Does Motorola actually have any stable profit from Moto G?
Google figuratively squeezes margins on the handset
Since Nokia Lumia 520 launched, the new Motorola Moto G is probably the top deal we have seen so far. So let’s have a look at how much money does Motorola make from the super budget friendly Moto G. When you think of it, does Motorola actually have any stable profit from the little fella?
According to the Wall Street Journal, things look really negative, as Google figuratively squeezes margins on the handset and apparently Motorola has worked in a really tidy profit. In fact, the company clears only 5% from each sale of a Moto G once the deal is done. Customers can live with that- they get a really decent smartphone for a really low price while they’re practically ripping Motorola off. On the other corner we also have a bunch of OEMs who could even follow suit. At least, as the device is quite popular, that will return some of Motorola’s investments. But let’s get more detailed view on the matter. A teardown of a 16GB version of a Moto G suggests that the device’s hardware is worth approximately $123. And that is for the $200 version.
Before you do the maths, keep in mind that there are also expenses for manufacturing, advertising and corporate overhead, which leaves the company to get less than $10 per unit overall. According to the analysis, after all the operating costs, a single Moto G gives Motorola a profit of $2.5. In order to explain how terrible this seems, in comparison to Moto G, Samsung Galaxy S3 makes Samsung about 20% per unit. Motorola has been really responsive to their customers and since they have been purchased by Google, they have never failed to offer great deals and customization outside of accessories for their handsets.
After all, Moto G is a pretty nice mid-range powerhouse smartphone for such a low price. It’s sad when they say that in order to produce such cheap but quality devices; you need some like Google watching your back. But that is simply incorrect. In all, companies need to rein-in all profit expectations. Either way, on the international stage, Motorola is performing pretty successful and Moto G is a barrier of low cost high quality that other companies won’t seem to overcome.
Source: Wall Street Journal
