Moto X costs carriers just $350, so the price could drop fast
0. phoneArena 09 Aug 2013, 12:19 posted on
Leo Laporte said on This Week in Google that when the Moto X hits the Google Play Store it will not be a Google Edition device, and will contain all of the Motorola extras. Well, Leo wasn't done with the info, because he has also given some info on what the carriers are paying for the Motorola Moto X, and he gives some guesses about how the pricing will work through carriers...
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1. g2a5b0e (Posts: 1930; Member since: 08 Jun 2012)
Ooooh, I can't imagine it's gonna make many people very happy to hear this news. Verizon, AT&T, & Sprint price gouging? No way!
10. ardent1 (Posts: 1983; Member since: 16 Apr 2011)
I would be surprised if the Bill of Materials for this device was over $170.
This is a very cheap phone to assemble.
31. lola99 (Posts: 31; Member since: 03 Aug 2013)
how in the heck would you know? reports say it's $215 to make, so do you have information to the contrary? do share.
49. ardent1 (Posts: 1983; Member since: 16 Apr 2011)
Your $215 number results in a gross profit margin of about 38.6% (versus my guesstimate of about 51.4%).
After accounting for setoffs and chargebacks, and then accounting for marketing spend, marketing support, (an implied charge for R&D), etc, you aren't looking at a good operating margin number if you believe the $215 number.
So when it doubt, use business sense or common sense.
50. lola99 (Posts: 31; Member since: 03 Aug 2013)
That's why you shouldn't believe the $350. When in doubt, trust the IHS over a rumor.
11. TheLolGuy (Posts: 469; Member since: 05 Mar 2013)
Nah, even other phones like the S4 etc. all have bulk discounts. The only one that doesn't discount as much is Apple and the iPhone, which is why some carriers were reluctant to carry them even though they were so popular. Most Android flagship handsets don't get to sell to carriers like Verizon for full price.
Now having said that, $350 is still a pretty good deal for them, so I'm hoping people boycott the Moto X and have it drop to $99 like it should be.
39. Professor (Posts: 115; Member since: 02 Aug 2013)
Don't worry no one has to resort to boycots for the price to lower soon and fast. With the new phones in the way soon they will have to lower the prices to be able to sell phones or at least to be able to compete in price and sales with the new ones from LG G2, HTC, Sony, and even with the rumored iPhone 5C.
4. roldefol (Posts: 2855; Member since: 28 Jan 2011)
I've said all along that $150 would be a more competitive contract price. Undercut everyone else without making it look like a budget phone.
5. PapaSmurf (Posts: 6631; Member since: 14 May 2012)
Not trying to take a jab at Moto, but even at $150 on contract, they're going to have to market the hell out of their phone. The HTC One and S4 sell for that price (on some carriers) and they're the phones that reps are pushing customers to, along with the iPhone 5.
8. KingKurogiii (Posts: 5483; Member since: 23 Oct 2011)
if the Moto X really does turn such a profit for the carriers then reps will start pushing the Moto X more especially considering how elaborate the Moto Maker stations will be in Carrier Stores.
33. youdug (Posts: 21; Member since: 19 Jul 2013)
you can upgrade to the htc one on sprint for $99.
best buy price matches amazon as long as amazon is the one fullfilling the order, which they are.
even $150 is too much.
if this phone was $99 i would still go with the htc one for the same price.
and you can actually get it for $49 if youre a new customer.
52. roldefol (Posts: 2855; Member since: 28 Jan 2011)
I meant $150 starting price, whereas the One/S4 started at $200 and then got discounted. It's the way Android phones work - early adopters pay a premium and the price drops quickly due to competition.
13. ardent1 (Posts: 1983; Member since: 16 Apr 2011)
The phone came out late, and comes across as a second-class citizen amongst high-end android devices where the current "de rigeuer" are big screens (close to 5" or more) with 1080 display.
I was going through the parts and trying to figure how much it would cost to assemble it, and there's nothing really pricey about this device.
This will be a "budget" phone within a few months. It will just be like the HTC facebook phone -- it will be a poor seller.
17. protozeloz (Posts: 5328; Member since: 16 Sep 2010)
Well... Unlike the Facebook phone this phone has had good reception to the people in US the fact that'd its helping the economy by providing jobs, its enough for many to consider it, what fans disliked was the price tag... But I can see that if they make it to the play store do 400 or less it will outsell the nexus 4
40. Professor (Posts: 115; Member since: 02 Aug 2013)
I have a Nexus 4 and it is still the best phone for the price (without contract).
The only way the Moto-X can outsell the Nexus 4 is if they stop selling the Nexus 4 at the Play store. Because who is going to buy it at the same asking price of the Samsung Galaxy 4 or the HTC One at the Play store?
32. lola99 (Posts: 31; Member since: 03 Aug 2013)
IHS already did that. Ya know, the global market and economic information firm? lol But i'm sure your analysis will be more much thorough. lol.
6. sum182 (Posts: 217; Member since: 19 Nov 2011)
This is where T-mobile needs to pave the way. All carries want to give it that high sticker price to justify the subsidized price, make it seem like your getting a deal like all the others with the contract, "But look how much it is with not contract!"....But since T-mob is done with contracts, they should sell this outright at the lower price point, point it out to everyone (through ads) how absurd it is VZ, ATT, and sprint is for marking up the price so much to justify the 2yr contract price, and start the revolution. When looking at it, if they're paying 350 a phone, sell it ouright for 450, $100 profit....sounds nice to me but i'm not a business man
14. lolrus (Posts: 29; Member since: 18 May 2013)
$100 profit, not including shipping, payroll, etc etc. Lots of other costs besides the actual price of the phone. Which means they have to charge a bit more to make it worth it.
19. kozza3 (Posts: 573; Member since: 17 Oct 2012)
not to mention the service plan they sell with it...
47. ollienightly (Posts: 37; Member since: 23 Jul 2013)
that's off-contract, so wtf are you talking about?
27. PK1983 (Posts: 144; Member since: 08 Aug 2012)
If I were T-Mobile, I would sell it at $350 off contract or $400 subsidized.
Yes I wouldn't make any money on the phone, but getting people into the store on a wireless plan and potentially selling accessories would more than make up for this. In addition it would be a big slap in the face to Big Red, and the Death Star.
7. Mass88 (Posts: 47; Member since: 06 Jan 2012)
So then T Mobile will be offering the best options money wise for this phone then.
9. softfurryanus (banned) (Posts: 232; Member since: 09 Jul 2013)
O snap. This sounds a whole lot better.
12. FoneAddict (Posts: 176; Member since: 05 Jul 2011)
This just proves Moto X is over priced.
26. SellPhones82 (Posts: 384; Member since: 11 Dec 2008)
Well everything we buy is "over priced" if you compare what it actually costs to make, compared to the wholesale/bulk price, compared to the actual retail price that you and I pay.
The iPhone 5 is said to cost $197 to make and the S4 is estimated at $237 per device. Now obviously that does not include R&D, marketing, or even paying the people to assemble them but they still retail around $650 to $750 depending on where you look. So "retail" for the X is about $75 less than other flag-ships but we don't know what the carrier are getting those for.
29. lola99 (Posts: 31; Member since: 03 Aug 2013)
would prove it if you could prove the $350 claim. But i doubt that's true.
15. xoxoGeorges (Posts: 151; Member since: 11 Jul 2013)
They HAVE to drop the price for that kind of device.
It costs as much as flagships
16. protozeloz (Posts: 5328; Member since: 16 Sep 2010)
I can pay 350 for it unlocked... I don't want it otherwise
18. krysis (Posts: 76; Member since: 14 Dec 2009)
So when it goes on the google play store, will it only be 350...?
41. Professor (Posts: 115; Member since: 02 Aug 2013)
The rumors are that is not going to be available at the play store, but that if Google decides to sell it at the play store, it will be basically at the same retail price than Verizon or AT&T is going to sell them, just unlocked. In other words at basically the same price of the Galaxy 4 and HTC One play editions.
20. bubbadoes (Posts: 313; Member since: 03 May 2012)
Not rocket science on this one...buy the phone off contract at $350. Why let the carrier lock you in for two years (VW) with only a subsidy of $150 if the phone does go for $199 on contract.
22. ChafedBanana (Posts: 352; Member since: 20 Sep 2011)
I can't tell you the last time I sold a Motorola. They have not been good money makers for some time and allot of the ones I sold back when they were, came back with problems. Samsungs have been a good balance of profitability and reliability. If the Moto X has a low enough cost and high enough price tag, I will be pushing it.
45. Zero0 (Posts: 561; Member since: 05 Jul 2012)
I assume you don't work for Verizon then? The Motorola Droids are really the only worthwhile phones they seem to come out with until the X. Shame they're exclusive; everyone else is making money by selling on all the major carriers.
54. roldefol (Posts: 2855; Member since: 28 Jan 2011)
All's fair... AT&T has had US exclusives on the Lumia 900 line, the 32 GB Galaxy S line, the 64 GB One, and of course 4 generations of iPhones. It's not a great business model for any manufacturer, but if Motorola and Verizon both still benefit from the deal, it's hard to argue.
They should market them as the Razr Ultra/Maxx overseas though.
25. suyash1629 (Posts: 22; Member since: 09 Aug 2013)
carrier unlocked version should be cheaper
28. lola99 (Posts: 31; Member since: 03 Aug 2013)
Why would a company who needs to make a profit sell this at a loss? the device costs over $200 to make, and they ar putting a hell of a lot of money into everything else associated with the phone. No way on the $350.
30. JunitoNH (Posts: 758; Member since: 15 Feb 2012)
Why are you guys making such a big deal out of this? you are paying for the technology and intellectual property. On that note, Galaxy S4 cost about $237, yet Samsung is charging $659
plastic in not that expensive anymore.
34. najariner (Posts: 24; Member since: 31 Oct 2012)
that doesnt mean diddly squat, tell me when they decrease the off contract price
35. lola99 (Posts: 31; Member since: 03 Aug 2013)
Could someone link us to the quote by Leo that they're selling this for $350? I've looked and i don't see it. Direct quote, or something close, not this very same piece being shown all over the web.
36. VZWuser76 (Posts: 986; Member since: 04 Mar 2010)
I personally don't see why Google has to worry about what the carriers think. It may have been that way when they first launched as an alternative to WM and the iPhone. But with android now being recognized by the average consumer as something worth considering when looking for a new phone, they're in a better position. If carriers decided to stop carrying android phones, they'll find themselves in the same position as they were when they were unable to carry the iphone, not having access to devices their customers want. While Verizon did that with the Galaxy Nexus, they had other androids to fall back on. Dump the whole android lineup and it's an entirely different matter.
What I don't get is why OEMs should make phones to order for the carriers. The OEMs know more about phones than carriers do. It's not like other situations where you can order a product how you want, because the carrier is not the end user. It's basically the carrier telling the OEM what the customer wants, and going by history, they are clueless in that regard. Why cant carriers simply offer cell service, instead of trying to force their customers into their extra services which most anyone else can do better. All that effort marketing and investing in things many don't want is a waste of time & resources. If they streamlined their offerings down to good cell service, they'd have more money for building out their networks. They need to stop trying to be experts at everything (streaming services, apps, exclusive phones) and focus on their strengths, building a reliable network with good coverage.
38. squallz506 (banned) (Posts: 1075; Member since: 19 Oct 2011)
The nexus 4 is priced at less than what T-Mobile sells it for unlocked on the play store. I don't see why Google would sell the x for carrier prices.
42. rtol1 (Posts: 21; Member since: 18 Jul 2013)
Very true, but I think most people interested in a new phone aren't even aware that you can buy a device directly from Google. I could be wrong, but I don't think I've yet to see a commercial for a Google product that mentions anything along the lines of "Purchase directly from Google through the Play Store".
As for the Moto X, I don't think Google was aiming for a low price as the selling point. They just want the device on all carriers to get it in the hands of more people. I really do believe Google is using Motorola to gain some leverage over Samsung.
51. lola99 (Posts: 31; Member since: 03 Aug 2013)
Because it is a Motorola phone and motorola while a company owned by google, is a seperate company that needs to turn a profit.
43. roscuthiii (Posts: 1717; Member since: 18 Jul 2010)
Not sure if people are getting it yet, but $350 is not the MSRP, aka not what consumers will pay in store for the device. It's only what Motorola is selling the phones at in bulk to the carriers.
The numbers that would be nice to know are what carriers are paying other manufacturers for their devices. THen compare the mark ups.
46. scsa852k (Posts: 257; Member since: 16 Oct 2012)
I doubt it.
T-Mo sold Nexus 4 for $500 when it first came out.
48. RobotMan (Posts: 124; Member since: 13 Apr 2012)
You all want the price the same as it was assemble in China. Now can you all think why no body want to manufacture phone in the USA.
53. roldefol (Posts: 2855; Member since: 28 Jan 2011)
But Americans won't pay a premium for "Made in the USA". Just look at the success of Wal-Mart, who gets most of their goods from developing nations. It's a nice marketing tagline and it's great for the people in Texas who have plant jobs, but it's not going to convince people to pay more for the the same or lesser goods.
55. Ant34 (Posts: 193; Member since: 10 Aug 2013)
According to this article the X is being sold to carriers at a lower rate than the phones made in China. That should translate into a lower price for the end user.