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Summary:

That Moto X priced at $579 without a contract is costing Motorola approximately $226 to make, even with the customization and U.S. assembly. Other indirect costs are part of the equation, but Motorola could finally start providing Google some tangible profits.

Moto X teardown

Motorola’s 16 GB Moto X costs $226 for materials and production, paving the way for the Google-owned company to potentially start contributing profit to its parent. The figure comes from an IHS teardown of the product, which identifies the individual components and costs, as well as an estimated price for production. IHS figures the customization and U.S. assembly process add $5 to the overall Moto X costs.

Moto X Colors

It’s interesting to compare the bill of materials and estimated cost of comparable phones: From that standpoint, Moto X fits squarely between Apple’s 16 GB iPhone 5 ($207) and Samsung’s 16 GB Galaxy S 4 ($237). I’m not surprised. Apple manages its component supply chain prices without equal and gets the best prices for the individual bits. Samsung makes some of its own parts, but the Galaxy S 4 has more capable hardware, which understandably can cost more.

What this says, however, is that Motorola stands to make a decent profit on each Moto X. Carriers subsidize the iPhone 5 and Galaxy S 4 a bit more: IHS suggests that the Moto X carrier subsidy is only around $300, or about $100 less than the competing flagships. There are also other costs involved, such as marketing and support, but surely that won’t eat up all of the profits of a Moto X smartphone.

And that may be the best news of all when it comes to this phone. Google purchased Motorola for $12.5 billion in August of 2011, but the company hasn’t added money to Google’s bank account so far. Instead, Motorola has produced a string of losses. With the new Moto X, and possibly the new trio of Droid Ultra phones at Verizon, Motorola can start contributing some profit — or, at the very least, lose less money for Google going forward.

  1. Moto still has an outsize headcount compared to Google, and an incompatible culture. That Google wants Moto to focus on profitability indicates they want to sell it without losing their shirt. At least I hope Google has the clarity to think that way.

    They should look at the disasters at Nokia and with the Surface at Microsoft. The road to hell is paved with fancy ideas about synergies between hardware and software companies.

    That they dropped the price on Nexus 4 indicates the scope of the conflict inherent in keeping Moto.

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