How could Motorola make Moto E so cheap?
For $120 Moto E is one of the cheapest phone you could buy that offers excellent value for money. But how could Motorola manage to keep its price so lower than its competitors?
When it comes to pricing of a mobile phone model, each company has their unique priorities. Apple couldn’t sell their products for cheap or its premium brand value will be diminished. Android smartphone manufacturers on the other hand, cater a wide range of customer segment.
If a reputed manufacturer offers a device much lesser than their competitors there should be some reason. Google bought Motorola in 2012 just for its patents; they were not at all interested in running a manufacturing business.
In the brief time period Motorola was a Google owned company, they launched Moto X and Moto G, the predecessors of Moto E. Moto G in particular was well received for being so inexpensive in comparison with similar phones in the its league. Some people even said Google was the only company who could sell Android devices at these price points. They didn’t have to make a profit margin by manufacturing mobile phones; they can make money from commission for purchases made through Play Store.
Other priority of Google was to increase the market-share of Android devices, which will eventually happen with introduction of such value-for-money devices. Another priority of Google was to encourage usage of their cloud hosting services. For this they made Moto G fixed memory device instead of hooking up with a microSD card. During all this time, an even cheaper model was in works for the developing markets – Moto E.
Google sold Motorola to Lenovo after retaining Motorola’s patent portfolio. Lenovo is a Chinese manufacturer which has substantial presence in electronic goods manufacturing in Asia. Lenovo was eager to make presence in the US market; all they wanted was a good brand image. With the acquisition of Motorola, Lenovo gained just that.
Moto E, which was already in works when Lenovo acquired Motorola Mobility, managed to get a low price like Lenovo phones. In India, Motorola completely shut down its supply chain after they withdrew from Indian market. When Moto G was introduced it was sold exclusively through Flipkart, an online store popular in India. Motorola is doing the same with Moto G too.
Now, Flipkart is a rapidly growing ecommerce platform. By tying up with Motorola to offer a sure to be successful product like Moto E will surely force a lot of customers to use Flipkart. This is in a country where people are skeptical to give their credit card number online and worse most people only have a debit card which increases the risk. I wouldn’t be surprised if Flipkart made a deal with Motorola to sell Moto G at a low to nil commission with the sole intention of increasing its market penetration. In return to the favor, Moto E is also getting a heavily highlighted top-spot on Flipkart website.
Lastly, Moto E will serve as a stepping stone for future prospective buyers for Motorola’s high-end models. Building brand loyalty will take time. Motorola already a good following in India but customer’s inevitably choose other brands once they stopped their operations in India. Now it is the time to get back old glory. This is a win-win situation both for Flipkart and Motorola. The best means of publicity is word of mouth, it is better than spending millions for 30 second TV commercials. Moto E is highly successful in this regard. Moto E has already gone out of stock 3 times since it was launched, all within a matter of hours. If you’re lucky enough you could snatch a Moto E early when it comes in stock again.