Moto X Teardown Reveals that Made in USA Costs $5 Extra
The cost of doing business in the United States is just a handful of extra dollars.
The Moto X smartphone is an interesting device not only because it's one of the first Google-influenced Android devices from Motorola, but also because it's made in the U.S. In a sea of consumer electronics that are made in Asia, having a domestically assembled is both notable and unusual.
A teardown analysis by research firm IHS revealed that manufacturing costs for the Moto X are around $12, which is $4 or $5 higher than comparable phones that are made in Asia. A fist full of dollars may not sound like much when talking about one device, but the cost is significant when multiplied by hundreds of thousands of phones.
The added cost of producing the Moto X in Texas, however, has enabled Motorola to offer a customization program where consumers can customize the color scheme of their devices without a significant impact on delivery time. Currently this service is only offered to AT&T customers.
The total cost to build the Moto X comes to an estimated $221, with the major costs being the main processor for $28 and the AMOLED display at $62.50.
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And by the way it wont cost Motorola any thing, unless they don't sell, because its all passed on to the customer.
Remember this is just the manufacturing cost. This doesn't take into account the cost of developing the phone's hardware, software integration, and the countless testing cycles to get to the finished product. There is a lot of investment and overhead just to get to this point. Moto and all other handset manufacturers need to recoup the costs of this investment. Think of it like movies. The cost of a single DVD is 20 cents or less, but you pay $20 and receive a movie that may cost hundreds of millions of dollars to make.
Well, Steve Jobs said it in its time and made clear what the challenges were to bring back the "production" part to the US of A.
The first and more important part is workers willing to move in no time (overnight mostly) to keep manufacturing levels up to speed. And the technological part for facilities was the second issue he identified: they had factories ready for production in like 3 days, was it? China has been advancing in both points faster than the US of A, but it doesn't mean it will last forever. Besides, that's leaving the point of "21st century slavery" at bay.
In short, the "cost" itself doesn't reflect if these issues are solved/overcome or not, but if Motorola is willing to do so, I'm pretty sure more will join when more plants are built and can compete with China (or Malaysia) in price and productivity.
Cheers!
Justifying that you can get 300% profit out of it is what is troublesome.
By this logic, technology benefit is secondary to profit, which is clearly goal of any investment.
Yet, when we assume that future offers us ease of work or technological benefit, we forget that it is driven by profit. More correctly said, would be along lines of: profit does not drive technology, but rather produces secondary effect output which we consider benefit.
Same can be observed in any company currently. So why claim that is positive development? Is this only acceptable way of dealing in current commerce? Answer yes would be considered without further thinking.
Actually, I think that's all part of the calculation
The figure in the article does not include anything besides the cost of the parts.
The figure in the article does not include anything besides the cost of the parts.
What part of MANUFACTURING cost did you not understand? The BoM was $209 manufacturing was $12.
Should people pay what it costs in parts and assembly? No. That doesn't include R&D and software and sales and support and marketing and all those peoples salary. But its irrelevant. Every company has those and it has nothing to do with this article.
The point is it supposedly costs $5 bucks more to make it here. Even with their customizations. And if that's true other companies could do it here if they actually wanted should Samsung? Not really. Its not their country. Should apple have a long time ago? Definitely.
Well a 40'x8'x8'6" container with a volume 2720 cubic feet costs about $2500 to ship from China to the Unites States. That equates to less than $1 per cubic foot. I will make up a cell phone package of 6"x4"x2". At that size you could fit 36 phones into one cubic foot. So we are looking at under 3 cents per phone to ship from China. Specifically for a $2500 40' container, it would cost 2.5531 cents. So if you find there is a variance in the containers shipping rate from what I mentioned, we could use the general rule that for every $1000 a 40' container costs to ship, a 6"x4"x2" phone package costs 1 cent to ship.
For all those people saying that $5 extra isn't very much, I hope you realize that means it costs more than 70% more to manufacture this phone in America. That is astronomical and completely ridiculous. Don't think that difference is due to lower wages in China either. The majority of that difference is due to the EPA, OSHA, the highest corporate tax rate ever in the history of the world, ect. ect.
$5*48 million iPhones sold annually= $240 million annually or about a quarter/share (or a 9% decrease in dividend size) and the larger shareholders aren't going to put up with that.
Development is usually still done in rich countries, or by above average paid people in middle income countries, so quite simply put it doesn't factor into the cost difference.
I'm not really surprised it costs only $5 more to make a phone in the US, after all, they save a lot of shipping costs and other costs stay the same, plus the US is a low wage country among rich countries (Europeans, Australians and Canadians get better pay and better benefits).
The only caveat is that of course some parts of the production chain still involve low wage labor, for example in the manufacturing of some parts and the mining/recycling of the raw materials.
They still have to pay overseas shipping and importation taxes, just now from a different location.
Actually, Samsung is building a fab factory in Texas. Apple... not so much. Go figure.
And just for the record, trade is the lifeblood of any advanced economy. If you're so hell-bent on self-sufficiency, why not set out into the wilderness and build your own civilization from sticks and stones and upwards? The logic applies to international trade as well. Or it would, if most people weren't still tribals at heart.
And just for the record, trade is the lifeblood of any advanced economy. If you're so hell-bent on self-sufficiency, why not set out into the wilderness and build your own civilization from sticks and stones and upwards? The logic applies to international trade as well. Or it would, if most people weren't still tribals at heart.