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]