The idea that putting together electronic devices in the U.S. is far too expensive has become a popular belief over the past decade, and while there are good reasons to believe in that sentiment, there are also reasons to think otherwise. A teardown of the Moto X has revealed that while the device costs $226 to build, only an extra $4 is added on to the price when assembling it in the U.S.
Since Motorola used its "Made in Texas" label as a way to attract patriotic customers, it received the benefit of more buyers without almost any price increase. Although the Moto X is cheaper than the iPhone, it retails for a hefty $579 without a contract.
Assembled in America
The customization options were marketed quite a bit by Motorola, but its "Made in America" credentials were marketed extensively in almost all of the Moto X advertisements. Since the Moto X is assembled in Fort Worth, Texas, Motorola was able to increase its customization options without adding a significant amount of time to the shipping process.
In total, the Moto X costs $226 to manufacture and has a $12 assembling cost, according to a teardown analysis by IHS researchers. Compared with most manufacturers in Asia, which other smartphone companies use, the assembling price only increases by $4 to $5.
The minimal price difference, combined with Motorola's ability to provide dozens of color customization options, has allowed the Moto X to gain attention so far. By assembling the units in Texas, a custom device ships within four days of ordering.
First Motorola/Google Phone
Despite retailing for a lower price than the iPhone 5, the Moto X actually costs $19 less to manufacture. The Samsung Galaxy S 4 on the other hand, costs $11 more than the Moto X. These price differences come from the agreement that Motorola has with carriers. Motorola only asks for a $300 subsidy, whereas Samsung and Apple both ask for $400 subsidies on their phones.
Motorola's Moto X uses a year-old and two chips from Texas Instruments according to the IHS teardown report.
"What Google and Motorola are trying to do is not play the game of 'bigger is better' that everyone else is playing," said Wayne Lam, an IHS principal analyst. "They are looking for ways to differentiate themselves from the pack and push the user experience in a new direction."
The primary chip, which the Moto X relies on for most of its features, is a Qualcomm Snapdragon S4. According to IHS, this processor costs around $28. The chips from Texas Instruments work to handle gestures as well as listen for voice commands and cost just $4 to $5 together.
"Motorola has put together a novel combination of electronics and software, and has done it in a very power-efficient way," Lam said.
Compared with other smartphones that dominate the market, the Moto X is a nice addition between its customization options and its "Made In America" label.