Palm Pre costs $170 to make: iSuppli

SAN FRANCISCO Wed Apr 29, 2009 9:18pm BST

The Palm website is seen on the Palm Pre smartphone at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada in this file photo from January 8, 2009. REUTERS/Rick Wilking

The Palm website is seen on the Palm Pre smartphone at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada in this file photo from January 8, 2009.

Credit: Reuters/Rick Wilking

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SAN FRANCISCO (Reuters) - Palm Inc's highly anticipated Pre smartphone costs around $170 to make, according to analysis by research group iSuppli released on Wednesday.

Although the Pre has not yet shipped and Palm has yet to announce a release date, iSuppli said it generated the estimate of the device's hardware and manufacturing costs based on second-quarter component and assembly pricing.

ISuppli expects Palm will try to sell the Pre to wireless carrier Sprint Nextel Corp for about $300, but said the actual cost to consumers will be around $200 due to an expected carrier subsidy.

ISuppli likened the Pre's functionality to Apple Inc's iPhone.

"The similarity in features between the Pre and the iPhone clearly reveals the mark Palm is trying to hit," iSuppli analyst Tina Teng said in a statement.

"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."

The Pre is seen as Palm's best hope to fight rivals such as the iPhone and Research In Motion's BlackBerry, which have hurt Palm's smartphone sales in recent years.

iSuppli's total Pre cost estimate of $170.02 consists of a hardware cost of $137.83, manufacturing and basic test costs of $9.58, and software and licensing costs of $22.61.

The analysis does not include shipping, logistics, marketing and other channel costs, the group said.

Shares of Sunnyvale, California-based Palm rose 2.5 percent to $9.89 on the Nasdaq.

(Reporting by Gabriel Madway; Editing by Steve Orlofsky)

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