Teardown shows that Moto X costs about $221 to build
0. phoneArena 27 Aug 2013, 18:14 posted on
There has been a lot of chatter about the Moto X and the hardware used in Motorola's new flagship device. Some think that the innards are mid-range, even though the performance of the device slides into the higher bracket because of the way Motorola has melded the software and hardware. Well, from a strictly dollars and cents perspective, the Moto X clocks in just under the Samsung Galaxy S4 on cost to build...
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1. Sniggly (Posts: 6761; Member since: 05 Dec 2009)
And this doesn't even include the R&D Motorola put into coming up with the X8 architecture.
Case closed. Motorola isn't skimping on this device.
4. ocilfa (Posts: 331; Member since: 03 Aug 2012)
Agreed on R&D cost, but the Nexus 4 perfectly shows how phones are horrifically overpriced.
7. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)
Wonder if there is a "Reference" Android device by any Android OEMS using Intel i3 chips? Constructed with Liquid metal with side air vents for the CPU to cool down: Ubuntu edge phone!
9. Sniggly (Posts: 6761; Member since: 05 Dec 2009)
You have to remember that as a business, companies have to make a profit. By definition a business has to bring in more money than they spend. Granted, if you assume that the company makes twice as much as it spends on a phone, that looks like a fat profit. However, you have to remember all of the money that has to go into company expenses which will never directly turn a profit. If a company isn't making enough money from its sales, it has no way and no incentive to funnel money into newer and better technology.
At this point Motorola has not only used unique materials in phone construction (Kevlar, for instance) and developed high capacity lithium ion batteries which remain impossibly thin (leading to its Razr series) but now they've come up with a processing architecture which allows the phone to do tasks never before accomplished without destroying battery life.
This is a pretty good list of accomplishments for a company that has lost money for the past 5 years.
Besides, it's probable that Google is subsidizing Nexus 4 costs, which means money is still being lost.
30. boosook (Posts: 929; Member since: 19 Nov 2012)
No, the Nexus 4 is "underpriced" (well... subsidized), meaning that Google pays part of the price to LG because they hope that you will buy their services (apps, music, games, books) with the google apps that come preinstalled .
The price of the Nexus 4 in countries where LG sells it directly because there is no Google Devices Store is much higher. When it was released, the price in Italy was about 450 euros (that is $600), now it still costs over 350 euros.
35. ardent1 (Posts: 1991; Member since: 16 Apr 2011)
Sniggly, it's obvious you don't understand US Gaap, e.g. basic accounting standards for publicly traded firms subject to Reg S-X et al.
Sales less Cost of Goods Sold = Gross Profit (GP)
GP less SG&A expense less Other Indirect Costs less R&D = Operating Profit or EBIT.
Included in SG&A expense is warranty costs, marketing expense, etc.
Here's the point lost on the non-finance readers. The gross profit margin (GP / Sales) is abysmally poor. The story is Moto is charging $350 to the carriers for each device for which the estimate is $221 to build. That leaves a GP of $129 or gross profit margin of about 36.9%. That is before marketing spend, setting up reserves for defective devices, returns, etc. AND before R&D spend. That means if Moto continues to generate less than 50% gross profit margins, it will be forced to quit the smartphone hardware business. Their ROIC would be too low to stay in business.
There is not enough juice in the GP to launch an adequate marketing promo similar to Apple or Samsung. Or said differently, after what little Moto can spend on advertising, there's no much money left to fund FUTURE R&D spend.
Simply, Moto is f*cked. Why -- since Moto can't control the market price (aka the sale price since that is being dictated by Apple and Samsung), it has to control its expenses. And, if it can control its expenses to generate sufficient GP, there's not enough money left to fund future develop. Don't expect Google to fund the hardware sinkhole.
Case closed?? -- more like good luck Moto, it was nice knowing you.
37. Sniggly (Posts: 6761; Member since: 05 Dec 2009)
You actually helped prove my point, Ardent, which is that Motorola is definitely not being a cheapskate with this device.
You're obviously a smart guy. It would help if you learned to pay attention to what other people are saying.
2. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)
$38 for a Snapdragon 600... Halfbaked A15+A9 is more expensive than Exynos™ custom build Soc. And Kernel for perfect up threshold+ down threshold CPU, voltage settings, CPU governor on demand, so it's just a Rooted device with a ©Rapdragon 600.... What a joke...
3. Shatter (Posts: 1983; Member since: 29 May 2013)
Could of spent like $10 more and put a snap 800 and a 1080p screen on it.
5. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)
And Moto is telling consumers that this device you will experience ™Smoothness™ yea like people buy Intel i7 for super fast, zippy actions, not dam smooth! i5 chips or i3 which Moto claim.
What a joke
20. Shatter (Posts: 1983; Member since: 29 May 2013)
You don't buy an i7 for smoothness, the benefit from it is actually next to nothing for 99% of people. The i7 performs exactly the same as the i7 in almost everything, it only has benefits in applications that use more than 4 cores + hyperthreading (next to nothing outside of benchmarks.)
If you want to just run Internet, general programs like itunes, and windows smoothly an i3 + 120GB SSD + 4gb of ram is sufficient.
8. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)
They could use a 4000Mah battery like the RAZR Max. Battery technology is there, but no OEMS wants to progree, nor add the cost of additional £10+ on expenses...
11. Berzerk000 (Posts: 3936; Member since: 26 Jun 2011)
Motorola said if they hadn't have used their X8 architecture, they would've needed two extra batteries to achieve the current battery life on the Moto X with its capabilities.
I would gladly take a 720p screen running the X8 chip with great battery life over a 1080p screen and Snapdragon 800 with below average battery life.
14. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)
Me2... 720P with 477Ppi to compensate the 1080p battery and CPU hog!
So looks like the S800 can't be overclocked to 2.7 with Custom Kernel or that's the Max 2.3Ghz.... Waiting for Roms and Kernels
17. Berzerk000 (Posts: 3936; Member since: 26 Jun 2011)
A 720p display that has 477 ppi would be like... 3 inches. I think 4.3-4.5" 720p is, in all practicality, negligible compared to 400+ ppi displays.
16. 14545 (Posts: 1095; Member since: 22 Nov 2011)
I might buy that if they hadn't still skimped on the battery. I mean 2200 mah, com'on. At least do the 2500 mah that was in the Razr HD. Or better yet, most would be forgivable if they had kept extendable memory and thrown in a 3k mAh battery. Even if it's slightly wider, I think most of the "average" customers wouldn't have noticed the slight thickness difference.
19. Berzerk000 (Posts: 3936; Member since: 26 Jun 2011)
The Moto X is already over 10 mm thick, yes it's curved to be more ergonomic and feel thinner in the hand, but that can only do so much. A 3,000 mAh battery would've made it at least 12 mm thick. 2,500 isn't too much of a stretch, but I'm sure they were really struggling for space with 2,200 mAh.
21. Shatter (Posts: 1983; Member since: 29 May 2013)
They can pack the battery together to increase mah without making it thicker, the battery will weigh more though.
23. 14545 (Posts: 1095; Member since: 22 Nov 2011)
I think part of the reason, IMO, for the thickness is because of the rounding job. I mean they squeezed 3500 in the pretty thin maxx last year. I could be wrong, but that's just how I see it.
29. ToddW (Posts: 4; Member since: 27 Aug 2013)
You have to remember, the Razr Maxx has an extra square inch of surface area from the width and height.
Sure the Moto X is slightly thicker at its largest point but it is only that size for a small area.
18. 14545 (Posts: 1095; Member since: 22 Nov 2011)
Exactly. I doesn't cost that much more. Or, since android isn't optimized, or doesn't have the ability, to run >4 cores anyway they could have at least included a 400 and a 1080p screen. You can't tell me the Pro, last years chip, is better on battery life than the 400 at the same clock speed? My argument is that it is still last years technology vs. this years.
22. Berzerk000 (Posts: 3936; Member since: 26 Jun 2011)
The Pro by itself isn't as power efficient as the S400. But, with Motorola's dedicated low power cores that take care of managing the sensors, voice recognition, and running background tasks, it probably is just as efficient as the 400. Plus, there is absolutely no way that a Snapdragon 400 would be able to run a 1080p display with the Adreno 305.
24. 14545 (Posts: 1095; Member since: 22 Nov 2011)
I'm asking, not saying. You don't think they could have gotten a custom 400 with adreno 320? I think that would have been more power efficient than the Pro. If battery efficiency was really their goal. I honestly don't know quite enough about CPU+GPU combos to know if that is possible or not. Just seems to me that the 400 would have been a better choice for battery life.
Unless it is really a 400 frankenchip anyway under the name of "Pro"?
32. Berzerk000 (Posts: 3936; Member since: 26 Jun 2011)
A 400 with Adreno 320 would just be the S4 Pro basically. Most variants of Snapdragon 400 use either quad A7 or dual core Krait 200/300, the X8 chip in the Moto X uses Krait 300. The only way a Snapdragon 400 would be moderately more efficient (without Motorola's 2 dedicated cores) is if it would be using the quad core A7 configuration, but the Adreno 320 would basically eliminate that power efficiency as the Adreno 305 is (I assume) a large part in the efficiency of the 400.
The X8 system gives a good balance between efficiency and power. Without those dedicated cores, I doubt anything comes close to being as efficient as the X8 system without being crippled by lack of performance.
28. ToddW (Posts: 4; Member since: 27 Aug 2013)
The MSM8960DT (Snapdragon S4 Pro) found in the Moto X is actually better than the Snapdragon 400. The GPU in the Moto X is actually more similar to the Snapdragon 600 cut in half.
The 400 uses Krait 200 cores, while the MSM8960DT contains Krait 300 cores, which are substantially more efficient.
34. sgodsell (Posts: 1028; Member since: 16 Mar 2013)
Android isn't optimized or have the ability to run >4 cores. What a lie. Clearly you have never looked at the kernel code. If you have the cores it will use them.
10. promise7 (Posts: 331; Member since: 03 Jul 2013)
$216 to build a Moto X and $237 to build a Samsung Galaxy S4? How much does Verizon, AT&T, T-Mobile, etc. buy them for?
13. Berzerk000 (Posts: 3936; Member since: 26 Jun 2011)
The carriers buy them for $350. That's why some people expect the contract price to drop soon if sales don't go so well at first, there's a lot of room for profit.
26. MorePhonesThanNeeded (Posts: 618; Member since: 23 Oct 2011)
You're forgetting labor and distribution which isn't even included in that whole $221 build. That's just the sum of the parts the phone is actually comprised of, not sure they worked in how much per phone it costs to pay someone to cobble it all together and then quality test the bastards before packaging and all that other mess.
Carriers buy in freaking bulk, so that in now way applies to how much they are actually saving considering they are taking a hit to sell phones that might not ever get sold. When they don't the carriers lost that investment and have to clear that bum stock out.
Motorola did some work and it makes sense to stop throwing horsepower at everything and working on optimization of everything. It's cool to have nice features but if every damn phone sports the next most powerful piece of silicon, why is it they all vary in performance of the exact same OS? I'm not even talking about benchmarks, I just mean running the OS. The OS is actually being updated a lot slower than these newer more robust processors are being deployed and these chipsets barely yield any sort of difference in what they do besides push more pixels in an rather dimunitive space and continue to suck battery life at every turn.
We call our phones smart phones but are they actually all that smart? They just do everything they are told and this is the first time I actually saw an OEM actually doing something worthwhile, sure you people can talk all day about last years tech or this years tech but this years' newest still does that same thing last years does just a little bit bigger. I think the Moto X is actually a "real" smartphone, it listens for commands and is smart enough not to drain your damn battery doing it, now if it could charge at appointed times I choose then I'd be set.
36. ardent1 (Posts: 1991; Member since: 16 Apr 2011)
The $221 bogey includes both (i) DIRECT labor and (ii) distribution costs associated with manufacturing since these costs are captured in inventory costs. The $221 bogey does not include SG&A expense.
Sorry, but you need to brush up absorption cost accounting as well as US GAAP per Reg S-X.
12. PootisMan (Posts: 199; Member since: 02 Aug 2013)
Hence the reason they should price this phone at least $399 or less off contact and unlocked.
27. ToddW (Posts: 4; Member since: 27 Aug 2013)
Why should a phone that costs 16-20 dollars less to build than the Galaxy S4 be sold for $241 less?
15. AfterShock (Posts: 2534; Member since: 02 Nov 2012)
I'm packing HTC, but respect Moto.
This phone is a good gamble and I'm thinking it may be respected and viewed more then the sum of its parts in time looking back as intended.
25. Charlie_boy (Posts: 55; Member since: 04 Jan 2013)
This translates to the hardware side of the Moto X being top shelf (since the article is comparing it to the S4). Will people stop claiming that the Moto X is still mid-range?
31. boosook (Posts: 929; Member since: 19 Nov 2012)
I've always hated these teardowns... I'm saying this now but I was saying it even for the iPhone: the cost of R&D MUST be considered, there's hundreds or even thousands of people involved for years: designers, software developers, engineers, graphic designers and many more. Yet, every time a new phone is released, we are told that it costs only a fraction of its price to build, that's simply not true, simply doesn't make sense.