Motorola pays $5 more per device to build its Moto X smartphone in the United States, say analysts.
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The Motorola Moto X, which is now available to AT&T and Verizon Wireless customers, costs on average $226 to make. Motorola pays a small premium to assemble the device at its Ft. Worth, Texas, plant, but the benefits outweigh the increased costs.
The Moto X is Motorola's first smartphone to be fully developed under the auspices of Google's ownership. It is not a spec monster, but does offer a different experience thanks to some customized components and the software that runs them. Analyst firm IHS tore the device down to assess its cost to Motorola and recently published its findings.
As with most mobile devices, the Moto X's screen is the single most expensive component. Priced at $62.50, the Samsung-made screen and its drivers amount to about 28% of the overall cost. The screen measures 4.65 inches diagonally and displays 1280 by 720 pixels.
The processor, which is a series of chips linked together, is the second-most expensive piece of the Moto X. The X8 architecture, as it is called by Motorola, includes a Qualcomm Snapdragon S4 application processor as well as two separate chips to handle other tasks, such as the Touchless Control feature. Together with Wi-Fi, Bluetooth and cellular radios, the system costs about $43 in total, or 20% of the overall cost. All of this goes to Qualcomm.
"What Google and Motorola are trying to do is not play the game of 'bigger is better' that everyone else is playing," said IHS analyst Wayne Lam. "They are looking for ways to differentiate themselves from the pack and push the user experience in a new direction. Motorola has put together a novel combination of electronics and software, and has done it in a very power-efficient way."
Some of the other companies responsible for supplying components include Omnivision (camera), Skyworks (wireless module), STMicroelectronics (various sensors), and Wolfson Microelectronics (microphones).
Together, IHS says the parts add up to about $214. Manufacturing costs run about $12 per unit. Custom models built for U.S. customers are assembled in Texas, but Motorola has sourced other plants to build models headed to markets elsewhere around the globe. By way of comparison, Apple's 16 GB iPhone 5 costs about $207 to make, and Samsung's 16 GB Galaxy S4 costs about $237 to make. The Moto X falls right in the middle, running about 9% more expensive than the iPhone, but 5% less than the GS4. Motorola could save a little bit by manufacturing the Moto X entirely outside the U.S., but it would then lose one of the X's main competitive features: the ability for consumers to build it to suit their own color palette.
"With the Moto X, Motorola is reaping the public-relations and customization upsides of producing a smartphone in the United States, while maintaining competitive hardware costs. Our initial estimate suggests the additional costs of onshoring the Moto X are relatively low," said Andrew Rassweiler, senior director, cost benchmarking services for IHS.
In other words, that extra $5 is money well spent.
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