iSuppli calls Motorola Droid more valuable than iPhone 3GS or Nexus One

The iPhone 3GS might have the looks and the Nexus One is the popular new kid on the block, but iSuppli has declared the Motorola Droid to be the most valuable in the class. Surprised?

According to their report, the Motorola Droid comprises $179.11 in electronic components and $8.64 in manufacturing costs, making a grand total of $187.75 bill of materials. (Note: this doesn’t include royalties, accessories, etc.) As for what you’re actually going to pay, Verizon’s Droid starts selling at $199 with a two-year contract (or $149 for existing Verizon customers).

That’s in contrast to the Droid’s two biggest competitors these days: the iPhone 3GS, which costs $178.96 to make, and the Nexus One, which only takes $174.15 to produce one model.

If it weren’t for that microSD slot, which costs $35 to put in, the Droid would drop behind these two. However, it seems like a lot of people like this asset (and some iPhone users are hoping to see it in the next version.)

If you’re seriously interested in what each aspect of the Droid costs (or you want to get an idea of how components contribute to a smartphone’s price), iSuppli has created a breakdown chart:

http://blogs.zdnet.com/gadgetreviews/?p=11248

Intersting article about time based costing:

• the full article

Apple's iPhone 3G-The Cost model

It costs Apple roughly $3 more to make an iPhone 3G S than it does Palm to pump out a Pré, hardware analysis by market watcher iSuppli has revealed.

Following a Bill of Materials (BoM) and manufacturing breakdown of the iPhone 3G S, iSuppli concluded that each unit will cost Apple $172.46 in components and $6.50 to manufacture.

By contrast, the same analysis conducted on the Pré back in April discovered that Palm’s smartphone costs $170 in components.

the full article

How much is the Kindle costing Amazon?

Image via CrunchBase

Jeff Bezos warned Amazon shareholders yesterday that the Kindle e-book reader was not a “big cash flow generator for us”.

In the meeting here in Seattle, the Amazon CEO instead characterised his digital books business as being in “investment mode”.

The Seattle Times reports Bezos as saying, “If something is successful, it seems to take five to seven years or more before it’s a positive contributor” to the company’s profits. The Kindle, which launched in November 2007, is less than two years old.

Kindle costs over $200 to make?

Bezos also commented on a recent statement by market intelligence company iSuppli, which estimated that the Kindle 2 e-book reader cost around $185 (£114) to make. He said the retailer’s manufacturing costs are actually “significantly higher”.

The Wall Street Journal also speculates that Amazon is losing money on some book sales, with retailers typically paying about half the eventual retail price of $25-30 for a new release book.Amazon sells most Kindle bestsellers for $9.99 9 (£6.16).

Jeff Bezos told shareholders that where Amazon carries both the physical book and the e-book version, Kindle sales account for over a quarter of total sales of a title.

for the full article

http://www.atarh.com/2009/05/30/how-much-is-the-kindle-costing-amazon.html

The iPhone 3G cost Vs the BlackBerry Storm cost

An article published last week compared the materials and manufacturing cost of the new RIM Blackberry mobile (Storm) with those of the iPhone 3G
The article claimed that the materials and manufacturing cost of the BlackBerry Storm is 203$, and the materials and manufacturing cost of the iPhone 3G is 174$
Does it mean that the Storm is more expensive for RIM than the iPhone is for Apple?
Not necessarily.
Let's take for example the Selling and marketing expenses of the iPhone: Is it possible to compare the massive branding, pre-sale and marketing expenses of the iPhone with the same expenses of the BlackBerry?
Visit an Apple store and take note of the iPhone's massive branding investment.
R&D expenses - The development of the iPhone began with Apple CEO Steve Jobs' direction that Apple engineers investigate touchscreens.
Apple created the device at a development cost of US$150 million over thirty months.
Apple rejected the "design by committee" approach that had yielded the Motorola ROKR E1, a largely unsuccessful collaboration with Motorola. Instead, Cingular gave Apple the liberty to develop the iPhone's hardware and software in-house. Numerous codenames and even fake prototypes were devised to keep the project secret.
This is only the investment on the first iPhone: Did RIM invest that much on the BlackBerry?
Logistics & supply chain expenses:Apple released the iPhone 3G in 70 countries. That means that Apple has to ship, supply and manage an inventory of phones in each of those locations






The table above describes the Selling/General/Admin & R&D expenses of Apple & Rim over twelve months.

Not all these figures have to belong to the iPhone/ BlackBerry, but we may safely assume that at least 30 % of those expenses have to be allocated to the iPhone/ BlackBerry


Summary:It is not easy to allocate the expenses of Apple and Rim to the iPhone/Storm. Nevertheless, it is possible to assume that the iPhone total cost is higher then the Storm cost.In order to get a final answer about the life cycle costing, it is necessary to perform Activity based costing (ABC) analysis at Apple & Rim.

Is this the full cost of RIM Blackberry Storm?

This week an article was published regarding the materials and manufacturing cost of the new RIM Blackberry mobile (Storm).
Is this the full cost of the Storm?
Do we have to consider the other expenses of RIM?
Well, the cost calculated in the article is not complete.
There is no allocation of some expenses, including R&D, quality assurance, Intellectual Property (IP), royalties and licensing fees, software, shipping, logistics marketing and other channel costs
According to other costing analysis in other companies from the electronics industry
- full measurement & allocation of all RIM’s expenses by using activity based costing (ABC) can significantly increase the cost of the Strom by 35% to 45%.

By full measurement & allocation, Rim will be able to understand what is the “real cost” & the life cycle costing of the Storm from the development phase to the marketing phase, and to Perform Break-even point profitability analysis.
However, due to the competition at the smart phones market, the price to the customers is even lower than the materials and manufacturing cost.

. The table below presents a summary of iSuppli's teardown analysis of the Storm :

The full article:

http://www.isuppli.com/MarketWatchDetail.aspx?ID=326

Why is it essential to implement a costing system especially now?

We are facing a major economic crisis. In this specific period it’s essential to implement a costing system in order to:
Support the company pricing policy
Determine the products and the customers profit and to allocate more resources on profitable products/customers
Monitor the products cost and to control the cost at individual level and on departmental level
Identify inefficient product, department and activity
Evaluate the inventory value
Determine the “red line” for strategic /marketing decisions
Determine & measure the current capacity usage