If you thought there was no way Motorola was able to make money form the Moto G, think again. A new study posits that Motorola has worked in a tidy profit into each Moto G handset, and will clear about 5% from each sale once all is said and done. For consumers, this is great; we get a really nice device at a stellar price. For other OEMs, it could pressure them to follow suit.
Research firm TechInsights is speculating that the components inside the Moto G cost Motorola roughly $123. At an asking price of $199 for the 16GB model, Motorola would make around $76 per handset. Considering Motorola says they make money on every device sold, analyst Mark Newman from Sanford C. Bernstein & Co. proposes that Motorola’s total profit margin is less that 5% per handset after operating costs. If true, that gives them a max net profit of $2.50 per device sold at that price point.
Comparatively, Newman thinks Samsung has a 20% profit for similarly specced devices such as the Galaxy S3 Mini, and up to 28% on a Galaxy S4. A colleague of Newman’s notes that Apple makes a 30-35% margin on each 5S or 5C sold, so Motorola could be bucking a huge trend. This is, of course, speculative and lacking a factual basis, but these types of analysis often shed light on other issues within the mobile spectrum.
Since being purchased by Google, Motorola has seen a renaissance of sorts. In an effort to reinvent themselves, Motorola has done everything we could ask of an OEM. They’re responsive to consumers, active on social media, and competitively price their handsets. They also offer customization outside of cases and covers, and a host of great accessories.
With the Moto G, we are given a true mid-range powerhouse device. It’s a strong showing for Motorola, and a great follow-up to the Moto X. While a device with the specs of the Moto G fails to excite our tech-savvy souls, the pricing does. At $199, it makes an easy burner smartphone, or a step up for those on feature phones.
Motorola is striking a key balance for the US market, and setting a standard worldwide. While they don’t follow the Xiaomi model of selling a device at cost and making profits up via add-ons like cases or accessories, they also don’t go with the market flow of selling a device for maximum allowable profit. For a worldwide stage, Motorola is set up for success. The Moto G will go over quite well in emerging markets, and prices itself at a level other OEMs don’t seem willing to approach. If Motorola plans to actively encroach on Samsung’s dominance of Android, theirs is a solid game-plan.