Why so cheap?

David Rosen

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OK so not to look a gift horse in the mouth here haha, but why is this phone only going to be $399? I assume that's the smallest model, so even assuming the 64gb at $499 perhaps... Why is it so cheap? It seems like it's pretty much top of the line otherwise... I've gone from Note 3 to Note 4 and would go Note 5 but I'm sick of Samsung software issues (and have no interest in rooting), and aside from the processor (which is still one of the best out) and 1GB of RAM less, the Moto X Style is looking like a great alternative... So is there something else about this phone that's much lesser than the Note 5 that makes it so much cheaper?

Just curious.
 

razortaz18

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I think, it has to be cheaper with their plan to am it unsubsidized. Not many people will pay $800 for a phone.

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worldspy99

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OK so not to look a gift horse in the mouth here haha, but why is this phone only going to be $399? I assume that's the smallest model, so even assuming the 64gb at $499 perhaps... Why is it so cheap? It seems like it's pretty much top of the line otherwise... I've gone from Note 3 to Note 4 and would go Note 5 but I'm sick of Samsung software issues (and have no interest in rooting), and aside from the processor (which is still one of the best out) and 1GB of RAM less, the Moto X Style is looking like a great alternative... So is there something else about this phone that's much lesser than the Note 5 that makes it so much cheaper?

Just curious.

Motorola finally wants to not be held hostage by the carriers. This is one way by selling the device cheap directly to people it allows them to do that.
 

landale

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OK so not to look a gift horse in the mouth here haha, but why is this phone only going to be $399? I assume that's the smallest model, so even assuming the 64gb at $499 perhaps... Why is it so cheap? It seems like it's pretty much top of the line otherwise... I've gone from Note 3 to Note 4 and would go Note 5 but I'm sick of Samsung software issues (and have no interest in rooting), and aside from the processor (which is still one of the best out) and 1GB of RAM less, the Moto X Style is looking like a great alternative... So is there something else about this phone that's much lesser than the Note 5 that makes it so much cheaper?

Just curious.

It's not so much that the Motorola is cheap it's that the other phones it competes with are massively overpriced. For instance when the iPhone 6 first came out it was determined it cost around $210 to build and assemble but it sells for $649. The S6 edge with 64GB of storage cost around $290 but sells for $799.

It's basically that Motorola is selling their phones at lower margins to try and increase sales and rebuild their brand. It also doesn't hurt that they cut a few corners like using a Snapdragon 808 processor vs 810, LCD instead of AMOLED display and not including some other high end features like wireless charging and fingerprint scanner.
 

David Rosen

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So basically they're doing what a lot of game consoles do, where they underprice just to get back into the market and carve out some extra market share. It's obviously not in most businesses interest to usually charge less for stuff haha (not that I don't wish they would). So that's why it was a little confusing/surprising.

Out of all the shortcomings, the only one I care about at all is the 808 processor, but even that, is a step up from my 805, and I've read some things about it maybe being better than the 810? Is that right? So that's still nice....
 

landale

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Pretty much. Let's be honest the smartphone market is dominated by Apple and Samsung so you need to do something to standout. Selling your flagship device carrier unlocked at a reasonable price is one of the best ways to standout in a crowded market full of also rans from HTC, LG and Sony to name a few.

Based on the reviews of the LG G4 which also has the 808 most benchmarks are pretty close to the 810 as there is less of a need to throttle down due to heat. The only area where it falls short is in the GPU department but it is still an improvement over last years 801 in that regard even if it's still slightly below last years 805. My guess is that the more advanced CPU marks will balance it out for most people.
 

getbretweir

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a lot of the price we pay for Samsung and Apple covers their marketing expenses. combine that with the kick back to carriers, which moto isn't paying, and you're left with an awesome phone for $399 ... hopefully the American consumer will recognize and support this, not just us phone nerds!

Posted via the Android Central App
 

edgar

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They have taken their marketing to the internet, youtube and blogs. They are making one phone in the US. One single phone works on all carriers. This makes an easier, cheaper assembly. They are selling mostly online directly from motorola.com. They will also be selling through bestbuy and amazon, but uncontracted. Carriers make money off sold phones and additionally carriers add bloat. The SD 808 will help save dough.
 

Ry

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I laugh when people think these phones should cost near the cost of materials.

Materials
+ hardware engineer salaries
+ software engineer salaries
+ firmware engineer salaries
+ licensing costs
+ marketing costs
+ keeping the lights on
+ making a profit for your investors

...

Posted via Android Central App (Moto X)
 

Woosh

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I laugh when people think these phones should cost near the cost of materials.

Materials
+ hardware engineer salaries
+ software engineer salaries
+ firmware engineer salaries
+ licensing costs
+ marketing costs
+ keeping the lights on
+ making a profit for your investors

...

Posted via Android Central App (Moto X)

I laugh when people think these should cost 3x cost of materials.

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Ry

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I guess these OEMs should all be non-profits. lulz.

Posted via Android Central App (Moto X)
 

mabr82

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I laugh when people think these phones should cost near the cost of materials.

Materials
+ hardware engineer salaries
+ software engineer salaries
+ firmware engineer salaries
+ licensing costs
+ marketing costs
+ keeping the lights on
+ making a profit for your investors

...

Posted via Android Central App (Moto X)

Some people don't really understand business.

I reckon the iPhone clears about 20% net profit after all deductions

Moto will be making about 5%.

Companies don't go bust making a profit.

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Cakefish

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$575 here in UK though D:

That's still a lot cheaper than the flagships.

Yeah, we get ripped off in terms of tech prices.

Sent from my Nexus 5 using Tapatalk
 

getbretweir

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Some people don't really understand business.

I reckon the iPhone clears about 20% net profit after all deductions

Moto will be making about 5%.

Companies don't go bust making a profit.

Posted via the Android Central App

as a small business owner it always amuses me that so many people don't understand the cost of doing business ... I used to own a pressure washing company, and people would say "$500 for spraying water on my house?" ... yeah, water + chemical + labor + gas + marketing + rent + truck payment + insurance + repairs + maintenance + phone/internet + supplies ... oh by the way I have a family to feed to and this isn't a charity so if you don't mind I'd like to make a few bucks too!!

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stanleywinthrop

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a lot of the price we pay for Samsung and Apple covers their marketing expenses. combine that with the kick back to carriers, which moto isn't paying, and you're left with an awesome phone for $399 ... hopefully the American consumer will recognize and support this, not just us phone nerds!

Posted via the Android Central App

Bingo. By marketing direct to consumer, Moto is attempting to cut out the carriers and their share of the profit.
 

anon(9072051)

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Motorola finally wants to not be held hostage by the carriers.

No doubt this is exactly how Motorola wants to spin their decision, but y'all may be jumping the gun a bit in your willingness to cast Moto as the virtuous white knight in this fairy tale. Time will tell if these Moto phones never grace the shelves of any carrier stores (which I kinda doubt) or if Moto attempts to pry itself free of or significantly alter any of its historic involvements with specific carriers, especially Verizon here in the States.

And that $399 price tag is also a bit of marketing smoke and mirrors. I mean, hands up everyone who is determined to pay no more than $399 + shipping and handling for your spankin' new X Style!

Don't get me wrong. I'm sure the phones will be awesome no matter what anyone pays for them. I just think some tech journos have been turning marketing hype into stories about heros, damsels and dragons.
 

getbretweir

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I don't think anyone is thinking moto is the white knight ... we all know this is business, dollars and sense, nothing more nothing less.

that said, they do have balls I'll give them that, they also know they're consumer, well OK, at least me and you that love pure android and bloat free phones, so indirectly they're easy to root for ... with the likes of Apple and Samsung, they're a bit of an underdog, and we all love underdogs.

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jephanie

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I don't know how Moto and other cell phone manufacturers' models work but a basic retail model is based on a 40/10 discount basis. So, based on a stated retail price of $100, the retailer gets a discount of 40%, then a stacked 10% discount. So the wholesaler sells the $100 item to the retailer at a price of $54. The retailer then marks up the item to a price that yields them a reasonable profit margin based on their individual business. So the manufacturer is likely selling their product to the wholesaler at a price a bit under that $54 price so the wholesaler gets a profit. So a product's markup is exponential compared to it's actual manufacturing price.

With smartphones, it seems there is no wholesaler, so it's a direct manufacturer-to-retailer relationship. And if we apply the 40/10 discount model to this relationship, a $699 retail priced smartphone's price paid by a carrier to the manufacturer would be $378. So if Moto were selling their base $699 model to a carrier for $378, they can sell it direct at $399 and make a higher margin per unit. So the price totally makes sense to me.

The main question is whether or not they move the equivalent volume of units in order to make a cumulative profit from their efforts. That being said, I have also seen some comments that indicate the Pure Edition/Style version is a "loss leader" for the company to get their true profit-maker, the Moto G, more press as part of the Moto family since it is their best-selling model.
 
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