The Moto G brings Motorola an operating profit margin of less than five percent, say analysts interviewed by the Wall Street Journal.
Technology research firm TechInsights conducted a teardown of the Moto G and found that the costs of its components add up to $123. Considering other costs, such as manufacturing and other overhead, analyst Mark Newman from Sanford C. Bernstein estimated for the WSJ that Motorola generates an operating profit margin of under five percent off the device.
The Moto G is selling in the United States for $179 for the 8GB version and $199 for the 16GB version. The device earned widespread acclaim (including in our own review) for its low-cost price tag and high-quality components, including a 4.5-inch HD LCD display and a Snapdragon 400 processor.
Newman compared Motorola’s margin on the Moto G with other devices, both in its price range and higher-end. Samsung generates a profit margin of roughly 20 percent on the Galaxy S3 Mini, and about 28 percent on the Galaxy S4. According to TechInsights, the components in the Galaxy S4 cost about $214, while Samsung currently sells it for $550-$600 unlocked. Apple, well known throughout the industry for its high margins, collects an estimated 30 to 35 percent profit margin on the iPhone 5s and 5c.
Motorola didn’t comment on the report, other than to say that it makes money on every device it sells.
The TechInsights report confirms what many market watchers have speculated – that the Moto G is a gambit for Motorola, which is more interested in putting pressure on competitors and improving its brand image than in immediate profits.
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The Moto G is a “lost leader” type of device. While it may not bring in large profits, it will get people using Google’s services, know the quality of a Moto device, etc. Which may translate into a “halo device” down the road for Moto & Google.
Very true , they want to sell millions of these. To capture more android users, get more people googling and build the Motorola brand again. Its a smart move !
There is no way they can possibly know what Motorola is paying for parts. They may have a good deal buying parts in bulk or whatever other reason. Google also has a lot of wealth behind them. This is a Google phone.
Google is treating Motorola the same way they treats any other division with a high probability of loss. They run it at a loss and make money off the services. Like the nexus products, maps, Google TV. All of these use huge resources but the tie-in of ads pays for it all. Google made billions of profit from ads, to lose a billion at Motorola but recoup it by posting 5 billion in profit from ads and services would seem to fit Google’s style.
Wait till they put the Australia tax on it. Then it will be a profitable handset. Other nations will subsidise this device for the U.S.A.
Motorola benefits from tax?
The unusually high mark up on goods in Australia, specifically technology, is commonly referred to as the ‘Australia tax’.
Not all companies follow Apple, Microsoft, adobe approach of over pricing.
Nexus 5 (outright) 16gb
USA: $349 USD (before federal/state tax)
AUS: $399 AUD (include GST)
Currently 1 AUD = .91 USD
So 349/.91 =384 AUD
Add GST of 10%
10% of 384 = 38.4
384 + 38.4 = 422.4 AUD
Asus/google could have charged 450 or even 500 if they wanted too but obviously decided against it. Maybe to put pressure on Apple and Samsung Australia strangle hold.
Since Motorola is now a Google company the moto g could also be priced reasonably.
ok, lol. I didn’t know the term xD
It benefits from Google ;-)
Lol..people should always remember that Motorola is Google’s Motorola…they need not pay for the os & they haven’t custom ui ed the G
So no matter what people say,Motorola & android is one thing just like Apple & ios
No wonder the low cost etc etc
No wonder sammy & others are investing on other operating system…
NOBODY has to pay for the OS.. Wat Ru talking about? ??!!!!
Actually, while the manufacturers do not pay for the OS *itself*, they do have to pay to access Google Apps, such as the Play Store (and the device also has to pass a compatibility test). We are not talking about astronomical prices, but still a few bucks that Motorola probably may not have to pay.
I m sorry,I didn’t mean to imply android is not free.I’m sorry :-(
But Google indirectly makes Money through android,specially through ads & search
So other oem also pay certain licensing fee for certain stuff from Google
That was my point,Motorola Need not pay anything
Yeah ok. I just seen baby Jesus.
The Moto G would flop, i have no doubt of that i have recommended the phone to a few people after they have had the chance of playing with the device they have all decided that they don’t like it one bit
What didn’t they like exactly? The phenomenal 4.5″ screen? the build quality? the vanilla OS? the performance? the extended battery life? the design? the cheap price? What?
I cannot possibly know how much profit Motorola makes out of these babies, but having the phone for almost a week now, its pretty obvious to me that this phone just proves how much profit companies make from their so called “flagship: devices.
Can’t say for sure but they all have tried the phone for sometime and decided that they don’t wanna buy it, probably the Motorola name scared them off
Companies tend to like to make profits. It’s the whole reason for their existence!
True. Although for some companies its “profit” and for others “profiteering”. ;-)
It’s both for all.
I’m sorry but they wouldn’t be in this position if they didn’t overprice the Moto X so much. That POS phone set them back more then anyone could have predicted.
Pretty hard for them to determine how much profit any phone company is making off their devices by adding up the price of the parts. There’s a lot more then that in the price of a phone or anything.
I am from Costa Rica , this my network description ..I wanna buy it , Does it work here? I am just worried about the phone not being 3G …
ICE GSM 850MHZ/1900MHZ 3G 850MHZ
Claro GSM 850MHZ/1900MHZ 3G 2100MHZ
Movistar GSM 850MHZ/1900MHZ 3G 1900MHZ
I would appreciate any help you can give me
“You know everybody is ignorant, only on different subjects.”
I am not sure if Motorola sells any devices in CR. If they do you should have success. The U.S. version Moto G operates on these:
3G Network HSDPA 850 / 900 / 1900 / 2100
2G Network GSM 850 / 900 / 1800 / 1900.
From my experience using U.S. devices in Mexico, Peru, and Ecuador, 3G should not be a problem on either Claro or Movistar.
I am planning to buy that online from amazon or the motorola site itself …I hope it works , I am using a Galaxy Ace stuck in android 2. something so I hope it works with 3g