Google Inc.'s Motorola Mobility group may be changing the hard and fast business rules when it comes to consumer electronics by showing U.S. production does not add much to the overall cost, says the consulting group IHS.
Motorola opted to build the new Moto X in Fort Worth, Texas, at a plant overseen by its manufacturing partner Flextronics International Ltd., rather than Asia, which is typically used in electronics to reduce production costs.
In a teardown study of the phone, released by IHS of Englewood, Colo., on Aug. 29, building the phone in Texas only adds $3.50 to $4 to the cost of the phone.
Total production costs, including manufacturing, are estimated at $226 by IHS. That compares to $237 to build the competing Samsung Galaxy S4 and an estimated $207 for Apple's iPhone 5.
The extra dollars spent to build in the U.S., however, allows Motorola and Google to tap into positive public relations, said Wayne Lam, senior analyst for wireless communications at IHS. In addition, customers can build a customized Moto X by going online to pick from a mixture of colors for the phone's back plate, front face and accents and still have the finished phone delivered within four days.
With a two-year service contract with a cellular provider, consumers can buy the Moto X for $199, which allows it to compete well against other smart phones, Lam said.
"Motorola is definitely vying to become the lower cost alternative to Apple and Samsung for the wireless carrier partners," he said.