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UBM TechInsights broke down the Motorola XOOM and concluded that its components all come together for a combined price tag of $278. The high-end 3G model of the iPad, on the other hand, was a bit cheaper at $245. I don’t want to use the cliche “shocker” tag, but I have no choice. It has a dual core processor, a front-facing camera, 1GB of RAM compared to iPad’s 256MB. It’s literally cutting edge technology. Its retail price being more expensive also doesn’t shock me now when you consider the fact that it will also get a 4G upgrade in the near future, a process that seems free to the end-user but is likely added into the retail cost of the Motorola XOOM. [Wall Street Journal]
Quentyn Kennemer, the “compared to iPad’s $245”, is that based on what it cost when it was released or what it cost now?
and the “XOOM Components Cost $278”, does that include the LTE radio?
So the good news is that there is a lot of room for price dropping when more tablets start hitting the market.
Do we know about the Galaxy Tab cost given that that dropped price by quite a lot so it’d be interesting to see the comparison and how much really is early adopter cost.
They didn’t say @kam.
How can this be? The Xoom only cost slightly more than the iPad to make with so much more hardware. . . that’s just not possible because Apple has purchase 60% of all displays. . . and everything else to make mobile products leaving the rest to fight over 40% thus raising the prices astronomically.
/sarcasm
they should sell, the wifi only for 399.99 then im waiting to buy a tablet in Nov
See, this is what kills me. At the most, I woulda launched the tablets at $550 for iPad, $600 for Xoom. $600 and $650 at the most.
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I woulda been happy with those prices at launch if I were the manufacture.
Cliche “shocker” tag??? Isn’t called “sticker shock”? :)
I agree with jroc. Gouge gouge gouge…
UBM reports the combined price of components, not assembly costs, shipping, costs associated with marketing, distribution and sales or import duties. Total supplier costs are considerably higher than component costs, alone.
u guys complain about the cost but you are forgetting that there are other things that go into this product…
how about how much it costs to pay someone to put it together (or a machine to put it together)then install the software, make sure it works, then someone to box it up and ship it, and someone to create the packing material, and someone to create the design and advertising on the packing material, then someone to ship it all over the globe, then someone to create advertising for the product itself, and finaly the retailer has to make a profit off of it…
if you think about what this thing is, it’s priced just about right, i mean it’s about as fast as my toshiba tablet pc…
the only thing that is stopping me from ditching my old machine and getting one of these tablets is that i can’t get my work done on these tablets as the software isn’t avalible…yet…
Wow, you people expect to pay $600 for this slate when the components cost almost $300? So you are basically saying that all those engineers, designers, marketing people, management, executives, etc, should work for free? Yea, so the components are $300, how much is it to assemble? $25, $50? Let’s say they have been working on this for 10mo, and devoted a team of 1000 people to this (engineers, designers, marketing people, management, executives, manufacturing, distribution, end sales). 1000 people times 40hr a week is 40,000 man hours each week, times 10 months gives us 1.6 million man hours to bring this tablet to you.
Let’s allow these people to average $25/hr pay rate, we have to repay $40,000,000 ($40mil) in labor costs alone. Then the company has to make a profit, if they don’t they won’t stay in business. And a public company has to return some of those profits to the investors (who fronted all the money to make this all possible)…
The larger intricacies of (global) business clearly allude most gadget people…
I am sure (as the article states) this is the price of components only. You have to add assembly labor and other overhead costs. I wouldn’t be surprised to hear it costs Moto $350-$400 out the door. We may be able to pick one up for $499-$599 some day, but much less is unlikely.
Why does this site just continue to try to take jabs at apple products its gotta be tiring by now because its very boring to read all the time
@Darrick
FINALLY!!!!!! Thank you for saving me having to type that.
@ Darrick
If costs to build the unit is $245 and they sell it for $350 ($105 markup) there is CONSIDERABLE profit to be made.
Let me break it down. At $800, Moto expects to sell 800,000 units in Q1 alone – at $105 markup x 800,000 units, they would be looking at a gross margin of $84,000,000.
If they expect to sell 800,000 units at $800 a shot, imagine how many they would sell at $350!! Maybe millions in the same time frame. Even if they ONLY sold 2 million in the entire year at $105 markup, they would be taking in $210,000,000 – more then enough to pay their staff and fill their pockets.
The $800 price tag is about corporate greed and nothing more. I’m sure Moto is more than happy that people accept the high price tag.
@Darrick Thanks also for saving me the typing! And lets not forget the cost of marketing, packaging, shipping, technical support….etc, etc. Motorola is lucky if they see $50 clear on a single tablet…that is why they need to sell millions to recoupe and see a profit. Start looking at the BIG picture people not just…ohh parts are only $278! They are bending us over! lol Be thankful that a product like the xoom is available for under $1000!
@Dan…???? Where do you get $245????? the parts and ONLY the parts are $278… Dude..someone has to assemble, test, package, market, support, develop etc. etc. Your point is…..well pointless!
hogwash. the devices, almost all of them are made under slave labor-like conditions in china where people commit suicide as their only out from their enslavement. the packaging is made where there are no environmental regulations, also by slave labor (probably children). the engineering is farmed out to india (along with customer service). finally, americans are charged more than three times what other purported western nations pay for internet service, and we get less than a third of the bandwidth they get. pay $800 for today’s am radio? not in this lifetime.
can you say “sucker”?
If the devices were built in America, by Americans they would cost $2000.00 because of the union laborers making $87.00hr plus benifits to satisfy a king. Slave labor building the devices? chilldren building them? hmmm…are we going to see a high failure rate on xooms? I mean children and slaves are probably not too technically savy on xoom assembly……….
A company also has an obligation to its shareholders to make a profit. They don’t pick these prices out of thin air just to screw the consumer. They charge what the believe will make them the most profit in term of price and volume.
@Dan you make a lot of assumptions.
@Ron they seem to do Ok with the iDevices and those have good build quality.
@ scott:
I would think the answer to your question is because tech journalists can often have a bias towards Apple. In the case of the Xoom you constantly here how expensive it is compared to the iPad, not taking into consideration that the Xoom is twice the machine. But they don’t take that into consideration and actually have the gall to say that the Xoom isn’t as good as the iPad – not the iPad 2, but the iPad… 0.0 That is some serious delusion, right there.
So, I think there is plenty of room for some well deserved Apple jabbing.
@Dan don’t make assumptions about the amount they’d sell, that’s the job of the marketing managers Motorola Mobility have, the amount they priced it at will most likely be the best sales to money ratio they’d get, it will be very near the equilibrium of supply and demand
@Dan Most of that goes back to the investors who risk their money to front these crazy projects. Right now the total outstanding market shares are set at 336,710,000. So using your calculation of the Xoom bringing in $210,000,000 in profit this year, take about 10% off the top for the company (21mil), then $190mil has to be devided amongs 340mil shares to give you a dividend of $.56/share. Because of Obama, your capitol gains tax is back which takes %15, then your income tax takes another %30, which means %45 of the $.56/share goes to financing your Toyota Prius subsidies. Which means each share gets about $.27 in profit on $210,000,000 profit off the Xoom. If you are a BIG shareholder (10,000 shares, or right now you own $380,000 of Motorola), you will recieve $2600! Yup, greedy. $2600 profit for risking $380,000. A return rate of %00.68. NOT EVEN 1 PERCENT!
@Joes, agreed…my comment was aimed back @ruddy guess I should have stated that.
@joes – Apple’s iDevices are built in China……..
@Dan – Again, if you think the Moto is fleecing the masses with prices, that means that their investors will be the ones reaping the rewards. Invest in the company and collect the dividends. Just don’t be upset when you invest $5000 and get your %00.68 return check that reads $34, and then $14 of that goes to taxes. You just made $20 sir. The stock market is risky, what do people generally look for in stocks? Work your way backwards to the cost of the Xoom. You can make %03 on a CD with absolutely NO risk. You can make %04-05 in mutual funds with VERY low risk. To take the huge risk in stocks most people are looking for %10. So if you invest $5000, you’d get $500 ($275 after taxes). So to get the investors that ammount of profit work backwards to find a price. Basically they need $712/Xoom in *PROFIT* to get their shareholders that %10 return, or, a MSRP of $990.50. This is assuming that 100% of all money above the purchase price of the hardware goes back to the investors, and the company and the employees work for free.
Wait a min, so the people that make these devices, test em, etc dont get paid until the devices get sold?
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I would like to think that they get salaries like everyone else while they are working on the devices.
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So the extra cost is the company recouping money spent on salaries?
@rudyy
Americans pay far far less for fuel yet complain en masse about it going up slightly. When I was there in 2008 it was all over the news, I took 1 look at the price on the pumps and laughed at the complaints when in the UK we were paying not far from the same amount per litre as Americans were paying per gallon. Not to mention electronics usually come out at a roughly direct 1:1 $:£ conversion rate along with a load of other items. I think paying a bit more for internet is a good trade off, all things considering.
@Darrick, agreed…at least a few of us understand what it takes to invent, develop, test, produce, ship and support a product in an Obama economy!
Consider also that Apple pays good money for the development of iOS whereas I do not believe Motorola has this expense with Android.
Darrick will you have my baby?
@Ron – Heck we haven’t even mentioned the lost profitability of pirated software (hence the locked boot loaders), stolen hardware designs (Huawei corporate espionage), loosing designs that don’t take off, and general poor economy.
I said Motorola sold these to Verizon for $400 buck a unit and Verizon is marking them up for $800. Milking the consumer!!!
@Aeok18109 – I’m a guy…but if you are a woman that can act like an adult, have a bright future and look reasonably good (i.e. take care of yourself), I’ll father your child…HAHAHA
@ilh Don’t hate us because we are smart enough to do the math.
I suppose all you “it should be $800” mongers also think that car makers are right on the money too?
So tell me then, why do they continue to spend MILLIONS on car commercial advertising when it is completely unnecessary? I’ll tell you why, the means justifies the end.
The ONLY reason why these devices are so expensive is because they know that you DORKS that have never been laid will be in line at 4am to buy one no matter what the price. Because you think that the hot chick next door will bang you if she sees you with that awesome XOOM. When in reality, she won’t even have a clue as to what it is and think you are 10 times more un-f&ckable when she sees you checking your pimple count with the forward facing camera. Its the same reason that guys with small dicks by big four wheel drive vehicles. Gimme a break. $599 YES the profits they will make will pay for everyones college tuition for several generations. You assholes make it sound like the are only going to sell a 1000 units and the margin HAS to be high!! BS. They are taking the RISK out of being a business by jacking the prices out of the shoot. Same thing happens with new gear in the music biz. They will put a magazine ad out with a prototype picture. And see what kind of response they get BEFORE they start manufacturing.. So do me a favor, don’t show your IQ but shutting the **** up!
@Andrew, drop your bud lite and spit cup and go get a college education in economics……then we will talk.
@Andrew, who’s more likely to get laid: the whiner who won’t shut up about the price or the guy who lays down 8 Bens without batting an eye? — You accuse a company of mitigating risk as though that’s a bad thing? — Sure they could sell the units at a much reduced price, and maybe barely recoup development costs by the time the product is effectively out of date, but where then does the money for the next product development cycle come from? Some already complain that upgrades don’t come fast enough. You’d have all that slowed down because you’re too cheap to crack open your wallet?
You know, after going to bestbuy and looking and playing around with the Xoom, I’m not that impressed. The device is heavy while holding it. I don’t know if this has to do with the security device that was attached to it or the device is really this heavy. The iPad on display was also as heavy. When using the device things were not that smooth. Jidder was very much present. I don’t know if this has to do with hardware, but I doubt it. Since Honeycomb is basically beta I would say the software is still in need of optimization. I know that many of the contributors to the Android community will sooner than later make well deserved optimizations to Honeycomb. Until then I will wait patiently for the Asus Slider tablet.
Thank you for that Dan …90% of every high end device is over priced for a reason money money money…nothing but money.
A lot of people complaining about the price of electronics. Is somebody holding a gun to your head and forcing you to buy either an IPad or a Xoom? If you don’t like the prices, don’t buy one!!!
Apple and Microsoft can charge high prices because people pay it. It’s really that simple. Please take an economics class and learn something.
@Ron
Obama’s Economic:
$250,000.00 a year and up get taxes.
$249,999.00 a year in below taxes break.
where do your income falls in?; Steve Job & Bill gated ain’t crying about it(Obama Economics) why are you?, whom make less then $250,000.00 a year?.it is always the poor whining about the rich getting taxes, I don’t understand it!..
The price will be 399.99 with a two year contract. Also you guys are forgetting about the people that sell these things need to be paid too.