Moto X Defies Conventional Smartphone Production

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Sept. 3 (Bloomberg) -- IHS Senior Principal Analyst Tom Dinges discusses the innovative approach Motorola is taking to build the Moto X smartphone. He speaks with Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

Is not much more expensive -- expensive than phones made in china.

It is interesting and goes against conventional logic.

This goes against the basic notion that manufacturing in the u.s. is too expensive.

You have to make consumer electronics in china.

Very much so, what is unique is when you look at our parliamentary analysis we have done, we have come up with a cost estimate on the labor side is roughly about $12. we have done a lot of these tear downs over the years on smartphones on the labor cost is usually three dollars-$20 and that is using much lower costs based in chinese labor.

This is right in the middle, about $12 of they found ways to engineer costs out in other ways.

It's interesting how it compares to the material costs.

It compares to apple and samsung and this is right in the middle.

These are the comparisons and this is surprising.

The components are still from china or wherever?

They are standard because these are the same vendors you will find in every handset.

They will come from the same vendors of memory and suppliers.

Through a lot of experience and in an attempt to do something pretty cool, google and the motorola team partnering with flextronics have looked at what to do to reengineer the process that we would've used in china where labor is a certain cost and texas you will pay higher.

Flextronics in the u.s. does a lot of assembly overseas.


Talk about the methodology and how you figure out what certain pieces cost.

In a tear down, we take the device -- we have models we have developed over the years that assume what the per piece part cost is to put that product onto a circuit board and assemble the product together and how much labor is involved in actually putting the product together and how much labor is involved in testing the product.

What we don't include are some of the other ancillary costs.

How do you tease out the manufacturing costs?

I have taken these phones apart with your guys.

You cannot see the manufacturing process.

You can see the result.

Through the team we've got, a significant number of engineers who have experience in manufacturing, we will look at the pieces that are there and make the assumptions based on the models we have used for years that we have refined and say this is how much we believe this should cost to actually insert, in other words, manufacture this part of the product.

We take those various chips that are there and the display and the packaging and say this is what we believe they stem our models.

Is there one take away that flextronics and motorola have figured out?

It is one that does not get a lot of rest which is the product itself is focused for the u.s. market and it is about speed.

It is about getting the product on a customized basis to the customer as fast as we can.

In this highly competitive market, you are starting to see a lot of other companies rethink if they have to build things and one major region.

It has been china now maybe because we have learned lessons and it is not cheap to manufacture there anymore, maybe speed to the customer is a cost that overshadows the cost of the

This text has been automatically generated. It may not be 100% accurate.


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