Motorola Q broken down by the numbers
By Chris Ziegler 
posted Jul 21st 2006 5:17PM
posted Jul 21st 2006 5:17PM
iSuppli's back doing what they do best -- ripping apart your favorite piece of hardware, adding up the component costs, and letting you know how much you're getting taken when you whip out the plastic. Today's victim is Motorola's text-tastic Q, and though the margins are pretty slim, it looks like Moto and Verizon are in the black on every unit they push. All told, iSupply totals the cost of the Q's guts to be $150; tack on another $8 for manufacturing and you're looking at $158 out the door. The most expensive component, not surprisingly, is the device's 320 x 240 display at $25, with memory and the XScale rounding out the top three. If you've invested in one of these bad boys lately you know that Verizon's charging $199 on a two-year contract, meaning that in the worst case, the two companies are splitting $41 -- and if you opt for a one-year at $349, well, they're just rolling in fat city.
Cost of software???
Cost of R&D???
Come on guys, cell phones are more then just plastic, metal and silicon.
Even if you sign up for a contract, they're making more than $41. Remember, the contract discounts the price of the phone, but if you break that contract you owe that discount back to the carrier. And why do they discount the the phone $150? Cuz they know they're making at least three times that on your two year contract.
Other costs off the top of my head (in addition to materials):
Windows Mobile licensing cost: ~$20
Qualcomm royalty for use of CDMA: 5% of wholesale price (probably $275).
Moto probably sells the device to VZ for $275, making about 33% gross margins on each Q. Not bad!
chicagoone:
the cost of software and r&d is covered by the cellular plan. what i mean is, you may only pay $199 for a q, but verizon pays full price when they buy one from moto. then, they recoup the cost in your monthly payment. the two companies ARE NOT splitting $41, rather, moto gets the full $500 (or whatever) up front from verizon, and then verizon recoups the $301 from your monthly plan.
now, if everyone paid full price for a phone, monthly plans would be cheaper (but not significantly so) because they would be designed to maintain the services in place and advance new ones; there would be no provision for recouping money lost to discounts and coupons on new phone purchases.
Great
I'm not familiar with iSuppli, but they seem shady to me. Can't see the source report, have to pay for their "Teardown Analysis" service.