The new Moto G from Motorola is one of the dollar-for-dollar best deals we’ve seen for smartphones in a while – probably since the launch of the Lumia 520. While the Moto G’s hardware isn’t going to compete with that you’ll find in this year’s flagships, it just costs so, so much less that it feels like you’re practically ripping Motorola off. Well, you’ll be glad to know that you can place your Moto G order with a clear conscience, as it turns out that while the company isn’t making much of a profit at all from Moto G sales, it is getting at least some return on its investment.
A teardown suggests that the 16GB Moto G (the $200 version) has hardware that adds up to about $123 in value. When you factor in the added expense of manufacturing, advertising, corporate overhead, and all that, analysts suggest that Motorola is turning a profit of just under $10.
We often talk about how much better a value the Moto G is compared to other mid-rangers, and the analysts agree: compared to the 5% profit Motorola sees with each Moto G sale, Samsung’s making something like 20% profit on a phone like the Galaxy S III Mini. And as we look at flagships, the profit margin keeps climbing.
So to everyone saying that super-cheap quality phones are only possible when you’ve got someone like Google behind your back to subsidize the low price: that’s simply not true – smartphone companies just need to rein-in their profit expectations. After all, a 5% margin is much higher than plenty of industries expect to see.
Source: The Wall Street Journal