What does it cost to take on the dominance of the Apple iPhone? $174.15 per phone, at least according to the teardown cost of the materials, as revealed by iSuppli Corp. The research firm did a cost breakdown and found that the Nexus One, the new Google brand name handset, was both cutting edge and cost competitive.
The Nexus One, which is manufactured by Taiwan-based HTC Corp., carries a Bill of Materials (BOM) of $174.15, which is based on a preliminary estimate from iSuppli’s Teardown Analysis Team. Of course, this cost only includes the hardware and component costs of the actual materials that make up the Nexus One, and don’t include other considerations, such as manufacturing, software, box contents, accessories and royalties. Nor does this cost include shipping, marketing or other costs related to anything except the actual parts. These parts include a Qualcomm-produced 1GHz Snapdragon baseband processor, Active-Matrix Organic Lighting Emitting Diode (AM-OLED) display, two components that while seen in handsets previously have never been utilized together. This combination “gives the Nexus One the most advanced features of any smartphone ever dissected by iSuppli’s Teardown Analysis Service,” said Kevin Keller, senior analyst, competitive analysis, for iSuppli.
So it makes the end-user cost a little more understandable. The Nexus One sells at an unsubsidized price of $529, or at $179 with a two-year contract with carrier T-Mobile. While the ability to have an unsubsidized handset could also “unlock” the mobile industry as a whole. This gives users the ability to take the handset to other carriers for service.
The question here remains whether the $529 price tag is too large for business users, especially given that there is always another great phone just around the corner. Many users might even pay a little extra for the freedom to go to another carrier and have the ability to upgrade to any Nexus Two (should there be such a thing) without being locked into a contract. It will be worth watching to see how well the unsubsidized version does as compared to the T-Mobile version with a contract.
According to news stories, including a quote in Reuters from Google’s Andy Rubin, the Nexus One smartphone is also being aimed more at business-minded customers than at the masses as a fun to use handset. The question this raises is whether Rubin and Google are aiming in the wrong direction – notably because as has been pointed the Nexus One lacks a physical keyboard. Google has hinted that this issue will be addressed with the next version of the handset (so will there be a Nexus Two?).
Where it gets more confusing is that Google’s push for the iPhone killer comes as other companies are producing their own Android devices, and some of these are being aimed at the masses. One example is the feisty little Droid from Motorola for Verizon, which had been seen as the flagship device for the Android platform and which had a keyboard!
A Few “Key” Points
In this reporter’s opinion a business smartphone absolutely requires a physical keyboard. Whilst the iPhone is the exception to the rule, and rules are meant to be broken, my concern is that Google and Apple could push innovation in a direction that might not be what the core business users actually want.