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Xoom costs $33 more to make than iPad, priced $70 higher

updated 09:20 pm EST, Mon February 28, 2011

Motorola Xoom costs 275 to make, expensive vs iPad

Cost breakdowns of the Motorola Xoom have suggested that its price is disproportionately higher than what it costs to make. UBM TechInsights estimated on Monday that the Android 3.0 leader costs $278 in raw parts versus $235 for a similarly equipped 3G, 32GB iPad. The difference came even as Verizon charged $800 for the Xoom off-contract where its Apple counterpart cost just $730.

The most expensive additions were the five-megapixel rear and two-megapixel front cameras, which UBM estimated brought an extra $14 to the price. Motorola's choice of a slightly larger 10-inch, 1280x800 screen also boosted the price by $5. Other factors weren't fully detailed but likely involved differing prices for the Tegra 2 processor, 1GB of RAM and cellular chipset, although costs are expected to have come down for Apple over the past year.

Motorola chief Sanjay Jha has already defended the price by noting the free upgradability to LTE in the spring. During a presentation at the Morgan Stanley technology conference on Monday, he also argued that his company had "shot for performance" from the start and was aiming to be competitive with future iPads and other tablets, not just what was on the market so far. iSuppli, however, responded by noting that Apple's slightly smaller display was higher quality for using IPS, leading to richer colors and wider viewing angles than the sometimes washed out Xoom display.

The assumption of higher value is a risk for Motorola. Its pricing is a calculated bet that the iPad shown at the March 2 Apple event isn't comparable in features at a lower price. Apple has routinely said it prices the iPad "aggressively" and has had the benefits of a year-long advantage, economies of scale and long-term contract deals not available to its fellow American competitor. [via WSJ]



By Electronista Staff
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Comments

  1. thebiggfrogg

    Fresh-Faced Recruit

    Joined: Jul 2007

    +9

    So...

    $33 to make, $70 more to buy, innovation by DUplex machine, AND half as good.
    Go Moto! Loved the RokR!

    Comment buried. Show
  1. ilovestevejobs

    Fresh-Faced Recruit

    Joined: Feb 2007

    -30

    Well don't forget

    The cost of R&D, marketing, testing etc etc which you they don't disclose in this article.

    Basically the same piss poor excuse that isheeps use defending their s*** overpriced, under feature crAPPLE products

    Comment buried. Show
  1. chippie

    Fresh-Faced Recruit

    Joined: May 2009

    -21

    Sorry, But Apple Does Not Set The Price For

    other companies products! So what a useless article! Oh, this was meant to be an apple advertisement. Gotcha!

  1. dagamer34

    Fresh-Faced Recruit

    Joined: Apr 2007

    +1

    Hmm..

    Are they considering the price of the 4G add-in card with shipping and handling?

  1. climacs

    Dedicated MacNNer

    Joined: Sep 2001

    +14

    get your hate on ilovestevejobs

    I feast on your bitterness every time I check out AAPL's price and think about how many dozens of times my original investment I made.

  1. SierraDragon

    Mac Elite

    Joined: Mar 2004

    0

    Where do you guys get your math?

    "Cost breakdowns of the Motorola Xoom have suggested that its price is disproportionately higher than what it costs to make."

    C'mon, we know you are journalists not engineers, but the math is pretty basic. Mark up the raw cost the same and the Xoom is priced disproportionately LOWER than what it costs to make.

    In any event the Xoom does remain overpriced for the market. Apple has created a mobile market space very difficult to compete in.

    As an aside, what is really entertaining is to watch MS flounder along dreaming of competing in mobility but unable to copy fast enough.

  1. neocyberdude

    Fresh-Faced Recruit

    Joined: May 2000

    +1

    Margin vs. Markup

    Percent gross margin is a better number to compare. Markup is misleading and doesn't relate to a company's financial statements. Based on the numbers from the article, Apple is selling that model of the iPad at 67.8% GM and Motorola is selling the Xoom at 70.3% GM. That's a 2.5% difference in gross margin percentage. I wouldn't describe that as "disproportionate." And of course that's assuming that the cost figures are correct. Since neither company is revealing their costs, those numbers are educated guesses at best. Plus that's the cost of the parts and does not include labor. And besides all that, who really cares? :-) As climacs says, just watch the stock price.

  1. facebook_Omega

    Via Facebook

    Joined: Mar 2011

    -6

    AND........

    It does a 1000% more! What an amazing Bargain! It's TRULY MAGICAL!

  1. nostrademas

    Fresh-Faced Recruit

    Joined: Feb 2006

    -1

    Re: Margin vs Markup

    You used the iPad costs for both calcs. The Xoom has a 65.25% GM based on the numbers given.

    But I agree with all the comments. And people far too often think that e.g. (iPad retail price)-(raw parts cost)=(Apple profit). Completely clueless.

    Comment buried. Show
  1. chippie

    Fresh-Faced Recruit

    Joined: May 2009

    -13

    Sorry, But Apple Does Not Set The Price For

    other companies products! So what a useless article! Oh, this was meant to be an apple advertisement. Gotcha!

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