In an interview with the Wall Street Journal, some analysts state that Motorola is only making a marginal profit of less than five percent off of its sales from the Moto G. That’s pennies compared to what they’re making off of the Moto X. It’s costing Motorola about $123 to make each unit, which they’re selling to consumers for a price of $199 for the 16GB and only $179 for the 8Gb. So that means they’re making about $76 and $56 off of each handset they sell, depending on the model. That’s not a whole lot. Thanks to TechInsights and the teardown of the phone they conducted, which provided us with the information on the cost and profit of the Moto G.
Sanford C. Berstein’s Mark Newman takes a look at the cost of each handset, what Motorola is making from selling it, and then lumps in other costs like overhead and manufacturing to arrive at the profit margin of under 5%. This extremely low price cost to the consumer as well as exceptional build quality and high-end parts has gotten the Moto G an unprecedented amount of publicity. Even though they are not making much money from these phones, they will more than likely sell a lot of them and make up for any profit they might have lost for offering a device at such a low cost.
The Moto G is similar in nature to its bigger brother the Moto X, but instead opts for the 4.5 inch HD LCD instead of the 4.7 inch 1280×720 AMOLED display on the Moto X. It also sports a snapdragon 400 processor and comes with 8GB and 16GB storage options as stated above, and has a 5MP rear camera.
Compared to other companies with low cost devices, Motorola clearly makes the least in terms of profit margins, but it seems that they are working angles different from making immediate money on their handsets. At least with the Moto G. It definitely shows that they’re trying to win over consumers with low-cost options without having to cut too much out of the other things people want in devices, which is high quality parts and a long time functioning phone. It’s obvious that Motorola is trying to better their brand image. Are they doing a good job with the first two phones they have put out since they have been operating under Google? Let us know what you think in the G+ comments.