iSuppli: Palm Pre Costs $138 to Build; Less Than iPhone, G1 (Updated)

iSuppli has issued a formal estimate for the build cost of the Palm Pre, pegging it at $138. This undercuts the iPhone, at $174, and even the G1, at a modest $144. Why so cheap? UPDATED

Well, it's not clear in Businessweek's summary of the report, but iSuppli is assuming—rightfully—that many under-the-hood components, like camera sensors and wireless antennae, will be similar (if not identical) to what's currently found in products from Apple and HTC, so this could just be an effect of falling component prices. The Pre is an innovative, fresh handset, but mostly on account of its software. Under its skin, it's more-or-less just another 3G, multitouch, Wi-Fi-enabled phone, released almost a year after its closest equivalent. So it should cost less.

Another possibility: iSuppli doesn't have a Pre—or even a detailed component list—and although their prior estimations have been right on the nose, they could have just missed the mark entirely.

UPDATE: The iSuppli report has been released to the public, and it turns out that BusinessWeek misrepresented the figures. They presented the raw hardware costs as the bill of materials (BOM), excluding patent licenses, manufacturing other embedded fees. The correct BOM figure is about 170—still a bit less than the iPhone, but more than the G1.

[BusinessWeek]