‘Xooming’ In: Researchers Say Cameras, Display Add to Costs of Motorola Xoom
Research firms that have taken apart Motorola Mobility Holdings Inc.'s Xoom tablet computer uncovered some additional clues about its features and why it costs more to build than Apple Inc.'s hit iPad.
Context & Ripple Effects
Three days after the Xoom hit shelves in the opening round of the tablet wars with the iPad, teardown shops have cracked one open and put numbers on what Motorola Mobility is paying for its hardware. The iFixit teardown earlier this week laid out the components; research firms now attribute the premium over Apple's build cost specifically to the dual cameras and the display.
That matters because Motorola entered 2011 with an aggressive volume plan — suppliers expected 700,000–800,000 units shipped in the first quarter — and a device priced at the top of the market against a competitor that famously buys components at scale. A higher bill of materials narrows whatever room Motorola had to undercut or match iPad pricing.
First-order effects
- Motorola Mobility earns thinner hardware margin on every Xoom than Apple does on an iPad at comparable prices, since the cameras and display push its build cost above Apple's.
Second-order effects
- Rival Android tablet makers face the same component math, pushing them toward either stripped-down camera-less designs or higher price points that make the iPad look more competitive by comparison.
Third-order effects
- If teardown-driven bill-of-materials comparisons become the standard lens on tablets, component selection — not software alone — becomes the visible axis of tablet competition, pressuring vendors to justify every dollar of silicon they add.
The trend: Tablet competition is settling into a cost-structure contest where teardown analyses expose how much each vendor pays for hardware against Apple's scale advantages.