Motorola Moto G costs $123 to build

Motorola’s newest offering, the Moto G has been the talk of the town for its impressive hardware specifications and very attractive price tag. Motorola is selling the 16GB version of the smartphone for $199 without a contract in the US, which made many suspect that it makes no profit of the actual hardware. According to an analyst though, it costs only $123 to build so there’s some profit to be extracted there.

Adding the other expenses to get the phone to the market and in turn in your pockets reduces the amount of course, but Mark Newman believes Motorola has an operating profit margin about 5% from the Moto G.The analyst from Sanford C Bernstein & Co also estimates the operating profits on Samsung’s mid-tier smartphones to be 20% and about 28% margin on couple of high-end smartphones like the Galaxy S4 and other flagships.

Apple is estimated to be operating with profit margins of 30% – 35% on its iPhone 5c and iPhone 5s smartphones.

Motorola’s aggressive pricing is said to put a lot of pressure on other manufacturers. However, the strategy seems to affect Samsung the most as the global market leader has traditionally done well in the entry-level niche.