Palm Pre Costs $170.02 to Make and Is Right on Target, Says iSuppli


According to a virtual teardown conducted by iSuppli Corp, the Palm Pre is packed with high end hardware with a cost to build of $170.02 and is designed to hit the iPhone where it hurts in its multi-touch. The BlackBerry Storm costs $202.89, the T-Mobile G1 costs $143.89 and the iPhone3G 8 Gigabytes costs $174.33.
The Palm Pre carries a combined total projected Bill-of-Materials
(BOM), of $170.02 which includes hardware, manufacturing and software
and IP licensing costs, according to an estimate from iSuppli that included a team of experts that estimated the parts and pricing.
"The similarity in features between the Pre and the iPhonelearly reveals the mark Palm is trying to hit," said Tina Teng, senior analyst, wireless communications, for iSuppli.
From a user perspective, the Palm Pre seems to be right on target,
combining a multi-touch display interface with an intuitive operating
system that makes operation easier and more convenient to use,
according to Teng. The Palm Pre is the only announced smartphone besides
the iPhone to support a multi-touch display interface, a feature that
allows multiple simultaneous touch inputs.
"The use of a multi-touch screen--a key allure of the iPhone--and
Palm's innovative webOS operating system, are likely to allow the pre
to appeal to a broad range of consumers, going far beyond the company's
core group of business-oriented customers," Teng said.
The Palm Pre's other
features match up well with the iPhone 3G and the other lineup of
'iPhone killers' including the BlackBerry STorm.
These features include 3G wireless broadband, an accelerometer, an
ambient light sensor, a proximity sensor, large capacity memory for
storage, Wi-Fi and a 3-megapixel camera. 
iSuppli's total Palm Pre cost estimate of
$170.02 consists of a hardware cost of $137.83, including the battery,
$9.58 for manufacturing and basic test costs and software &
licensing cost of $22.61. iSuppli is projecting that Palm will try to
sell the Palm Pre to Sprint at a price of about $300. However, as is
the case with virtually all mobile phones, the Pre's price to consumers
will be lower, at about $200, due to the wireless operator's
subsidy. Software and licensing includes the cost of intellectual
property, royalties and licensing fee. Not included in this analysis
are shipping, logistics, marketing and other channel cost

The combination of the display and touch
screen module is expected to be the Pre's most expensive single
subsystem, at $39.51, representing 23.2 percent of the device's BOM.
iSuppli believes the Pre employs a 3.1-inch TFT-LCD screen that has a
pixel format of 320 by 480 pixels and supports the display of 16
million colors. The display subsystem also likely includes a capacitive
touch screen overlay that allows multi-touch input through software.
Other significant contributors to the Pre's cost include:

  • 8GBytes of NAND flash memory for storage, accounting for $15.96, or 9.4 percent of the Pre's total BOM.
  • A dual-band CDMA EVDO air interface, at a cost of $15.41, or 9.1 percent of the total BOM.
  • The 3-megapixel camera, costing $12.39, or 7.3 percent of the BOM.
With the
arrival of the iPhone and a range of competitive products, Palm in
recent years has been suffering a decline in its already-minor share of
global smart phone sales. Palm's share of global smartphone shipments
declined to 2 percent in 2008, down from 2.9 percent in 2006, according
to iSuppli.
"Palm has been known for years for its touch screen enabled PDA
devices, its easy to use, simple operating system and its Treo smart
phone product line," Teng observed. "However, just a glance at the Pre
at CES has changed the industry's opinions about Palm, showing it is a
company that can be competitive with Apple iPhone or any other
leading-edge product in the global smart phone market."