Palm Pre aims at the iPhone, iSuppli cost analysis reveals
Palm is aiming high with its new Pre, a smartphone that rival's Apple's iPhone in terms of slickness and hardware features, according to iSuppli.
The Palm Pre carries a materials cost of US$137.83 and a combined total projected bill-of-materials (BOM) of US$170.02 which includes hardware, manufacturing and software and IP licensing costs, according to an estimate from iSuppli. Since the Pre is not yet shipping, iSuppli has not conducted an actual physical teardown of the product. However, iSuppli has produced an estimate of the Pre's hardware and manufacturing costs based on second-quarter component pricing and assembly pricing from the company's mobile handset cost model to develop this cost analysis.
"The similarity in features between the Pre and the iPhone clearly reveals the mark Palm is trying to hit," said Tina Teng, senior analyst, wireless communications, for iSuppli.
From a user perspective, Palm 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 use of a multi-touch screen – a key allure of the iPhone – and Palm's 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.
Outside of the user interface and software, the Pre's other features match up well with the iPhone 3G and the other lineup of "iPhone killers" including the BlackBerry Storm, according to iSuppli. 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.
Pre's price tag
iSuppli's total Pre cost estimate of US$170.02 consists of a hardware cost of US$137.83, including the battery, US$9.58 for manufacturing and basic test costs, and software and licensing cost of US$22.61. iSuppli is projecting that Palm will try to sell the Palm Pre to Sprint Nextel at a price of about US$300. However, as is the case with virtually all mobile phones, the Pre's price to consumers will be lower, at about US$200, due to the wireless operator's subsidy. Software and licensing includes the cost of intellectual property, royalties and licensing fees. Not included in this analysis are shipping, logistics, marketing and other channel costs.
BOM breakdown
The combination of the display and touchscreen module is expected to be the Pre's most expensive single subsystem, at US$39.51, representing 23.2% of the device's BOM. iSuppli believes the Pre employs a 3.1-inch TFT-LCD screen that has a pixel format of 320×480 pixels and supports the display of 16 million colors. The display subsystem also likely includes a capacitive touchscreen overlay that allows multi-touch input through software.
Other significant contributors to the Pre's cost include: 8GB of NAND flash memory for storage, accounting for US$15.96, or 9.4% of the Pre's total BOM; a dual-band CDMA EVDO air interface, at a cost of US$15.41, or 9.1% of the total BOM; and a 3-megapixel camera, costing US$12.39, or 7.3% of the BOM, iSuppli detailed.
Can Pre help Palm get a leg up on the market?
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 smartphone sales. Palm's share of global smartphone shipments declined to 2% in 2008, down from 2.9% in 2006, according to iSuppli.
Can the Pre reverse Palm's slide and allow the company to become a more significant player in the smartphone market?
"Palm has been known for years for its touchscreen enabled PDA devices, its easy to use, simple operating system and its Treo smartphone 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 smartphone market."
The Palm Pre carries a materials cost of US$137.83 and a combined total projected bill-of-materials (BOM) of US$170.02 which includes hardware, manufacturing and software and IP licensing costs, according to an estimate from iSuppli. Since the Pre is not yet shipping, iSuppli has not conducted an actual physical teardown of the product. However, iSuppli has produced an estimate of the Pre's hardware and manufacturing costs based on second-quarter component pricing and assembly pricing from the company's mobile handset cost model to develop this cost analysis.
"The similarity in features between the Pre and the iPhone clearly reveals the mark Palm is trying to hit," said Tina Teng, senior analyst, wireless communications, for iSuppli.
From a user perspective, Palm 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 use of a multi-touch screen – a key allure of the iPhone – and Palm's 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.
Outside of the user interface and software, the Pre's other features match up well with the iPhone 3G and the other lineup of "iPhone killers" including the BlackBerry Storm, according to iSuppli. 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.
Pre's price tag
iSuppli's total Pre cost estimate of US$170.02 consists of a hardware cost of US$137.83, including the battery, US$9.58 for manufacturing and basic test costs, and software and licensing cost of US$22.61. iSuppli is projecting that Palm will try to sell the Palm Pre to Sprint Nextel at a price of about US$300. However, as is the case with virtually all mobile phones, the Pre's price to consumers will be lower, at about US$200, due to the wireless operator's subsidy. Software and licensing includes the cost of intellectual property, royalties and licensing fees. Not included in this analysis are shipping, logistics, marketing and other channel costs.
BOM breakdown
The combination of the display and touchscreen module is expected to be the Pre's most expensive single subsystem, at US$39.51, representing 23.2% of the device's BOM. iSuppli believes the Pre employs a 3.1-inch TFT-LCD screen that has a pixel format of 320×480 pixels and supports the display of 16 million colors. The display subsystem also likely includes a capacitive touchscreen overlay that allows multi-touch input through software.
Other significant contributors to the Pre's cost include: 8GB of NAND flash memory for storage, accounting for US$15.96, or 9.4% of the Pre's total BOM; a dual-band CDMA EVDO air interface, at a cost of US$15.41, or 9.1% of the total BOM; and a 3-megapixel camera, costing US$12.39, or 7.3% of the BOM, iSuppli detailed.
Can Pre help Palm get a leg up on the market?
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 smartphone sales. Palm's share of global smartphone shipments declined to 2% in 2008, down from 2.9% in 2006, according to iSuppli.
Can the Pre reverse Palm's slide and allow the company to become a more significant player in the smartphone market?
"Palm has been known for years for its touchscreen enabled PDA devices, its easy to use, simple operating system and its Treo smartphone 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 smartphone market."
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