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Moto X Reportedly Costs $221 to Build

yellow moto x

Market research firm IHS has come to the conclusion that the Moto X costs $221 to build. If you need something to compare that number to, we can look at the previous findings of the IHS for devices like the Galaxy S4 and Apple’s iPhone 5. At launch, they estimated that Samsung’s newest flagship would cost the company $237 to build, while the iPhone 5 was estimated at launch to cost around $209 to build. That puts the Moto X somewhere in between two devices that are considered by almost everyone universally to be high-end flagship devices. The question is, does this number make the phone worth that $199 pricetag that has been a hot topic of conversation ever since the phone was announced on August 1? 

According to IHS findings (or estimates), the components used to build the Moto X roughly total $209. It then costs Motorola another $12 per unit to manufacturer the device, which is roughly $4 or $5 higher than the cost of most phones made in Asia. As you can see, the “Made in America” stamp is actually costing Motorola more, but that shouldn’t surprise anyone.

In terms of component pricing, IHS estimates that the Qualcomm Snapdragon S4 used inside the Moto X costs $28 per unit. Couple that with the two Texas Instruments companion cores that run $4 and $5 each, the display (made by Samsung) at $62.50, an Omnivision camera, and other parts, you get to your total of $209.

And as one reader points out, Google is selling the Nexus 4 (off-contract) at a price lower than what Motorola is able to even produce the Moto X for. Only Google is capable of doing such a thing (maybe Amazon too), but that just shows you how insane of a deal the N4 is right now.

So the phone, at least on paper, costs Motorola as much to make (as estimated by the IHS) as it costs Samsung or Apple to produce their high-end phones. I’m not sure if that’s supposed to ease your mind on a Moto X decision or not, but it’s at least additional info to pile on the stack.

Via:  AllThingsD

  • MichaelCrackMonkey

    I wonder is the take into account the discount for buying components in bulk. If they are looking at the retail cost of components then they are WAY off the actual cost to manufacture.

  • R

    F motorola. 275% markup? F OFF!!! moto.
    GO LG!!!

  • Droid 1967

    Is the phone over priced..YES they all are. But the cost of the device is only a small part. There are 1000 of hours spent on research and development, the workers pay, electricity etc. It needs to cover the costs from the start of hey here is a new phone idea and here is the phone. thats a lot more than 200. While i say the phones cost too much im more talking 50 to 100 more for another 16 gigs 100 on apple 50 on android costs around 16 bucks. With the cost of things these days really 600 for a small handheld computer isnt that bad. smaller is more expensive always has been. Again all BIG (lg,samsung,htc)cell phones company’s have plants in the US this is nothing exclusive by motorola they are jsut doing it backwards. instead of building here and shipping over seas for assembly they are shipping the stuff in and building it here. same difference. I just dont see the moto x series as it is now worth 600 to ME. ill spend 4 bucks for lean hamburger while others will pay 3 for more fatty its all choices. Nothing is outdated if it functions adequately. This phone doesn’t appeal to me due to no removable battery, no sdcard slot with only 16 gigs of ram(verizon), and i dont buy the battery crap. watch a baseball game or football on the phone over 4g bye bye battery. the custom stuff which isnt even available on verizon just does nothing for me. I just dont see the arguments on this phone. if people like it let them post why do people have to post how lousy it is. that is opinion only. is the phone worth 600 sure is it worth 600 to ME no! so i continue on with the nexus until there is a 600 dollar phone that appeals to me.

  • chris125

    People complain about the poor working conditions and then bring jobs back to the US and when they do you complain about that too. What do you people want? Oh that’s right you will complain no matter what. They could give you a free phone, make the perfect device, and pay you for it and you would still complain that they only gave you one. This costs around the same as the iphone, s4 and htc one which all have similar off contract prices. But that’s right it is mid range so it should cost less than $200 I mean because the nexus is cheap every phone should be cheap /s

  • harryballs

    Moto X vs MAXX. Same hardware. Same software. X doesn’t have Droid Zap, Miracast, 3 ring clock, 5″ screen, off screen buttons, huge battery, wireless charging and 32 gig of memory. Why would you buy the X?

  • Daeshaun Griffiths

    I cant get over that some people are willing to pay top dollar for a phone made in America but complain about the price of the moto x. You really cant have your cake and eat it too.

  • FragDroid

    Most posters here seem to either NOT read the comments completely or just have no clue at all. Things to consider.
    Motorola is selling the phone to the carriers for an estimated $350-$375 so not near as much profit as you think. The carriers are the ones that then jack up the retail price. The devices that are sold direct thru Motorola and Google play match the prices that the carriers charge due to contractual obligations to said carriers. You will then see places like Best Buy sell the phones at $799 or sometimes more.
    Those saying that the device has mid range specs are off base as well. The dual core S4 pro (which is a NEW 2013 model with Krait 300 cores) and custom architecture with the low power cores offers performance that matches and in many cases surpasses the One and S4 while offering superior performance in games.
    Lastly, those that are complaining about the 720p screen consider this. Motorola needed to use an OLED screen to use their new notification system without killing battery life. Most manufacturers that use OLED get them from Samsung. Samsung keeps their newest and perceived best to themselves. Once they have a newer screen they start selling the other screens to the other OEM’s. Name another device sold by a major smartphone manufacturer that has a 1080p OLED screen? Motorola used the best OLED screen available to them at the time and its a damn good one.
    This is the first truly innovative device in both software and hardware that has come along in a LONG time. Motorola/Google deserves some big credit here. I can’t wait to see what the do next.
    Unless the next Nexus is a Motorola that uses this new system, the Moto X will be the smartphone of the year.

  • Alan

    What are the part costs for low end and mid range phones? $200?

    • Hojo

      So a Snapdragon 600 costs $20. How much for a Snapdragon 800 that also does the same ultra low power language processing?

      • Kenton Douglas

        I’ve asked before. Do you have info on this ultra low power language processing? If it’s integrated into the main SoC core, how does it operate at ultra low power without waking up the Krait CPU cores?

  • TheSimpleTruth

    I’m not sure I understand why people don’t think this device is worth the money they are charging for it. From what I can tell, this device boasts almost the same exact specs as the DROID Ultra, and aside from the battery and wireless charging, the DROID MAXX as well.

    The main differences I can see would be the screen, which is slightly smaller, but has a slightly higher PPI, and the fact that the Moto X is manufactured here in the US.

    Why is there no outcry about the Droid Ultra?

    Apple has been consistently selling their products with specs that can’t even compare to most Android phones at even higher prices.

    Samsung sells a phone with monster specs, but with a horribly skinned version of Android and with the manufacturing quality of a McDonalds toy.

    I think these phones are worth every penny. Design and all, the Moto X is a good step forward for GoogleMoto.

  • James Hill

    I think for phones, most American would gladly pay a $50.00 premium for a device made in the usa. If the Xbox One was made in the U.S., I wouldn’t mind paying $100.00 more.

  • Capt. Crunch

    Should have been priced like a Nexus…

    • lookatmyfunnyusername

      You clearly lack reading comprehension skills..

  • Bryan

    For all of the previous comments talking about how the Nexus 4 and LG and Google is a unique situation. Why can’t Google buy the Moto X from Motorola at wholesale and sell it cheap on Google Play just like they did with the Nexus 4 from LG?
    I don’t want to hear how it would upset other manufacturers. They are doing this with every Nexus device and manufacturers don’t seem to be upset with it. There is nothing stopping Samsung or HTC from selling their phones to Google at wholesale prices to let them sell as they wish.
    There is one reason why cell phone prices are still so high today compared to other electronics – carrier manipulation. In no other industry does the MSRP of a product stay so high until the day the product is discontinued even though the same product’s contract price is dropped by hundreds of dollars. if they want to drop the contract price from $199 to $99, $49 or free, then the off contract price should drop as well.

  • Terrance Steiner

    I HATE phone cost predictions. I am not hating on Droid-Life, I’m hating on IHS Research [and the like] for putting this BS out. Everyone gets up in arms that the phone is sold at more than cost. I have to give credit that this report actually said that it cost $12 in labor to build the phone. Most only tell you how expensive the parts are and leave everything else out.

    I used to work in manufacturing so I know that parts cost is only a small part for the final price. The reason I hate these is because it does not give a true production cost of the phone. Yes, the parts probably cost around $209 and yes, the labor to build the phone probably cost around $12. What these reports do not talk about is the miscellaneous cost associated with the device. The engineers that designed the phone and the process to manufacture it have to be paid, the power company has to be paid to keep the light on, the lease/mortgage on the manufacturing plant has to be paid, the marketing firm promoting the devise had to be paid, the shippers that send the phone to the retailers have to be paid, patent holders [i.e. Microsoft] may have to be paid. These miscellaneous cost account for a surprisingly large portion of the phones actual cost. And last but not least the bookkeepers at Motorola do have to factor in a profit because Google (their parent company) is a public company and must show a profit to its share holders and have money for future R&D.

    Just remember that the only reason the Nexus 4 was as cheap as it was, was because Google subsidized the phone. It was likely sold at or near cost, if not at a lost.

    • Justtyn Hutcheson

      Thanks for that. As an engineer, I have to justify costs every single day. To anyone who thinks that using a part that costs $5 more in mass production is reasonable, I’d love to see them argue their position when attempting to add $0.02 cents to a BoM causes a huge uproar.

    • Terrance Steiner

      Sorry about the rant.

      I am not going to through out some made up numbers based on my previous experience in manufacturing (I admit that I was in industrial manufacturing, not electronics manufacturing). These are my estimates so please take this with a grain of salt. Based on my experience, I would assume that actual phone cost may be double the parts cost. If my estimate is right this leaves maybe $200 in profit, but that profit must be split between Motorola and the carriers. Let’s say the say that Motorola gets $100 from your device. They will likely re-invest 60-75% back into the company leaving an actual profit of between $25 to $40 off of your $600 phone.

      Would I rather get a phone for next to nothing? Sure I would; but I think $40 is a fair profit.

      • Kenton Douglas

        or to summarise this in another way: which OEMs outside of Apple and Samsung are making any real money?

  • http://people.ign.com/mrfrodo24 mrfrodo24

    Am I the only person who thinks the color choices of the Moto X pictured in this article are brilliant??

  • JoshGroff
  • Philip A. Kaiser

    This reminds me of the stories about the Kindle becoming Free in the near future for Amazon Prime members. Basically, if they can put a tablet in the hands of their “paying” customers with ads that show the occasional “buy it now” button, they know they will recoup the costs of the device. Amazon and Google can afford to give away these devices because they know they will make their money back in apps, goods, and services. Motorola, Samsung, and HTC do not have this option because they are in the hardware business and not much more. If their profit margins are not high enough on their current products, they won’t make enough money to research and develop the next generation of products. Eventually when you don’t make enough money, your R&D falls behind the curve ball and you begin to snowball into failure. (ahem, HTC)

    • Kenton Douglas

      Nearly. Amazon can do that being completely closed. In the case of Goggle I can buy an Android device, install Bing as a default search engine on a non-Google browser of choice, … and maybe install Facebook Home so that even more user data (and associated ad revenue) doesn’t reach Google.

      • Philip A. Kaiser

        I would argue that at some point you are bound to spend some money in the app store but agreed. I think that’s why they sell their devices at a perfect price point, not too expensive yet not too cheap. Kinda hitting the demographic they are looking for.

  • Chase Chick

    I don’t care how much it cost to build. I want the moto maker option open to me on verizon or you aren’t getting my money.

  • Matthew Rebmann

    I’m dying to find out info on the Dev Edition for Verizon. Ideally when it’ll be released :/

  • chadstone30

    pic of moto x face down on a rock ftw!

  • Ben

    What surprises me is that it’s not costing Motorola considerably more. $4-5 extra per device is not much when you’re charging $600 and (R&D and marketing aside, at least) you’re making a huge margin. My guess is they did the math and decided that the “assembled in America” label caused more good will than what it costs extra.

  • brkshr

    Profit margins for 16 GB AT&T phones

    iPhone : $650 – $209 = $441
    Galaxy S4 : $640 – $237 = $403
    Moto X : $580 – $221 = $359

    I would say Motorola is definitely the fairest of them all.

  • KleenDroid

    For only a few bucks more they could have used a quad core. It doesn’t matter that they claim they didn’t need it.

    • Justtyn Hutcheson

      It does matter. It was designed for a certain cost. Going over cost on a BoM is very detrimental to any company, and no engineer or their manager in their right mind would push the issue if it is deemed an unnecessary cost.
      Many companies argue about moving from one resistor to another that would add pennies to each device. Now, imagine the amount of justification it would take to increase the BoM cost by hundreds or thousands of times that.

      • rarebreed

        instead they just have a phone branded as mid range and lost a ton of customers. get a clue.

        • brkshr

          It’s people like you that “branded” the phone as mid-range. Every single person that has actually had their hands on the phone, has said that it is just as fast as an HTC One or a Galaxy S4, or even faster. It’s people like you that can’t fathom how beneficial the extra 2 dedicated cores are. Moto is using a completely new cpu architecture and you guys don’t understand it. I think Moto needs to have some massive educational advertising for people that don’t get this stuff (which seems to be most everyone).

          • Big_EZ

            It’s only part of the tech community (which is very small to begin with) who think it’s mid range. I’m not going to say it’s a top end device, because I’m not going to make any judgements until I use the device since it has new innovative features we aren’t use to.

        • bp

          they may have lost customers that come to a site like this, but the majority of phone owners out there 1) don’t come to a site like this; 2) don’t care as long as it works and looks nice.

        • Justtyn Hutcheson

          Nowhere have I seen anyone other than die-hard spec lovers brand the Moto X as a “mid-range” device. There is a very very good reason that it is being compared to the HTC One and Galaxy S4, and that is because it performs at those levels in real-world usage. To the average consumer, the experience is what gives it value, not numbers on a page or illegible numbers spit out by some random benchmark.

    • Kenton Douglas

      It’ll be dual core again next year (X2?) but you’ll be surprised :P

  • Daniel Russell

    I think this furthers the point of how much Verizon and At&t rip us off. Motorola could easily sell this phone at $400 off contract and make a decent profit, but Verizon and At&t are jacking that price up about $200? Don’t they make enough money off the coverage they provide?

    • Justtyn Hutcheson

      Retail markups are nothing new, and without them retailers would go out of business. Motorola likely has wholesale prices between $350-450, which would be a ~25-45% gross margin for the retailer. From which they might make a 10-30% profit margin. If they subsidize the device, it ends up being a pretty hefty loss until they make up the difference on their services (which have a much much higher margin).

    • Kenton Douglas

      That’ll only change if people start buying their phones off contract

  • Trueblue711

    “Made in America” only adds an extra $5 to the manufacturing cost? I’d totally pay that extra on more of my electronics.

    • http://techonblogger.ward.pro/ Stynkfysh

      But they will charge you $35. $15 for typical profit and $15 because the American Flag is all warm and cozy :P I’m with you though, I would pay a little extra if I knew American’s are employed making things.

      • michael arazan

        Not to mention that the carriers have got to tack on another $200 per phone. If moto sold this through their site for $400 this would be one of the most sold phones by the end of the year. But carriers with their self appointing powers have screw everyone at any cost to the consumer. Just another reason why carriers need more regulation

    • Big_EZ

      That’s only the cost of assembly. If it were made in America (all the parts) then that entire cost would nearly double.

      • jseah114

        If you want to call the Moto X “made in America”, you may as well call a Toyota or Subaru made in America when all the Japanese parts are assembled into a working car in their factories in Tennessee,

        • Jason B

          Except Toyota has suppliers in America and builds engines/transmissions in America. Not exactly the same. Subaru probably does source parts from Japan, but it’s a smaller company.

          • michael arazan

            Same with Honda, it is actually made in America and the parts too since the early 80′s

        • MicroNix

          You might want to check your facts because the clueless light is flashing above your head. Toyotas have majority parts from US suppliers and are assembled in the US which is more than can be said for many domestics.

          • jseah114

            That just goes to prove my point. They don’t call Toyota an American car, and yet they can use the “made in America” tag on the Moto X? By your statement, a Toyota is more American than the Moto X is.

      • MichaelCrackMonkey

        The cost would not double. The price of components in the US is only slightly higher because most of the components are made by machine. Very little human intervention in those. It’s labor costs that increase the price tag. US Labor costs are some of the highest

        • Big_EZ

          Labor costs are not the only reason American made products cost more. We also have much higher taxes than many other manufacturing country’s, and regulations that drive up costs (some are good, most aren’t)

    • Humberto Enciso

      AAAMERICAAAA! F&CK YEAH!!!! *insert team america song*

  • rarebreed

    wtf did they spend 221 dollars on? they got ripped off.

    • chris420o

      smh…

  • Needs Da Help

    Just bought two Nexus 4s. Really wanted the Moto X, but I just can’t wait and the Nexus price drop was the last straw. I’m leaving Verizon and switching to T-Mobile.

    I do have a question though. Since I the Nexus phones are paid off, I don’t need T-Mobiles Jump!. But Could I add Jump in a few months when whatever new phone I want is out?

    • NexusPhan69

      Yes. But, you’d have to start from fresh and only buy phones direct from T-Mobile, not Google Play.

      • Justtyn Hutcheson

        To add: you could also enroll in JUMP! immediately for the insurance portion of it.

        • Pedro

          Is Jump available for Bring Your Own Phone deals?

  • lensgrabber

    If it does cost $225 or whatever to make the device it looks like a $300/350 or $350/400 off contract price should be easily doable.

    • NexusPhan69

      Not with the profit margins currently held as acceptable in the mobile phone world today.

    • Shagnscooby

      The price doesn’t factor in the marketing blitz they’re supposedly doing for it.

  • Victor

    I really like this phone regardless of cost on or off contract. my only concern is whether the battery will make it through a full day with any type of use, moderate or heavy. This phone is the only option on VZW running close to stock Android beside the droid line and i think the battery is what makes some people get the maxx.

    Regardless of cost I will wait for Motomaker to come to VZW.

  • SomeDooD

    Well there’s product development costs. Companies pay for much much more than the materials and parts used to build the phone.

  • RaptorOO7

    Well either the Moto X is overpriced OR the iPhone & Galaxy S4 are overpriced given the fact that they cost $649 Full Retail. So who is ripping who off? Yet the Moto X based on specs alone is not a high end phone its more mid tier based on specs, not software features.

  • AxemRed

    This is probably on-par for cell phones. There are a lot more expenses than the raw materials (including covering the losses on crappy cell phones that don’t sell,) and cell phone oems want to make a profit. The Nexus 4 is special because Google’s product is their services, not the phone, so they can sell it closer to cost.

  • https://twitter.com/AndroidRevenge Mike Sullivan

    i reaaalllllyyyy wanted the Moto X, but without MotoMaker on Verizon, and the lack of announcements last week I went with the HTC One, and I love it. Motomaker availability would have made me wait it out though. Bad call Moto

    • T S

      just because you can’t pick a color? buy a case for the phone. problem solved.

      • Tyler Durden

        that’s never the same. the point is to be unique, not have the same black or white phone people are used to

        • T S

          i understand that but the comment was saying he really wanted the moto x but went with a different phone which couldn’t be personalized either.

          • marko358

            the other phone has 32gb of storage space, a better screen, stereo speakers, etc. It’s a nicer phone than a cookie cutter, 16bg black/white Moto X. And they’re the same price. The One is obviously the better value in this instance.

          • Justtyn Hutcheson

            It is highly incorrect to unilaterally claim that one device is a better value than the other. Value is a very personal distinction. If a certain person can’t tell or doesn’t appreciate the difference between the screens, has never used more than 2GB of internal storage, and rarely if ever uses the external speakers, the advantages of the One over the Moto X are pretty much gone. At which point, said customer could also decide that the design, durability, and features of the Moto X are much more valuable to them, and choose the Moto X instead.

          • charles rogers

            Well i think its obvious which the actual buyer thought had more value.

          • Justtyn Hutcheson

            I was arguing against the unilateral usage of “better value”. Obviously the OP found them to be roughly equivalent in value initially with a slight bias towards the Moto X due to its customization. However, the Moto X not having a definitive date (or anything more than a rough guess really) for customization reduce its value to the point that the HTC One became the better value for them and they went with that instead.

          • marko358

            Durability of the Moto X? What are you basing that on? It’s just another plastic phone.

          • Justtyn Hutcheson

            Again, recall perception. I was arguing that a person could perceive the Moto X as more durable, as anodized aluminum will show damage (dings/nicks/scratches) more clearly than a soft-touch rubberized plastic. Whether it is objectively more durable is irrelevant at the time of purchase, unless you are purchasing a used device, but that seemed outside the scope of the current discussion.

          • Big_EZ

            Maybe he really wanted it specifically for the customizations. My wife wants an X bad, but if she can’t customize it she’ll get the S4 instead. The customizations are a major selling factor for most that will be interested in this phone.

    • Philip A. Kaiser

      Go to MotoMaker and custom build your phone for ATT. Do not activate or sign plan. Have it shipped. Go to VZW and pick white or black device (Motomaker only allows black or white fronts anyway) Swap custom parts from ATT device to VZW device. Sell ATT device as brand new stock device. Be first to own MotoMaker VZW phone. :)

    • Kenton Douglas

      carrier politics. They’ve had to cut messy deals to get the phone on all 5 carriers. So AT&T get a few months exclusive on Moto Maker. Remember the carriers largely dictate terms since they are the major customer for OEMs. The one exception is Apple – and that’s the whole foundation of their success, nothing else.

  • beaumac

    I wonder how much more the S800 would have been? To silence all the spec concerns…

    • Tyler Durden

      I’d imagine the same since the G2 is going to be the same price off contract as well

    • Justtyn Hutcheson

      I’d guess ~$20-30, but possibly more given that it will have limited supply for the first few months. However, you’d also need to factor in the increased cost for the display and battery, versus removing a couple of the sub-processors in the X.

      All in all, it will probably cost ~$250 to build a G2, though they may cut themselves a deal on the screen which wouldn’t be reflected in an externally-estimated BoM.

      • Franklin Ramsey

        Actually, I’d bet it would cost less than $20 to change to an S800. Processor chips usually have a lower cost than the screen. I would be surprised if an S800 cost more than $40 to put in a device since most estimates peg the S600 as costing $25-$30.

        • Justtyn Hutcheson

          Generally I’d agree, but considering that the supply is likely going to be relatively low compared to demand for the first few runs, I was adding a premium to it.

          Also, the 800 has a load of features that are well above and beyond that of the 600, namely all of the audio and language processors. Extra features all cost, whether you use them or not. For Motorola, those are also redundant to their X8 system, so I doubt we’ll ever see a full-on 800 SoC in a Motorola device. A stripped-down version of it with two-four Krait 400 cores will probably be in next year’s Moto X refresh, but we’ll see I guess.

          As for actually using an 800 (or even a 600) it would be exceptionally difficult to justify a 10-50% increase in the cost of the processor (which is a 2-10% increase in total BoM cost) when the average end user would not be able to notice any significant difference. I guarantee they have an engineering sample of their X8 with a 600/800/T4 around somewhere just to see how it would affect their system overall.

  • Sheldoneous

    I don’t think the on contract price is the problem. IMO it’s the off contract price that is mad silly considering what it cost to make this phone. Further seeing it up against other top tier phones is making me sick with the amount of money these companies make off full retail.

    • Guest

      You obviously didn’t evenr ead the article, as the HTC one Galaxy s 4 and iPhone all cost similar amounts with the same off-contract price.

      • NexusPhan69

        All of which makes him sick. Read his post more carefully before you calim he hasn’t read the article.

      • Sheldoneous

        It’s all of them I have problems with sir!

        • Ben

          since you said “this phone” I suppose you didn’t really make yourself clear.

    • http://techonblogger.ward.pro/ Stynkfysh

      Pretty much nowhere else in the consumer electronics industry, where items are mass produced, is there as much profit as there exists in smart phones. The fake MSRP + ‘subsidized’ pricing is what keeps the pricing of the phones separated from true market forces and artificially elevated.

      I have been saying this for years, but I wish the blog would cease emphasizing ‘subsided’ costs and emphasize MSRP… maybe then the phones will begin to compete on price.

      • Justtyn Hutcheson

        That’s just it though, there is no impetus to compete on price, because customers are buying their devices at what they are currently charging.

        Also, I’d much rather have the price stagnate for 5 years, than go up in cost year after year like most products do.

        • http://techonblogger.ward.pro/ Stynkfysh

          But doesn’t it only seem stagnant because they are charging so much and can absorb some changes? And I think it is worth noting that many tech things tend to go down in price. Thinking of monitors, hard drives, blu-ray players, etc.

          Bottom line: We are gadget suckers :D

          • SparkysShocker

            “Thinking of monitors, hard drives, blu-ray players, etc.”

            You mean the things that don’t really change year after year technologically?

          • http://techonblogger.ward.pro/ Stynkfysh

            Milk goes up in price, though it doesn’t change. Monitors go down, though they stay (some/many) the same or get cheaper. That is what I meant.

          • SparkysShocker

            Sorry if what I said came off brash, what I meant was most of the time those items only get cheaper because the internal technology doesn’t change weekly. Therefore the further out things go the cheaper the end product can be sold because the up front costs have been covered. Now if a new Monitor came out with some crazy new feature like some Smart TV-esque function or Android/ChromeOS on the monitor itself while still being able to be used as a monitor, then we would see prices rise again. Or a new SuperHD+Infinity display panel comes out the price will rise again there.

            The problem with phones is much the same as PC hardware not peripherals. They are constantly being updated sometimes daily there fore new device costs wont be low unless manufacturers use actual year old + components (and no not this baseless argument trolls use about the X using an “old” dual core).

            Spoilage is a threat to any tech manufacturer and that is why costs start high and then lower. Same goes for you milk argument, the initial cost of milk may go up as production shrinks or transportation (which greatly effects milk price) prices go up, however when stores have stock of milk that is nearing it’s spoilage date they will offer a sale or bogo’s on the milk.

            Edit: This is just basic stuff and of course there are a multitude of other things that can effect the prices of items rising and things other than spoilage that can cause a price decrease in a product.

          • http://techonblogger.ward.pro/ Stynkfysh

            I knew what you mean’t, and agree with you 100%.

      • icedrop

        The Nexus program is a great start to diminish this kind of behavior. If they could just get the word out more, those things would sell like hotcakes!

        • http://techonblogger.ward.pro/ Stynkfysh

          Yeah, gotta love Google for the Nexus program.

    • Nathan Wright

      Keep in mind that the $221 is the cost of the materials and labor to build one Moto X. This isn’t factoring in the research and development costs, the plant and equipment costs, the QA costs, the packaging, the shipping, the huge marketing budget. They also need to make a profit because they aren’t making phones just for the fun of it, and the carrier who is selling the phone needs to make a profit as well. There are a lot of costs involved besides materials and labor.

      • Dave

        Well, there’s at least one person here with some business sense besides me….good work man.

        • David Verba

          Well, there’s at least two people here without business sense. R&D, Plant & Equipment costs, etc. are not part of the cost of the phone because it’s split over several different products over a much larger period of time. You never include these costs in per unit.

          • Big_EZ

            You’re right, but what many people don’t understand is that the profit margins aren’t as good as they seem. Out of the profits from this phone comes part of the R&D of the next devices, and operation costs.

          • jose

            Wrong. It comes out of the bottom line. Profit margins are not calculated using all expenses. They are calculated using sales less costs to manufacture the phone. The rest is operating expense

          • Big_EZ

            OK then, where does the “bottom line” come from? Sales, therefore everything that comes out of the bottom line comes out of the profits of products. The BOM is only the cost to manufacturer, and shows a high profit margin that some people think is the companies profit, but the other parts of the business doesn’t pay for itself. Many people commenting here seem to think the BOM is $221, and they sell it for $579 then they make $358 off the sale, but part of that profit pays for the rest of the business expenses.

          • jose

            You said “profit margins aren’t as good as they seem.” But the thing is, they ARE. Profit margins are just that, sales – COGS. When you analyze a business and its financial results you don’t calculate margins all the way down at net income.

            You look at it at the profit margin level. Anything below that point has “fake expenses” like depreciation expense, amortization expense, capitalized variances and unrealized gains/losses on FX fluctuations. Things like that come out of the ‘bottom line’ and aren’t even a real cash expense.

          • Nathan Wright

            David Verba, you’re right in an accounting sense, but there are always costs involved beyond materials and labor. That’s the point I’m trying to make.

          • Tony

            do you really think they did not spend money on researching the market for this phone? the answer is yes, they did. therefore, those costs can be correllated to the device said costs were used for researching.

          • Dave

            All those expenses add up to what is called shelter. My comment was more aimed at the total cost compared to their asking price. The percentage of shelter is added to each unit to amortize depreciation and cost of facilities and equipment over time.

          • jose

            At least you get it. I don’t understand why people keep bringing up R&D and overhead. That has NOTHING to do with unit costs, which is what this article is about. It’s about unit cost and retail price. That’s it.

            I don’t care how much Motorola spends in landscaping fees or how much they spend on coffee for the breakrooms each year.

          • MicroNix

            So you separate those costs from the phone. The point being made was that those operating costs need to be paid from some form of income. If all you make is phones and accessories, THAT is where that money comes from. Whether it is spread over many devices and time or not, it still costs money to bring that phone to market besides the parts and assembly costs. It doesn’t take a genius to figure that out.

        • RPGambit

          I was waiting for someone to mention the other costs beyond what is included in the $221. Good job!

          Some people have no clue.

        • j

          Yea, it makes business sense for the business, because they are raking in large profit margins. Motorola is consistently around 10% margin per quarter.. higher than oil companies who are thought to gouge consumers at every corner. Apple makes around 20%. Full retail price does not need to be 3+ times as much as manufacturing costs to make a profit. The subsidized pricing scheme allows them to charge such high prices and get away with it.. similar to Colleges/Universities.. there is always someone or some way for the bill to be picked up (gubment loans, etc), so the prices are extremely high yet seemingly manageable.

          • asten77

            Uh, the Motorola unit of Google has been losing money for a long, long time. It has negative margins.

          • j

            I sit corrected.. the figure I was looking at was probably motorola solutions or something. comment remains accurate for apple and other manus I think.

          • Dave

            Don’t forget that that oil company profit margin is on about 50-100 times more sales. Big moooonnneyyy!

      • Sheldoneous

        Understood.

      • Jordan Pfingsten

        BUT WE ALL WANT FREE AND CHEAP THINGS!!!

        /s

      • Joeseph

        I wonder how much resources they wasted on the X8 chipset instead of going with a ready made SoC that does the same thing and more (ie. Snapdragon 800).

        • Kenton Douglas

          The 800 is very interesting in so much as it has voice processing integrated like the NLP on the Moto X. But, can it do this without waking up the main Krait CPU cores, ie. at minimal power? An info on this?

      • smoke n mirrors

        a$$ kisser

      • reason_check

        Wait, don’t all manufacturers add some sort of proprietary features to their phone. Should we be paying a premium for Shitwiz from Samsung or perhaps BlinkFeed from HTC. What about all those little gimmicky features the SG4 have? Are hands-free voice, active notifications, etc. enough to justify the “innovative” price hike.

        I’m not buying it (the phone either).

    • brkshr

      EVERYONE was pissed when they saw that the phone would be $200 on-contract. I could pull up thousands of posts on every blog out there to prove it.

      It seems like everyone is finding something to complain about the Moto X. First it was the “mid-range specs” (I’ve always disagreed with others on this). Then it was the on-contract price of $200. Now, apparently, it’s the off-contract price?… Can’t wait to hear what’s next…

      • Sheldoneous

        Most I know are grandfathered unlimited data users who have no interest in on contract pricing. We just run in different circles I guess

        • Drock240

          That would be me :) I’ll keep on buying phones out of contract as long as I have the unlimited 4G (thanks VZ)

    • Tyler

      It costs money to engineer a phone and everyone who put an hour into the design needs to be payed. Motorola may be owned by Google but for the most part the funds need to be self maintained because they are supposed to be operating separately.

    • kixofmyg0t

      Its even worse if you consider the GPE S4 and One. Those cost even more yet are cheaper to make.

      But no, let’s just hate Moto for trying to make a profit.

    • MicroNix

      GET OVER IT! Your $299-off-contract fantasy phone is not happening!!!

  • Tyler Durden

    gool ol’ capitalism

  • Justtyn Hutcheson

    I think we need a “brace yourselves” meme regarding the amount of “MOTO X IS OVERPRICED RAWR!!” comments about to occur.

    Neglecting, of course, that it probably costs as much or less to build the GS4 and One, and nobody calls them overpriced….

    • MK17

      But but but, the SPECS!!! /s

      • Justtyn Hutcheson

        Lol. I told people that there weren’t any cost savings to “pass on” to customers because savings from the SoC/screen would be eaten by the extra subprocessors. I’m really hoping this analysis puts to rest all the cries of it being too expensive. Probably not, but one can hope.

        • Kenton Douglas

          … “extra subprocessors” and the cost of US assembly, and the the flexibility (and extra logistics) of Moto Maker, and the negative economies of scale since they don’t (yet) have the purchasing power of an Apple or Samsung, and …

  • Derek Duncan

    these ‘cost’ stats are worthless to me. Nothing in those prices notes the research and development costs.

    • http://www.droid-life.com Kellex B

      This is true as well.

    • Kevin

      and employees

      • DanSan

        and the building itself, the power, gas, etc, etc. all wrapped up in the cost.

        • Philip A. Kaiser

          All of these are considered “manufactoring costs.” Hence, why the manufactoring costs are more to build in the US. Labor, gas, power, etc.

      • CasperTFG

        A subset of the $12 manufacturing costs entail labor: direct and indirect labor, equipment repair, maintenance, other manufacturing support and overhead (e.g. consultants). The IHS teardown did not account for expenses such as software, licensing, royalties.

        • Trueblue711

          And design/planning of the hardware.

          • CasperTFG

            Correct, like selling, advertising, marketing and other operating costs. Regardless of fixed and variable period costs – the price per unit will decrease as more handsets are sold. (sorry to the 90% of readers here who already know this)

    • NIGHTSCOUT

      When you spread the R&D cost over 10 million units, it will be a few dollars to each device.

      • Tyler Durden

        considering the whole “made in america” costs about $5 per phone

        • Big_EZ

          Assembled in America, that’s why that cost is almost double. If it were made in America it would also nearly double of the parts as well.

          • Justtyn Hutcheson

            It is currently impossible to be completely American made, as we lack the raw materials processing for some of the components, namely the rare-earth metals used in the semiconductors and display panels.

        • Ryan Ropero

          Thinking about changing my user name to Dyler TURDen.
          ^that sounded a lot funnier in my head^

          • Tyler Durden

            This is related to my comment how? Good for you. Do what you want. It’s america after all.

          • Ryan Ropero

            No relation to your comment. Just being funny.

      • Justtyn Hutcheson

        Then you add marketing, distribution, procurement, shipping, warehousing, management, software support (legacy support for updates, not initial R&D), plus a whole host of other expenses that are dependent upon the manufacturing scale. Its not difficult to imagine that the actual cost to produce and maintain is north of $400/unit.

        • NIGHTSCOUT

          If only a million devices sold, I can see that as a possibility. But the more devices sell, the lower the cost per device. Again, when you spread all these costs over 10 or 20 million devices, the cost drops significantly per device.

          • Justtyn Hutcheson

            Only fixed costs would be reduced, which are comparatively small next to the per-unit costs. You need a fixed amount of power, management, shipping etc. to produce any given number of units, and all of that scales near-linearly with the number of units produced.

            R&D costs are technically fixed, and therefore per-unit would be affected by increased sales. However, many companies take a certain percentage of their revenues (up to a certain amount) and put it towards R&D, since more and better R&D ultimately means more money overall. And R&D isn’t just measured by what went into current units being sold, but on future products and features.

            The cost to produce each unit will eventually fall, but not to the point that they’ll be able to make any reasonable profit off selling the device for $400 to the public.

          • NIGHTSCOUT

            The same principle is applied to the rest of these expenses. OEM’s pay pennies on the dollar, on shipping charges, since they ship in bulk.

          • Trueblue711

            But they don’t know their sales volume until after the device is released. They can’t plan a device expecting to be a best seller.

          • NIGHTSCOUT

            Judging by peoples interest in the MotoX, i’d say it can easily sell 10 million in 24 months time.

          • Big_EZ

            Other than Samsung and Apple, who is selling 10-20 million units?

          • NIGHTSCOUT

            For the sake of this argument, consider this: Phones sell about 2 years at carriers. So 10-20 Million is not difficult to achieve. Sammy and Granny Smith sell probably 100 Million during a 2 year cycle

    • onDroid

      And marketing

    • Kyle

      And no mention of how the marketing costs play into the price. I’d love to see a full price work up.

      • Trueblue711

        People also forget the design and software costs which are never accounted for in these raw material breakdowns. I feel like Google still could’ve charged $399 or even $499 for this off-contract though.

        • guesswhat

          I think nexus 4 price dropped in anticipation moto x in playstore. It confirmed news that moto x will sold through playstore, we just dont know the price. Looking at the price drop of n4, moto x ight well dropin at $299-$399 range in playstore.

          • Justtyn Hutcheson

            I wouldn’t get my hopes up on that. If it comes in under $550 I’d be shocked. The only reason Nexuses are sold so cheap is because Google sells them at wholesale+their (Google’s) costs. They don’t care about profits on devices. Motorola, on the other hand, doesn’t have that luxury, as the only place they can make money is on device sales.

          • Bryan

            Google may not care about profit on the Nexus 4, but I bet LG does. They still need to recover their costs on the phone. They aren’t a charity either and aren’t just going to give Google a good deal because they feel like it. There is more to it then “Google doesn’t need to make money off of the hardware.” The people who actually manufacture the phone, do need to make a profit.

          • Justtyn Hutcheson

            The wholesale price is where LG, and any other OEM, makes their profit. The MSRP is wholesale + a standard gross margin, which is where the retailer makes their profits.

            That is why I stated that Google is likely selling at wholesale + their costs. LG only really cares about getting the wholesale price, because that is all the profit they would ever make.

          • Bryan

            And I would guess their wholesale price is higher than their parts list price that everyone is talking about here.
            My only point is that somehow LG is doing just fine by selling a phone at wholesale prices to Google. So why can’t Motorola do just as well by selling their phone at a lower profit margin to try to get market penetration and brand visibility. You make it up in volume once everyone has to have your phone.

          • Justtyn Hutcheson

            I’m guessing that they are selling their devices wholesale at very low margins. If a report that their wholesale price is $350 is true, that is very low. Even the $579 off-contract retail price indicates that the wholesale cost is $50-100 less than their competitors, which encourages their carrier partners to push their device as they have higher margins on the subsidized pricing. Pricing it at $199 on-contract initially also give retailers more leeway in their “sales”, as shoppers respond better when their perception of getting a “better deal” increases, even if the initial price was heavily inflated to begin with.

            Also, recall that Motorola is putting everything that they have into this one device at the moment. They have to make as much profit as they can off of it. Should they release a Nexus, it could theoretically be priced even lower, as they could make up any lower profits in increased primary device sales (in this case, the Moto X and its successors).

          • Kenton Douglas

            Correct. Just look at LG over the last 2-3 quarters. Up to no.3 globally.

        • Justtyn Hutcheson

          Eventually, yes. The Razr M is currently $349 off-contract at Verizon. However, until economies of scale really kick in, or you have alternative sources of revenue (Google), it takes a while.

          • Ben

            If, like Samsung did with teh S3 and S4, Googorola is selling the same device with software twerks for the various carriers, it won’t take long for economies of scale to kick in. According to the phone profile on GSMarena, it’s got an MSM8960 dual-core (which we knew it was dual-core) which supports pretty much every cellular standard still in use. Wikipedia says of the MSM8960:

            Bluetooth 4.0, 802.11n (2.4/5 GHz), World Mode (LTE FDD/TDD CAT3, SVLTE-DB, TD-SCDMA, Rel9 DC-HSPA+, GSM/GPRS/EDGE, EGAL, 1× Adv., 1× EV-DO Rev. A/B)
            Shouldn’t take long once it launches everywhere, as it seems ATT probably paid for timed exclusivity.

          • rabidhunter

            Software twerks? Is that like Miley Cyrus live wallpaper performing at VMA?

          • Ben

            Dammit now I gotta go scrub my mind’s eye.

    • NexusPhan69

      That’s not how BOM costs work. You don’t include that when creating price structures.

      • Derek Duncan

        I know. But the numbers are irrelevant.

        • NexusPhan69

          Not at all. Companies set their sell price based only on the BOM cost and their desired profit margins. Everything else is considered completely separate. R&D, marketing etc. are only taken into account on the overall business not tied specific per device. It’s waaaay to complicated to set a selling price that way.

          • Derek Duncan

            Yes but my point is, these cost to build stories and people complaining about a phone that costs $190 to make and sells for $550 is stupid.

          • NexusPhan69

            Oh, that’s true. What needs to change is the belief that phone makers can demand 50% profit margins. That’s what I’m complaining about. And, this phone was supposed to end that.

          • guesswhat

            if companies cant make 50% profit margins ..they will spend less on R&D ..so more incremental stuff and less innovation for end consumers. Google can sell nexus for cheap as they dont care about profit margin on hw itself they care about building the android ecosystem and sustaining it so that google services can be pushed out to everyone who carries a smartphone.

          • Bryan

            But the Nexus argument still doesn’t make sense because Google didn’t actually manufacture the device, LG did. LG still wants to make a profit, so I doubt they are selling the Nexus 4 to Google at cost. They have to recover all of the same expenses as if they were selling the phone as one of their own. Google must be taking a big loss on the Nexus 4 or the true cost to manufacture these phones isn’t really known.

          • Kenton Douglas

            … and look at how many device manufacturers are struggling to make a profit, even with the supposed 50% margin.

          • SparkysShocker

            Who said it was supposed to end that? I think guesswhat nailed it with the Nexus comment however I don’t think we will see another nexus priced like the 4 was.

          • EdubE24

            Said who? Rumors on blogs?

          • Terrance Steiner

            That is true but the R&D, marketing cost, et cetera have to be taken in to account when determining what the profit margin has to be. While those miscellaneous cost are not directly connected to the final price their is an indirect connection. Without enough profit to cover these cost a company would loose money and go out of business.

    • psuturtle

      Agreed. I’ve been involved in BOM costs a lot my career, and there’s so many things that affect it that outside companies would really have no way of knowing. Pricemasking, buy/sell agreements, rebates, etc….it’s crazy. It’s hard enough for companies to get a true measure of BOM costs for their own products (most have one or more entire departments responsible for it), so I don’t put much stock in numbers coming out of a 3rd party. They might get close from time to time, but I doubt they are accurate.

    • TheWenger

      That’s how they justify insane phone prices compared to tablets. It takes way more R&D to package stuff tighter.