Motorola unit of Google has dropped the price of its flagship 16GB Moto X from earlier $550 to $399 for US customers. The price of Moto X was also dropped earlier to $349 for a brief period in December but this price reduction is permanent.
With a price tag of $399 Moto X has become significantly cheaper than the flagship Galaxy S4 from Samsung which costs $600 without a contract. Galaxy also runs on Android like Moto X and is the most popular Android smartphone. The 16GB variant of Apple’s flagship iPhone 5S costs $650 without a contract.
This deep price cut appears to be in line with the strategy of Motorola CEO Dennis Woodside to ‘undercut rivals.’
Market analysts are of the view that price reductions are likely to have more important impact in markets outside US where smartphones are generally sold without contract.
Priced at $399, Motorola will be selling its smartphone at extremely thin profit margins because a 16GB Moto X roughly costs around $200 according to TechInsights and Galaxy S4 also costs roughly the same.
The price cut by Motorola may also be in an effort to boost sales of Moto X which have been recently slow. According to data by Strategy Analytics Motorola sold 500,000 units of Moto X in the third quarter whereas in comparison Samsung sold more than 10 million units of Galaxy S4.