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Palm Pre less expensive to make than iPhone

updated 08:10 am EDT, Wed April 29, 2009

Palm Pre Cost Breakdown

The Palm Pre will cost substantially less to build than the iPhone 3G did when it was new, according to a pre-launch cost breakdown by iSuppli. While the company doesn't have full access to the parts Palm is using, its estimates put the pure cost of assembling the first webOS phone at $138. The multi-touch screen is expected to be the most expensive part at $39.51, while the phone's Texas Instruments OMAP processor -- touted as significantly faster than the iPhone's Samsung chip -- costs just $11.

Next most expensive after the screen would be the built-in 8GB of storage, which should cost $15.96. The cellular baseband processing that handles the CDMA calling and EVDO Rev A networking is poised to come from Qualcomm and should cost $15.41, while the 3-megapixel camera is likely to come from Aptina and cost $12.39.

Patent licenses and other royalties for certain parts of the phone technology and pre-loaded software are predicted to cost $22.61, but these aren't factored into the direct cost as these are more likely to change. The price also doesn't factor in development, marketing, shipping and other factors involved in getting the Pre to stores.

The expenses put the price of the phone at $36.33 than the iPhone 3G's $174.33 launch cost, which itself focused only on manufacturing. iSuppli believes that some cost differences may depend on the multi-touch display and software, which are likely to use at least slightly different approaches than Apple. It also comes roughly a year later and is likely to have reduced the prices of some parts, like the 8GB of flash memory present in both the base iPhone and the Pre.

Regardless of differences, the pricing is close enough that Sprint is expected to price Palm's device at the same $199 as its Apple equivalent but will ask for a much more modest subsidy: while the contract-free 8GB iPhone costs $599 through AT&T, Palm may only ask $300 from Sprint and therefore require only a $100 subsidy that can be recovered relatively quickly.

The news comes as an ad campaign and other leaks suggest Sprint may launch the Pre on June 7th, or just two days before Apple is expected to introduce a new iPhone that should offer improved storage and other new features at the same $199 price. [via BusinessWeek]

by MacNN Staff



  1. testudo

    Joined: Dec 1969



    Next thing you know, they're going to tell us its cheaper now to produce an iphone then it was two years ago.

    I never would have thought prices for hardware components went down over a large period of time...

  1. gor3don

    Joined: Dec 1969


    which is why

    Which is why, like all of us, keep reading MacNN. Thought provoking and well written. No?

  1. simdude

    Joined: Dec 1969


    who cares?

    So, I can get a Pre or an iPhone for $199. Thanks, I'll stick with an iPhone. They have an established app store with tons of apps, a company that is financially more sound, a pretty decent interface, a million accessories and the most used dock interface. You can't swing a dead cat without hitting a car, radio or stereo company that hasn't licensed the iPod dock connector.

    Pre is DOA. The only real competitor is Google's Android which will expand to netbooks and other areas.

  1. johncarync

    Joined: Dec 1969


    Launch date?

    Launch the Pre 2 days before Apple's keynote speech at WWDC? Does Palm really think it can steal the thunder from Apple? The Pre introduction will only be a slight distraction from the overwhelming amount of speculation and rumors about Apple's next iPhone.

  1. Constable Odo

    Joined: Dec 1969


    But the new iPhone may

    be even less expensive to produce than the Pre. Besides the more devices you can sell will drive down the overall cost. I've heard that RIM makes terrific margins on it's products yet I've also heard that the products feel cheap. I don't know if this is true or not because I've never touched a BlackBerry. Apple products feel solid to me.

    Time and use will tell if Palm is building high-margin products that will be sturdy enough or have a good feel to them. I'm not putting Palm down, yet. Customers will need to decide that, not the bean counters. Let's hope the Pre doesn't have high return rates like supposedly the BB Storm did.

  1. slapppy

    Joined: Dec 1969


    Well yeah

    I mean you can tell from the images that its just cheap build with a fancy shiny paint job. The screens touch technology is not as sophisticated as the iPhone or iPod Touch.

  1. resuna

    Joined: Dec 1969


    Much as I hate to say...

    Much as I hate to say it, since I've been a Palm fan since last century, but I can't imagine any reason whatsoever that I would care about the Palm Pre. Too little, too late.

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