So the Moto X is here. It’s attractive, it’s innovative in its way, it’s not particularly future-proof, and it’s a lot more expensive than people were anticipating. And that last bit, while most disappointing/relieving to me, may very well point up a fundamental problem.
See, one of the selling points of the Moto X is that it’s actually put together in America. Some of the components are imported, of necessity, but the phones themselves get made in Texas, in an old Nokia plant. It’s the closest thing in years to a legitimately American-made mobile phone. And it’s got mid-range specs and a high-end price. And there are some rumblings that this is the inevitable cost of making a phone in America – and by implication, that the current pricing level for high-tech gadgetry is entirely a function of cheap Chinese wages, and that moving away from that inevitably entails a possible doubling of costs.
That’s as may be. The fact is, almost every high-tech manufacturer had decamped to China by the early 21st century (Apple’s own PowerBook manufacturing left Cork for OEM by Quanta around 2000 sometime). It’s not unlike what happened to the textile industry over a century and a half of seeking cheap labor – clothing moved from the mill towns of New England to the deep South, and once modern OSHA regulations and labor laws reached the former Confederacy, the industry promptly chose to up sticks and move into Central America, and eventually as far as South Asia. Bangladesh recently experienced a loss of life an order of magnitude worse than the legendary Triangle Shirtwaist Fire of 1911, which caught the attention of the rest of the world and pointed up the fact that it’s not just high tech: mass manufacturing as a whole has been moved to where labor is cheapest and oversight is slightest.
The thing about technology is this: as a result of ten years of manufacturing in Shenzen, all by the same half-dozen companies like Foxconn or Pegatron, an infrastructure has grown up around that manufacturing process that provides economies of scale. Setting up shop to make iPhones or iPads in the United States would entail moving the supply chain for parts, or else shipping them halfway around the world (much as Motorola may have to do with the X), and then building the infrastructure to do large-scale assembly of delicate parts. Almost from scratch, at that, since Silicon Valley manufacturing mostly evaporated twenty years ago. Not for nothing is this Motorola plant in Texas, which leads the country in “business is always right and taxes are always wrong” levels of regulation and workplace safety; the South has always been the site for manufacturing of last resort before leaving the US altogether. And even with all that, the Moto X’s announced cost at point of purchase is nearly double that of similarly-configured hardware from other manufacturers.
There are other theories around this. The most prominent is that Motorola is attempting to send the signal that because this phone costs $200 on contract, it is a peer of other phones that cost $200 on contract like the HTC One or Samsung Galaxy S4 – phones that have much more advanced technical specs. Or of the iPhone, which is similarly equipped but almost a year old and due to be replaced with a more advanced model by the end of autumn. Maybe it’s the designer jeans approach – if you charge $200 for it, people will think it’s worth $200.
But it’s also entirely possible that this is the price of “made in America”. Just like the Levis 501 jeans that cost $40 off the shelf or $178 for the LA-made North Carolina denim pair, it may be that what we think of as a mid-range Android phone just has to cost twice what we’re used to if we want to put it together in the United States instead of whatever the cheapest sweatshop in Shenzhen is this month. Maybe if a lot of different companies went that route – if we had the Fort Worth Special Economic Zone and went nuts with the tax incentives and unemployment was high enough that the necessary skilled labor could be had at a minimal wage and a whole lot of gadget makers started making a whole lot of gadgets here – you might eventually achieve some economy of scale and drive down the cost.
But for whoever goes first, it’s going to be an expensive proposition, and nobody is patriotic enough to take a bath on their earnings while rebuilding the sector. More to the point, Wall Street won’t reward you for the long-term thinking, because they’re not capable of seeing a world beyond the next quarter. So for Motorola to do this at all, they’re going to have to be able to do some magic – using patriotism and multi-colored shells to convince Ed Earl Brown to buy a quarter for fifty cents. Whether enough people are willing to buy into the magic…well, I guess we’ll find out.