Report shows just how little money Motorola makes off the Moto G
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.