Nexus One built with materials costing $174.15, according to iSuppli

Research firm iSuppli reports Google's Nexus One smartphone is built with hardware totaling approximately $174. Manufactured by HTC but sold under the Google brand name, the Nexus One is priced at $529 without a service contract or $179 with a two-year agreement from T-Mobile. The iSuppli teardown did not factor in manufacturing or licensing costs, therefore decreasing the profit margin.

The Bill-of-Materials breaks down as follows:

  • $30.50 for the Qualcomm 1GHz Snapdragon Processor
  • $20.40 for the Samsung DDR Multichip Package
  • $8.20 for the Broadcom Bluetooth Transmitter/Receiver
  • $2.50 for the Qualcomm Power Management IC
  • $2.50 for the Qualcomm RF Transceiver
  • $2.20 for the 4 Power Amplifier Modules
  • $1.20 for the Texas Instruments Power Management & Li-ion Charger
  • $23.50 for the Samsung Display
  • $17.50 for the Synaptics Touchscreen
  • $16.30 for Miscellaneous Electronic Components
  • $12.50 for the 5MP Camera
  • $8.50 for the 4GB MicroSD card
  • $7.50 for Miscellaneous Electromechanical Components (Connectors, Acoustics, etc.)
  • $6.60 for PCB's
  • $6.20 for Miscellaneous Mechanical Components (Plastics, Metals, Hardware Shielding, Insulation, etc.)
  • $5.25 for the Battery
  • $2.80 for the Aluminum Unibody Main Enclosure

Qualcomm leads all other suppliers with 20.4% of the Nexus One's BOM. The Snapdragon processor is the most expensive single component with the 3.7-inch OLED display coming in second. iSuppli found the Nexus One to be the most "Apple-like" product to date, with a unibody design similar to that of the iPhone.

Kevin Keller, Senior Analyst at iSuppli, states, "With the Nexus One, Google has taken the most advanced features seen in recent smart phone designs and wrapped them up into a single sleek design. Items like the durable unibody construction, the blazingly fast Snapdragon baseband processor and the bright and sharp Active-Matrix Organic Light Emitting Diode (AM-OLED) display all have been seen in previous phones, but never before combined into a single design. This gives the Nexus One the most advanced features of any smart phone ever dissected by iSuppli's Teardown Analysis Service - a remarkable feat given the product's BOM is similar to comparable products introduced during the past year."

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29 Comments

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Doesn't exactly cost millions to go to HTC and trial a few hardware configurations. Taiwan, just like PRC hasn't exactly got high labour costs either.

True, but it's not manufacturing, but rather R&D, QA, and marketing on new products which make up most of the cost.

Let's also not forget about the "bleeding edge tax" and initial marketing costs. Whenever something is brand new on the market you pay more just because of the coolness factor, and you get to be the first kid on your block with the new toy. Products are often introduced with an inflated retail price and the market allows for that.

As for marketing, it's the initial advertisement push that generally costs the manufacturing company the most money. After that, word of mouth, store ads, carrier ads, etc. ramp up and the costs to the manufacturer are decreased.

To summarize, if you want to be the first to have one, you will pay more. Period.

But in your example the price should drop significantly after several years. Look at the Samsung Omnia at Verizon. It is still $400+ without a contract. It's a blatant ripoff. Period.

There are exceptions to any generalization, and your example of the Omnia is one of those. In this case, as with other very popular items, it's whatever the market will bear.

Like others have said. What about the R&D, assembly, labor, etc costs. This all adds up. A company has to make a profit. When you go to a restaurant do you break down the actual cost of a BLT. Let me see 2 strips of bacon - 5 cents, 2 pieces of white bread - 5 cents, lettuce and tomato - 5 cents. Total cost = 15 cents. The customer pays $3.50. What many people don't factor in is the building cost (rent or mortgage), employee cost (wages + benefits), insurance, heat, electricity, equipment, etc. A simple BOM is not accurate. LOL!!!!!

where's the cost of integrating all these units together to make it a phone?

can you give all these parts to a person and he will give u a Nexus One?

No but 3x the cost of parts is a complete rip off. The pricing models are there to trap consumers into a contract. $299 would have been a great price to make a profit and recoup prices while finally being fair to the consumer.

The key point to this is really the last paragraph

"This gives the Nexus One the most advanced features of any smart phone ever dissected by iSuppli's Teardown Analysis Service - a remarkable feat given the product's BOM is similar to comparable products introduced during the past year."

All products on the shelf have a BOM that is significantly lower than sale cost, except in exceptionally rare cases such as the odd games console.

They should put a reminder about : marketing cost, labor cost, licensing/patent cost, research and development cost and etc... so people don't rage off about getting rip off...

Shadrack said,
Well, the title specifically says "materials costing..." so if people can't RTF title, then that will make me very sad :(.

problem is MOST ppl will read: 'Being charged 3x as much for phone'

I would have thought that the aluminum enclosure would cost more than $2.80.

To be honest, I really like everything I see about this phone. Anxiously waiting to see what the Nexus Two will be like. That should be released about the time my contract runs out...

Well if you weight the aluminium, it might be worth $2.80, but maybe they need to buy a brick that is worth $4.00 (it would be a huge loss though lol).

But still, I'm surprised too. Aluminum's starting to be rare, prices should be higher.

I got the idea that Aluminum is expensive (dunno about rare) because where I work we buy a lot of Aluminum ;). The price (of which) has gone up quite a bit in recent years.

Sure, the second phone cost $174, but the first one cost millions. These number are not a fair way of understanding unit cost, we all know that.

WICKO said,
+1, That's a good way to put it.

agreed.

it definately doesn't take into account the human element... we all have to feed you know.

and those number are only the cost of the parts. What about the staff and facilities it takes to put them together and ship them to suppliers?

This is a surprise? The price they charge for any unlocked phone is nothing but a pure rip off designed to encourage long-term contracts and lock customers in.

Research costs, development costs, assembly costs, machinery costs, OS development costs, lighting and terrain and maintenance costs for the factories ...

Do you really think the phone is WORTH $174.15? I'd say it's worth at least $250, it could be worth more if it ends up being not popular.

Then, in the fabulous world of cellphones, everything's a ripoff. So yeah, they will charge twice the price, but not like 4 times as you think. But it's sad because the article states the phone parts are worth this, and most people (you're not the only one, don't worry) think the phone is worth this. It's 2 different things.

nexus one is manufactured by HTC and they already have a manufacturing unit,assemly team,maintanance team etc. The cost to manufacture will be less than what many will be thinking.

Funny that for similar topics ...

Google Nexus: peaceful discussion on related costs ...

Apple iphone: angry mob yelling apple tax ...

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I actually don't often see people exclaiming about apple tax on the news posts It only occurs in these instances when someone complains about other people saying it.

PsykX is right on. The materials cost is only one part of the total cost to bring a product to market. There is labor, R&D, QA and so on, not to motional that the business needs to make at least a 10-15% profit on the product or there is no reason for them to business.

To Maysky’s point. When people talk about the "Apple Tax" they are normally comparing an Apple computer to a similarly configured Dell or HP, so that is a true Apples to Apples comparison (no pun intendedâ€Â¦okay maybe a little). If Dell can make a fully functional computer and Apple sells what is basically the same thing with the same specs for 20% more than is worth talking about. Comparing to raw materials to a final sales price is just silly.