Pre Production and Retail Pricing Numbers Guesstimated

Posted By: Kris Keilhack Wednesday, April 29, 2009 12:45:42 PM

BusinessWeek has just posted an informative new piece that actually sheds some new light on the Palm Pre's potential assembly cost. Entitled "An Early Peek Under the Palm Pre's Hood", the article is written by Arik Hesseldahl and dated today.

Based primarily around a recent report from industry assembly cost firm iSuppli, Hesseldahl claims that the Palm's manufacturing cost is currently estimated to be approximatey $138. While key component prices, especially NAND flash memory, do fluctuate almost daily, Palm's healthy margins on the device should only increase over time, as production is ramped up. iSuppli analyst Tina Teng is quoted extensively within the article and stresses that a great deal of speculation has been used to arrive at these figures as no actual production Pre devices have been made available for an actual "teardown".

The multitouch 3.1" LCD touchscreen, provided by Cypress Semiconductor, is the Pre's most expensive component set, totaling $39.51. No new details are confirmed in the report, such as whether or not the Pre's screen is glass like the iPhone or the cheaper, lighter, and more scratch-prone plastic as rumored in the Angelina Jolie story from a few weeks ago.

Aside from an actual release date, the most anticipated detail about the Pre is its cost to consumers at retail. Assuming the usual 2yr-contract pricing, the pierce reveals that Sprit is likely to offer the handset at $200, subsidizing $100 of the purchase price from Palm. With this sort of cost structure in place, Palm's battered profit margins should finally improve after numerous consecutive quarters of relatively slow Windows Mobile sales and tiny margins on the Palm Centro.

With the earlier report that the low-cost SERO plan will not be applicable to the Pre, Sprint should nicely make up the subsidy by pushing users towards its Simply Everything unlimited plans. No mention is made within the article about Palm hedging their bets on a high attach rate of software purchased from their app store or on any kind of revenue sharing between Palm, Sprint, and Amazon.

The article concludes with some speculation about potential additional costs to the device totaling approximately $22.61. Software licensing fees and patent royalty payments comprise these additional charges, making the Pre's final cost to Palm somewhere in the neighborhood of $170, or as Teng is quoted, "…about 56" of the $300 price at which Palm is expected to sell the device to Sprint".

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Pricing gamble?

philpalm @ 4/29/2009 1:23:48 PM #

The first Pre will be a test run and due to low memory people will be clamoring for an upgrade. Smart that they can't use a memory add in card (though stuff can be off loaded).

My guess is they will use a scratch prone screen so a user would need to buy accessories and a new model after a year.

Throwaway consumerism is great sometimes....

Glass vs plastic

freakout @ 4/29/2009 2:30:50 PM #

Maybe I'm nuts. But I drop my phones all the time onto all manner of unfriendly surfaces. I treat 'em like dirt. I do not want a glass screen. I don't care how tough anyone says it is; it's frickin' glass. Plastics have done me just fine for the last forever, thanks...

RE: Glass vs plastic

Winterbay @ 4/29/2009 2:44:46 PM #

I agree, also it should be possible to add an extra protective layer on top of the screen. Just like you can on the "normal" palms (like my trusted Zire 72).

RE: Glass vs plastic

hkklife @ 4/29/2009 4:10:07 PM #

Remember, the Centro supposedly had a "built-in" screen protector, though many users still experienced problems with the plastic. Palm actually advises against using adhesive screen protector overlays on that particular device.
Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p->?

RE: Glass vs plastic

freakout @ 4/29/2009 4:37:39 PM #

speaking of Centro, it's the first Palm I haven't bothered putting a screen protector on. 9 months later and it's still scratch-free, despite my tough lovin'.

RE: Glass vs plastic

jca666us @ 4/30/2009 4:20:26 AM #

glass can be a pain to replace if the phone isn't designed to make that easily replaceable (original iphone).

RE: Glass vs plastic

joad @ 5/3/2009 10:44:24 AM #

I don't know what you guys are doing to your glass screens. I've been using Treos naked since 2003 and have yet to see a scratch or break one. And ever since they removed the antenna I've just stuck it into my front pocket without even a case.

Something tells me plastic isn't a great direction for Palm. Perhaps they have decided to build in more obsolescence than their engineers usually include just as a matter of bad habit.
Palm "Preh": as in "eh, where's the microSD and Garnet emulator?"

No SERO, no deal!

QDeath @ 4/29/2009 4:26:26 PM #

Subject says it all.
-
Palm Vx -> Palm m515 -> Tungsten T3 -> Verizon Treo 650 -> Sprint Treo Centro

RE: No SERO, no deal!

jptx @ 4/30/2009 6:26:11 AM #

y it too.

No SERO, no deal!

Palm wants YOU!

SeldomVisitor @ 4/29/2009 5:14:40 PM #

http://blog.palm.com/palm/2009/04/got-opinions-become-a-real-reviewer-and-get-a-new-phone-courtesy-of-palm.html

RE: Palm wants YOU!

hkklife @ 4/29/2009 6:00:59 PM #

You can be assured that it'll be a HIGHLY SCRUTINIZED bunch of....ahem, "Palm Loyalists". I can assure the kind of outright honesty (not even blatant Palm Pessimism) of the kind found on PC that Palm NEEDS to listen to in order to have a snowball's chance in hell of remaining viable through 2010 will be nowhere in sight. The recent responses here to the Inside Sprint Now info is exactly the kind of feedback I am talking about.

As I've been saying here for the past several years, I'd give anything to see some site compile a no-B.S. list of 20 or 30 genuine hard questions and have someone, ANYONE, (preferably higher-up recently let go by Palm with an axe to grind) address as many of them as openly and honestly as possible.
Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p->?

RE: Palm wants YOU!

Ryan @ 4/29/2009 7:44:00 PM #

Sounds right up your alley Seldy!

RE: Palm wants YOU!

twrock @ 4/29/2009 10:49:17 PM #

>>"(preferably higher-up recently let go by Palm with an axe to grind)"

But why should I believe I'll get any more "realistic" view from someone who has recently been let go by Palm and has an axe to grind? How about an intelligent person who has the wisdom necessary to know the difference between PR fluff and the truth? I want neither Palm's nor SV's "reality".

Hey Palm! Where's my PDA with Wifi and phone capabilities?

RE: Palm wants YOU!

hkklife @ 4/29/2009 11:13:57 PM #

I just have a feeling that the "truth" would be so ugly, that there's no way that anyone still actively associated with the firm would ever truly spill the beans.

My current example of Palmyanna propaganda is the "a microSDHC slot couldn't fit in the Pre's formfactor" from CES when just a few weeks later there's a SIM card-packin' GSM version.

Now, had they said "we want consumers to buy every new version to get more storage" or "We are trying to emulate Apple wherever possible" or "WebOS is in such a shoddy state that we couldn't figure out how to make external memory play nice" I would've believed it 100%. But "it doesn't fit"? With a TINY microSD card? In the year 2009? Come on!
Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p->?

RE: Palm wants YOU!

SeldomVisitor @ 4/30/2009 3:22:28 AM #

> Sounds right up your alley Seldy!

Lol!

Nah...I'm too old to begin to match their target customer set (I think these type of places stop counting at about 40 and I haven't seen 40 since...well...forever). Though I did not "Take their survey" I easily can imagine it includes the key "Age range" question that kicks out the old fogeys fairly quickly. In addition, they're looking for Facebook/Myspace users since that IS their target customer set - I use neither.

But it IS an opportunity for a member of their target customer set to get a new device and data service for a half year. It's not clear WHAT device the users will get, of course, though the comments at that blog entry from Palm suggest a Pre is possible eventually.

The cynical ones out here (Who? Me?) might also suggest that this program means that Palm really IS aiming at early-adopters ONLY with the release of the Pre, with other customers to follow sometime later.

RE: Palm wants YOU!

SeldomVisitor @ 4/30/2009 4:21:34 AM #

Oh!

A corollary to the "early-adopters only" aside is the suggestion that the intro price could be relatively high.

I'm sure we'll find out soon!

good product

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