A 21-year-old woman who lives with her brother and parents on the India side of the disputed India-Pakistani border was in her home when three gunmen burst in demanding food and lodging. The woman's father refused and was attacked and the woman, who was hiding under a bed, attacked the assailant with an ax, and then grabbed his gun as he went down, shooting him dead. Feel free to read the full story, it's pretty intense, and the guy may well have been a major Pakistani terrorist. I'll admit, this has little to do with gadgets, but even you have to agree, ax to AK is one hell of an upgrade. [Telegraph UK via a million tweets]

Speaking of upgrades, anyone who migrates to Windows 7 Pro, Enterprise or Ultimate who's still missing XP can officially virtualize that sweet old OS, says our friend Mary Jo Foley, who reports that the lauded XP Mode has been released to manufacturing, and will be present in time for the Oct. 22 Windows 7 launch. [ZDNet]

This is an example of me scratching my head at the way tech business is conducted. GigaOm reports a scoop that Lenovo will likely pre-install Skype on a bazillion new ThinkPads soon, advertising the VOIP maven in the Start menu, and allowing people to "install and sign up for Skype without downloading the software." In other words, one of these companies is taking money from the other one to turn a perfectly decent free utility into crapware, in hopes that, what, some IT guys won't just go and delete it from their deployed fleet of laptops? Sorry, but there has to be a better way to build brand equity than simply being the app people didn't delete during initial setup. [GigaOm]

Generally we love iSuppli's fat pipeline of sound manufacturer-based information, but this time, I think there's something in the pipe besides info: A report today says that by 2013, Windows Mobile will be in second place behind Symbian in world smartphone market share, following a dip where they drop to third place. Whaaaaaaa? We plan to follow this up, since iSuppli is generally a smart source, and the report seems to be measuring licenses rather than actual user base. Still, I wanted to drop it here, because it's insane-tastic. [iSuppli]

What does this mean? Most likely, it means we were right: the desktop PC is sputtering out. Not all the decrease can be attributed to the weak economy, seeing as notebook PC shipments raised by 11.7%. Pretty soon we're going to see desktops become a niche market, reserved only for pros, dental assistants and gamers. [iSuppli]

I say this as a guy who was baptized into the tech world with a desktop; who still obsessively follows the latest PC components from Intel, Nvidia, ATI and the like; who has built, fixed or upgraded more towers than I care to remember; and who, until a few years ago, was an avid PC gamer. As someone who would be, by most measures, a desktop-PC kinda guy, I just can't go on pretending there's a future for them.

The State of the Industry
This is more than a hunch; a grim future is borne out by the numbers. A week ago, iSuppli issued a broad report on the state of the PC industry. The leading claim was predictable: The PC industry was experiencing lower-than-expected quarterly sales—down about 8% from the same time last year. This included laptops, and made sense, because the whole economy's gone to hell, right? People aren't buying computers.

Except that's not quite what's happening. In the same period, laptop shipments—already higher than desktop shipments on the whole—grew 10% over last year. Desktops were entirely to blame, dropping by an astounding 23%. That's not decline—it's free fall.

Stephen Baker, an analyst for industry watchers NPD, shared with me a wider picture of how retail PC sales break down. The way he put it made measuring the rise and fall of sales percentages seem dumb—there really aren't any sales to lose: "In US retail, 80% of sales are notebooks now," he said. "Start throwing in stuff like iMacs and all-in-ones"—which share more hardware DNA with laptops and netbooks than traditional desktops—"and it gets even higher."

The Buyer's Dilemma
To understand why this is happening doesn't take anything more than a little empathy. Put yourself in the shoes of any number of potential consumers, be it kids, adults, techies, or luddites. In virtually any scenario, a laptop is the sensible buy.

Take my dad. Despite spending three decades in front of commercial jet instrument panels, his relationship with computers is, at best, strained. When he came to me a few months ago asking for advice about a laptop to replace his desktop, I assumed it was a just a whim, based on what he saw happening around him. It wasn't, at all. As someone who uses a computer mostly for news, email, music, etc—like a significant part of the population—he was actually being intensely rational. A laptop would do everything he needs simply and wirelessly, with a negligible price difference from a functionally equivalent desktop. If he wants a monitor, keyboard and mouse, he can just attach them. Choosing a desktop PC wouldn't just be a not-quite-as-good choice—it'd be a bad one.

The TradeoffsLet's look at mainly stock examples taken (hastily) from Dell's current product line. Their configurations could be tweaked and changed to make desktops look slightly better or slightly worse, but we chose them because they are typical budget-minded consumer choices. We are not talking about workstations, and we're not talking about all-in-ones, because if anything, they are keeping this category alive. When it comes to pure household computer buying, you can hunt for deals all you want, but laptops and desktops are more closely paired than you might expect.

That's not to say that there aren't noticeable tradeoffs. Graphics performance, although I wasn't specifically angling for that with these configurations, is generally better in a desktop. Likewise, hard drives—being that desktops use larger, cheaper 3.5-inch units—are faster and more capacious across the board. Greater amounts of RAM can be had for less in a desktop, the optical drives can be slightly faster, and the ports for those and other drives can be used for expansion.

But these tradeoffs aren't nearly as pronounced as they once were, nor are they as consequential. On account of the huge demand and sales volume, newer mobile processors have become a hotbed for innovation, now rivaling most any desktop processor, and mobile graphics engines—though still markedly inferior to dedicated desktop cards—have improved vastly in recent years, to a point where most consumers are more than satisfied.

And if you really look out for them, there are some amazing deals to be had on new notebooks. (Look at Acer's 15-inch, 2.1GHz Core 2 Duo, 4GB DDR3 RAM laptop with 1GB GeForce GT130 graphics card and Blu-ray for $750, and then try to build the equivalent in a desktop at the same price.)

The important takeaway here is that the performance sacrifice you make in owning laptop is minimal, and mitigated, or even outweighed, by its practical advantages. Want a bigger screen on your notebook? Hook it up your HDTV. Want more storage? Buy a cheap, stylish bus-powered external USB drive. Want to use your desktop on the toilet? Good freakin' luck.

The image associated with this post is best viewed using a browser.The Fall of the Gaming PC
But to say that the average user doesn't have any reason to buy a hulking beige box isn't that controversial, and even borders on obvious. The real, emotional, diehard support for the form factor is going to be found elsewhere anyway. I mean, hey, what about gamers? Have you ever tried to play Crysis on an Inspiron? Let's jump back to the numbers.

Last year saw a huge 26% increase in game sales across platforms, powered mostly by Xbox 360, Wii and Nintendo DS sales, according to NPD. Breaking that number down, we see PC game sales down by 14%. That decrease barely even registered in the broader scheme of things, since total PC game sales amounted to just $700m of the industry's $11b take. This year is looking even worse. You know what, let's just call this one too: PC gaming? Also dead. Update: Luke at Kotaku points out that NPD's numbers only cover retail game sales, where PC gaming is hurting the most. Due mostly to MMOs—hardly the exclusive domain of desktops—the PC gaming industry take is actually higher.

As the laptop is to my old man, the console is to the gamer. Just a few years ago, buying—or just as likely, building—a high-end gaming PC granted you access to a rich, unique section of the gaming world. Dropping a pile of cash for ATI's Radeon 9800 to get that precious 128MB of VRAM was damn well worth it, since there was no other way to play your Half Life 2 and your Doom 3. PC titles were often demonstrably better than console games, and practically owned the concept of multiplayer gaming—a situation that's changed, or even reversed, since all the major consoles now live online. We even spotted a prominent PC magazine editor (and friend of Giz) copping on Twitter to buying an Xbox game because it has multiplayer features the PC version doesn't. Yes, things are different now.

NPD's Baker sees it too: "Go back two years ago and think about all the buzz that someone like Falcon or Alienware or Voodoo was generating, and how much buzz they generate now, that might be a little bit telling." He adds, "There's considerably less interest in high powered gaming machines." They're luxury items in every sense, from their limited utility to their ridiculous price to their extremely low sales.

A Form Factor on Life Support
But no matter how irrational a choice the desktop tower is for the regular consumer, sales won't hit zero anytime soon. As we've hinted, much of this can be explained by simple niche markets: Some businesses will always need powerful workstations; older folks will feel comfortable with a familiar form factor; some people will want a tower as a central file or media server; DIY types will insist on the economy and environmental benefit of desktop's upgradeability; and a core contingent of diehard PC gamers, despite their drastically thinning ranks, will keep on building their LED-riddled, liquid-cooled megatowers until the day they die.

Baker sees another factor—less organic, more cynical—that'll keep the numbers from bottoming too hard. "Desktops are a lot more profitable than notebooks for a lot of reasons, not the least of which is that big shiny monitor, which has a nice margin attached to it. For the retailers, people tend to buy a lot more peripherals and accessories when they buy desktops than when they buy notebooks." Even if the volumes are ultra-low and concept is bankrupt, retailers are going to keep bloated, price-inflated desktops and desktop accessories out there on the sales floor until they've drained every last dollar out of them.

You'll see plenty of desktop towers for years to come, in megamarts if not in people's homes. You'll still hear news about the latest, greatest graphics cards, desktop processors and the like. Enthusiasts and fansites will stay as enthusiastic and fanatical as they've ever been. These, though, are lagging indicators, trailing behind a dead (or maybe more accurately, undead) computing ideal that the computer-using public has pretty much finished abandoning.

Major Component Breakdown:

2GHz Core 2 Duo Processor
$118.35

GeForce 9400M
$65.16

120GB Hard Drive
$46.00

Pioneer DVD±R DL/DVD±RW/CD-RW Drive
$32.00

WLAN/Bluetooth Module
$18.00

AC Power Adapter
$14.25 (Apple spends more money on the Mini's power adapter than its RAM!)

1GB DDR3 RAM
$10.00

Manufacturing Costs
$10.94

Interestingly enough, I've always looked at the Mac Mini as one of Apple's most expensive products in terms of the hardware you actually get for your money—while iSuppli's report offers proof to the contrary. Of course, the Mac Mini's profit margin is a bit different when you look at what Apple charges for their more premium model of the system—$800—when the only differences are 200GB more storage and an extra 1GB of RAM. In this case, the "Apple Tax" helps subsidize the pricing of the base Mac Mini.

As usual, these pricing figures only reflect the build and materials of a product, not development, testing, etc. [iSuppli]

iSuppli also noted that the 3GS hardware set is fairly similar to the 3G (with the exception of the new features) which helps to keep the costs down. However, they did note that there were some interesting changes with regard to component selection this time around.

iPhone 3G S Carries $178.96 BOM and Manufacturing Cost, iSuppli Teardown Reveals

El Segundo, Calif., June 24, 2009-With the new iPhone 3G S's Bill of Materials (BOM) and feature set nearly the same as the previous model in the iPhone line, you might think the product's component selection would be virtually unchanged. However, a dissection conducted by iSuppli Corp.'s Teardown Analysis Service reveals some interesting changes in the parts and suppliers.
"The entry-level, 16Gbyte version of Apple Inc.'s new iPhone 3G S carries a BOM cost of $172.46 and a manufacturing expense of $6.50, for a total of $178.96," said Andrew Rassweiler, director and principal analyst, teardown services, for iSuppli. "This is slightly higher than iSuppli's estimate of $174.33 for the original low-end 8Gbyte iPhone 3G based on pricing in July 2008. Although the retail price of the 16Gbyte iPhone 3G S is $199, the same as for the 8Gbyte version of the original iPhone 3G, the actual price of the phone paid by the service provider is considerably higher, reflecting the common wireless industry practice of subsidizing the upfront cost of a mobile phone and then making a profit on subscriptions."
The attached table presents a summary of the major component cost drivers in the iPhone 3G S.
The table and cost data presented in this article consist only of the iPhone 3G S's BOM. The total does not include other costs, including software development, shipping and distribution, packaging, royalty fees and miscellaneous accessories included with each phone.

This year's model
Beyond faster performance, the iPhone 3G S differentiates itself from the original 3G with the addition of video capture, an autofocus 3-Megapixel camera-compared to 2 Megapixels before-and a built-in digital compass. Besides these extras, the 3G S hardware feature set is not much different from that of the 3G.
"From a component and design perspective, there's also a great deal of similarity between the 3G and the 3G S. By leveraging this commonality to optimize materials costs, and taking advantage of price erosion in the electronic component marketplace, Apple can provide a higher-performing product with more memory and features at only a slightly higher materials and manufacturing cost," Rassweiler said. "Nonetheless, there are a few key differences in component selection compared to the iPhone 3G introduced a year ago."

Broadcom and Dialog dial in to iPhone
One of the more noteworthy changes in hardware is the use of a Broadcom Corp. single-chip Bluetooth/FM/WLAN device, costing $5.95. This represents the ongoing industry trend of moving to higher levels of integration, by putting all of these functions into one chip. Previously, to implement these functions, the 3G employed two devices: a Marvell Technology Group Ltd. WLAN chip and a Cambridge Silicon Radio (CSR) Bluetooth Integrated Circuit (IC).
Making its debut in the iPhone line is Dialog Semiconductor with its power management IC serving the 3G S's applications processor. At an estimated cost of $1.30, the Dialog chip replaces a corresponding NXP Semiconductors device in the 3G.

STMicroelectronics and AKM find way into 3G S
To implement the digital compass feature, the iPhone 3G S adds AKM Semiconductor Inc.'s electronic compass and STMicroelectronics' accelerometer, both of which are 3-axis devices. The STMicroelectronics part allows the 3G S to determine device orientation or inclination, while the AKM sensor detects device movement relative to magnetic north, supporting the 3G S's capability to reorient a map displayed on the screen to correspond with the direction the user is facing.

Infineon and TriQuint hold down the fort
Prior the 3G S introduction, speculation was rife that Qualcomm Inc. might displace Infineon Technologies AG as the supplier of the phone's critical baseband chip. However, Infineon has held onto this critical spot with its PMB8878 baseband chip, which accounts for $13 of the 3G S component costs. Similarly, TriQuint has kept its slot as the 3G power amplifier module supplier, supporting the tri-band HSPA functionality of the phone.

Major cost drivers
Toshiba Corp. scored the biggest single design win in the 3G S, with its 16Gbyte Multilevel-Cell (MLC) NAND flash costing $24. With the price of NAND flash having risen in recent months due to supply constraints, this represents a lucrative design win for Toshiba. However, while Toshiba was the supplier of the NAND in the specific 3G S torn down by iSuppli, the part is available from other sources that Apple is likely to use, most notably Samsung Electronics Co. Ltd.
Samsung also maintained its position as iPhone's applications processor supplier. Priced at $14.46, the applications processor is the fourth most costly component in the iPhone 3G S after the NAND flash, the display module and the touch-screen assembly.
The applications processor plays a key role in the 3G S's faster performance. In the 3G, the processor used an ARM RISC microprocessor with 400MHz clock speed; the 3G S employs a 600MHz version.

[iSuppli Image: iPhone 3GS Dissection]

Seems that while critical darlings Samsung and Sony were hawking 40-inch sets average selling prices of $1,000 and $1090, respectively, Vizio was busy selling 42 inchers for an average of $850, and doing it through Walmart. They even offered a 120Hz premium set for an average selling price of $1000, where Sammy and Sony were at around $1400 for the same on-paper specs, at the smaller 40" size.

People who read both TV reviews and The Economist don't appear to have been in the mood to buy flatpanel TVs as the fate of our global economy was being hashed out, but people who just absolutely needed an LCD bought Vizio mostly. Its North American market share was 21.6%, but to be fair, LCD sales were down nearly a quarter from the holiday season.

As iSuppli's release puts it so bluntly: "Rather than stopping their purchases of LCD-TVs, consumers are focusing on lower-priced sets." [iSuppli]

Well, it's not clear in Businessweek's summary of the report, but iSuppli is assumingrightfullythat 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 Preor even a detailed component listand 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 170still a bit less than the iPhone, but more than the G1.

[BusinessWeek]

E Ink Display (by E Ink)
$60

EVDO (by Novatel)
$39.50

Baseband Processor (by Qualcomm)
$13.18

8-Layer Printed Circuit Board (by Multek)
$9.83

532MHz Multimedia Application Processor (by Freescale Semiconductor)
$8.64

Battery (by LICO Tech)
$7.50

Main Enclosure
$4.45

(Interestingly enough, the main enclosure costs more than the than the RAM or Flash storage.) Keep in mind that this price excludes Amazon's costs for EVDO service, along with the standard R&D, shipping, yada, yada. [iSuppli]

Main Processing Chip (Samsung)
$5.98

4GB Flash Memory (Samsung)
$6

Lithium Ion Battery (Smallest iSuppli had ever seen)
$1.20

Various Capacitors and Resistors (Smallest iSupply had ever seen, a grain of salt a pop)
Less than a penny each

The prices of the headphones, body and case were unspecified, but apparently those components make up the other half of the shuffle's component cost to Apple. And with the build price at just 28% of the sale price, the shuffle should be Apple's most profitable iPod ever, even if iSuppli's report doesn't account for expenses like R&D. [BusinessWeek and image]

So, at launch, the PS3 cost Sony about $840 to make, according to iSuppli, and they sold them for $599, resulting in a tidy loss of $200 a pop. By stripping out over 1200 parts and features like PS2 backward-compatibility, Sony has cut their costs to just $445 per PlayStation 3. Which they sell for 400 bucks, meaning they still lose about $45 a system.

That, friends, is why you didn't see a cheap PS3 for Christmas, and why you won't see one until deeper into next year at the earliest, even as the Xbox 360 outsold it 3-to-1 on Black Friday. [BusinessWeek via PlayStation Forums via PS3Fanboy]

T-Mobile G1 Carries $143.89 BOM Cost, According to iSuppli Estimate

El Segundo, Calif., Nov. 11, 2008—The T-Mobile G1 smart phone, the first wireless handset to be based on Google Inc.’s Android mobile operating system, carries a Bill-of-Materials (BOM) cost of $143.89, according to a virtual teardown conducted by iSuppli Corp.
Part of the new generation of so-called “iPhone killers,” the HTC Corp.-manufactured G1 combines voice communications with a host of other capabilities, including e-mail, Internet access, camera and music playback. Along with many fellow phones of its generation, the G1 includes a high-resolution display and a QWERTY keyboard. Like the iPhone, the G1 includes a touch-screen interface.
“The G1’s differentiation resides in its use of the Android operating system, which has won praise for its ease of use, but whose major advantage is its integration with Google Internet services and its capability to accommodate the flood of free applications that are becoming available,” said Tina Teng, senior analyst, wireless communications, for iSuppli.

Inside the G1
iSuppli determined the $143.89 BOM based on information from its Mobile Handset Cost Model (MHCM), which provides detailed analysis of present and future expenses to build mobile phones with any possible feature set. This estimate includes only the component and material costs for the G1, and doesn’t account for other expenses including software, research and development, manufacturing and accessories. iSuppli hasn’t yet conducted an actual physical teardown of the G1.
The most costly segment of the G1 is the baseband, at $28.49, or 19.8 percent of the G1's total BOM. Similar to other recent handsets from various brands examined by iSuppli, the baseband employs a combination of an ARM11 microprocessor for multimedia applications and an ARM7 core for modem functions.
The next most costly section of the G1 is the display, at $19.67, or 13.7 percent of the BOM. The G1’s display is a 3.2-inch TFT-LCD flat touch-sensitive screen with HVGA resolution, at 320 by 480 pixels. The display uses projective touch-screen technology.
The camera represents the next most expensive segment, at $12.13, or 8.4 percent of total BOM costs. The camera has a 3 megapixel resolution and an autofocus feature.
The fourth most expensive segment is the Radio Frequency (RF)/Power Amplifier (PA) portion, which costs $9.84, representing 6.8 percent of the total BOM. This section supports a high-speed 3.5G network connection using the HSDPA air standard.

G1 vs. iPhone features
So how does the G1 stack up against the industry standard for smart phones: Apple Inc.’s iPhone 3G?
On the feature front, the G1 supports the HSDPA air interface at the 1700/2100 bands for 3G, which limits its U.S. end users to T-Mobile subscribers. However, the G1 is suitable for markets outside the United States using the 2100 frequency band.
In contrast, the iPhone 3G supports the HSDPA air standard operating at the 850/1900/2100 bands. The 850/1900 bands are designed for the AT&T network. Thus, an unlocked G1 phone using an AT&T network can only achieve EDGE download speed.
The G1 comes with a full QWERTY keyboard, which comes in handy for texters. The iPhone 3G eschews a physical keyboard and instead employs a touch screen for input.
Like the iPhone, the G1 includes Wi-Fi, which allows subscribers to take advantage of T-Mobile's hotspots.
As for the touch screen, the G1 employs projective touch technology, while the iPhone 3G uses a capacitive multi-touch glass touch-screen. The G1’s screen doesn’t support multi-touch capability.

G1 vs. iPhone user experience
Many observers have lauded the user interface of the G1. Teng believes it is well above the industry average, but still has a gap to close with Apple’s interface. Consumers can navigate through playlists and albums with a flicking of finger and can access other intuitive features. For a Google fanatic, this device is well integrated with many Google services, like Gmail, YouTube, and Google Maps.
Teng also observed that the industrial design and finish of the G1 lacks the wow factor of some of its slicker competitors.
Also like the iPhone, the G1 supports the downloading of music, but unlike the iPhone, G1 users must employ Wi-Fi to take advantage of this feature.
“This is a negative for G1 users when there’s no Wi-Fi coverage,” Teng said. “Apple really makes the music download experience transparent; everything is integrated smoothly and seamlessly.”
Teng also noted that the G1’s lack of enterprise friendliness is a downside of the product compared to the iPhone and other platforms like the BlackBerry Bold.
“The G1 presently supports only Post Office Protocol version 3 (POP3) mail, which doesn’t work with many corporate e-mail systems,” Teng said. “However, this problem can be solved if Google licenses Microsoft Corp.’s ActiveSync synchronization system, as Apple did to make the iPhone more suitable for corporate use. This will allow the G1 to receive pushed mails from Microsoft Exchange Servers or manually synchronize emails through a connector.”
The real differentiation and advantage of the G1 relative to the competition is the availability of free open source applications.
“Each day there are about five or six new G1 applications for download,” Teng said. “Eventually the G1 will have its own software community, much like the Linux applications in the wired world or the Sun OS has for workstations. This will produce a rich suite of free software for a variety of purposes that anyone can access.”

[iSuppli]

Seeking Mass Market Acceptance, Apple Stresses Cost Reduction for iPhone 3G

El Segundo, Calif., Jul. 15, 2008—The new iPhone 3G sports an evolutionary design that favors cost reduction instead of cutting-edge features, supporting Apple Inc.’s goal of expanding its market share and achieving a worldwide presence for the product, according to a physical teardown analysis conducted this weekend by iSuppli Corp.
iSuppli’s Teardown Analysis Service on July 11 obtained an iPhone 3G and commenced a dissection in order to identify component suppliers, as well as to determine preliminary part and system costs.
Per the teardown analysis and subsequent examinations by analysts, iSuppli has issued a preliminary estimate of $174.33 for initial production costs for the 8Gbyte iPhone 3G.
This figure consists only of the iPhone 3G’s combined Bill of Materials (BOM) and manufacturing expenses. The total doesn't include other costs, including software development, shipping and distribution, packaging and miscellaneous accessories included with each phone.
iSuppli’s cost estimate is nearly identical to the $173 BOM predicted in iSuppli’s virtual teardown issued to the public in late June.

Cost considerations rule in new iPhone
At $174.33, the BOM and manufacturing cost of the new iPhone is markedly less than the $227 that iSuppli estimated for the first-generation, 8Gbyte 2G iPhone in June 2007. While using a new design, the iPhone 3G really represents a refinement of the original iPhone 2G, according to iSuppli.
“The addition of 3G wireless capability represents an evolutionary design step for the iPhone, not a revolutionary one,” said Andrew Rassweiler, teardown services manager and principal analyst at iSuppli. “iSuppli believes Apple aimed for a more cost-effective design for the 3G iPhone compared to the 2G, in order to lower the retail price—which will allow the company to seed adoption and to capture maximum market share now—while the company still has buzz and a perceived differentiation relative to its competitors.”
The iPhone 3G’s use of an Infineon Technologies AG baseband chip that supports the HSDPA, WCDMA and EDGE air standards, plus the integration of three separate TriQuint Semiconductor Inc. tri-band WCDMA Power Amplifier Modules (PAMs), reflects the fact that the iPhone 3G is suited for sale worldwide.

Infineon takes key baseband slot
The attached table presents iSuppli’s preliminary analysis of components and suppliers for the iPhone 3G, determined via physical teardown. iSuppli has conducted a teardown analysis of only one 3G iPhone. While there are variations in the components and suppliers for individual products, iSuppli believes that the vendors and parts identified in its teardown likely are representative of all iPhone 3Gs now being shipped—excluding certain memory devices and other commodity parts that are available from multiple sources.
After iSuppli has completed an analysis of a larger sample of iPhones, we will issue further information to the public.
Infineon AG was the big winner in the key baseband section of the iPhone 3G torn down by iSuppli, contributing its HSDPA/WCDMA/EDGE chip that includes dual ARM926 and ARM7 microprocessor cores.
Solely-sourced items include Infineon’s baseband solution, RF transceiver and Global Positioning System (GPS) devices; Samsung Electronics Co. Ltd’s applications processor integrated with Synchronous DRAM (SDRAM); Marvell Technology Group Ltd.’s WLAN device and Cambridge Silicon Radio’s (CSR’s) Bluetooth chip.
Multi-sourced items include Toshiba Corp.’s 8Gbyte NAND flash memory chip. Apple’s other likely sources for this part include Samsung.

Design insights
Other observations made by iSuppli’s analysis team include:

· The redesigned internals of the iPhone 3G include only one large Printed Circuit Board (PCB), instead of the two nested PCBs found in the 2G version. The iPhone 3G uses a 10-layer board, compared to the less-expensive six-layer PCBs commonly employed in mobile handsets.
· The battery is not soldered into the iPhone 3G as it is done in the 2G, making it more serviceable.
· Some chips have the Apple logo or are unmarked. Although iSuppli has been able to identify many of these parts and their true manufacturers by de-capping the chips and examining their dies, some devices remain unidentifiable at this time.

iPhone costs
Beyond the $174.33 BOM and manufacturing cost of the iPhone 3G, Apple is spending an estimated $50 on IP royalties per unit shipped. With the 8Gbyte version retail-priced at $199, and the estimated $300 subsidy paid by AT&T to Apple for each unit, Apple is selling the product at a price of $499, and spending $224.33 to produce each one. This gives Apple a BOM, manufacturing and royalty margin of 55 percent for each 8Gbyte iPhone 3G unit sold.
Please respond to this e-mail to receive photos depicting iSuppli’s iPhone teardown analysis findings.

Their supply chain break down goes along three steps. After a hard drive rolls out of the oven at either Seagate or Toshiba, it's preloaded with software and OS stuff (like Xbox Live). Next, it goes out to a Value Added Reseller, who buys the drives for about $75 a pop, and then slaps them inside the Xbox 360 compatible casing and pretties 'em up. They also do the retail packaging. This costs them about $5. They turn around and hit Microsoft up for $100 each. So Microsoft probably pulls about $80 of profit out of each one (though Amazon's got them on sale for $150 right now).

While that's a hell of a margin, it's actually less than I figured, because I didn't expect Microsoft to eat $100 on a drive a consumer would pay $45 $70 for, even with the little bits of plastic and software tacked on. Granted, these are all just estimates by iSuppli, so it's possible they're paying less and are reaping in totally obscene profits on each drive sold, but I actually don't relish assuming the worst all the time. [Multiplayer via Kotaku]

This chart makes the damage pretty clear: Apple barely ekes out a 10 percent profit (a single Jackson) on the 40GB model at the new pricepoint, a far cry from its more typical 50 percent margin.

Andrew Rassweiler, iSuppli's Teardown Services Manager & Principal Analyst, says that while the processor is admittedly the "big unknown for us" because it's not an off-the-shelf component, he "doubts it would be anymore expensive than what we've assumed." The bottom line for Apple's bottom line here is that "if they were giving it away before, they're definitely giving it away now."

This is a marked change for Apple: iTunes content has existed to sell the hardware, not the other way around. iTunes income is incredibly minor compared to hardware sales, not least of which because the majority of each track, album, whatever goes back to the label or studio. Apple TV stands to be the first device Apple makes more money off of the content than the hardware.

Conclusion? Apple is getting aggressive about moving into the living room, looking at the long run of establishing that fourth-leg. Besides, it's better to sell a million at a $20 profit than ten thousand at $60. [iSuppli]

The 8GB iPod Touch has these major component costs:

Flash Memory: $32
(by Toshiba)

Video-Audio Chip: $13
(by Samsung)

Other Memory: $12
(by Samsung)

Touch Screen: $44
(Broadcom - controller chip , Texas Instruments - video driver chip, STMicroelectronics- motion reorientation)
(Balda, Wintex, and Optrex do touch portions)
(while Epson, Toshiba Matsushita Display Technology, and Sharp Electronics can all handle the LCD portion)

Total Component Costs (we know this doesn't add up): $147, about 50% of the retail price, which is standard for iPods.

Add marketing, shipping, building costs, etc...and that's really not so bad. Trust me, having once worked part time in menswear, I can assure you that the real ripoff is that $300 sport coat you are wearing right now. [businessweek]

Apparently Apple's been flipping back and forth between suppliers for various parts as they move from one line to another, which iSuppli's Chris Crotty says they wouldn't do "unless there was a compelling cost-related reason to do it." Well, hopefully quality would make for another compelling reason to switch suppliers. You know, if they were getting crappy shipments of certain parts. [BW]