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  1.    #1  
    Parts in total average about $138. What does this mean for retail price? Hard to say. Article's source suggests it will probably be $199 after MIR.

    An Early Peek Under The Palm Pre's Hood - BusinessWeek
  2. #2  
    I like the $300 selling price to Sprint. The question then becomes (for those of us with extant contracts), what does this translate to as a non-discounted selling price?
  3. #3  
    Quote Originally Posted by wynand32 View Post
    I like the $300 selling price to Sprint. The question then becomes (for those of us with extant contracts), what does this translate to as a non-discounted selling price?
    Your going to be looking at 549.99 for one w/ out contract.. that seems to be pretty close to what all higher end smart phones go for on sprint. Might even be 649.99 but I highly doubt that.
  4. #4  
    Key part of the article:
    Researchers at iSuppli typically conduct teardown analyses of popular consumer electronic devices to estimate their costs and identify key suppliers. This analysis is an estimate, however, because there is not yet a product to tear down.
    Aka, this is all just educated guessing.
  5.    #5  
    Quote Originally Posted by jhoff80 View Post
    Key part of the article:


    Aka, this is all just educated guessing.
    True the estimates aren't final exact numbers but it's probably a lot closer than what any of us might guess the phone might cost to make. Also I think the breakdown of part-by-part is very useful as well. It is a good primer in depiction of the product's physical worth to Palm and to get a better idea of how much they might gain per unit in sales.
  6. #6  
    Don't forget that the cost of parts is only a small part of the cost of making any product. You've got to amortize the R&D costs that led up to the phone, the cost of the factory equipment and labor to make it, packaging costs, transportation costs, import duties, marketing, etc., etc. Palms true cost to make this phone is way higher than the cost of parts, whatever that figure may be.
    Bob Meyer
    I'm out of my mind. But feel free to leave a message.
  7.    #7  
    Quote Originally Posted by meyerweb View Post
    Don't forget that the cost of parts is only a small part of the cost of making any product. You've got to amortize the R&D costs that led up to the phone, the cost of the factory equipment and labor to make it, packaging costs, transportation costs, import duties, marketing, etc., etc. Palms true cost to make this phone is way higher than the cost of parts, whatever that figure may be.
    You know I was originally trying to use these numbers to figure out if the revenue gained from the Pre would be enough to pull themselves out of their hole, but the way you put it, it seems like they're destined to fail and go bankrupt because they won't gain enough profit off the Pre.
  8. #8  
    Not necessarily. Amortizing costs means spreading those costs out over the life of the device. So if it costs 10 million dollars to do the R&D and set up the factory and actually get the first phone out the door, Palm appears to lose $10 million on the first phone. But if they expect to sell 5 million pre phone over the device's lifetime, that's only 2 dollars per phone. (BTW, those figures were pulled out of thin air to make the math easy. I have no idea what it cost to produce the phone, nor how many Palm expects to sell.)

    And remember that the price after discounts and rebate reflect Sprint's accounting, not Palm's. Sprint is probably selling the phone at less than their cost so that they can make revenue off of the monthly service. So Sprint could be paying Palm $300 for the phone that you buy for $199. If the phone sells well, I'm sure Palm will make a profit. If it doesn't, that's all she wrote.
    Bob Meyer
    I'm out of my mind. But feel free to leave a message.
  9. #9  
    To the best of my knowledge Palm outsources the manufacturing of their phones, so they don't pay for the factories or the overhead involved with running them. They probably pay a fixed rate per unit made.
  10. #10  
    Quote Originally Posted by tntsniper View Post
    Your going to be looking at 549.99 for one w/ out contract.. that seems to be pretty close to what all higher end smart phones go for on sprint. Might even be 649.99 but I highly doubt that.
    Okay, so: if I already have a 2-year contract with Sprint (long story, ouch), then I'll pay the same as the off-contract price?
  11. #11  
    Quote Originally Posted by meyerweb View Post
    Not necessarily. Amortizing costs means spreading those costs out over the life of the device. So if it costs 10 million dollars to do the R&D and set up the factory and actually get the first phone out the door, Palm appears to lose $10 million on the first phone. But if they expect to sell 5 million pre phone over the device's lifetime, that's only 2 dollars per phone. (BTW, those figures were pulled out of thin air to make the math easy. I have no idea what it cost to produce the phone, nor how many Palm expects to sell.)
    Also remember that a whole lot of the R&D for this phone was for WebOS which will be released on other phones as well, so the R&D costs for the OS will be spread across many phone launches to come in the future.
  12. #12  
    Quote Originally Posted by freeridstylee View Post
    To the best of my knowledge Palm outsources the manufacturing of their phones, so they don't pay for the factories or the overhead involved with running them. They probably pay a fixed rate per unit made.
    Oh, Palm pays for the factories and the overhead... It's built into the price they pay for the Pre.
  13. #13  
    Quote Originally Posted by wynand32 View Post
    Oh, Palm pays for the factories and the overhead... It's built into the price they pay for the Pre.
    Indirectly yes, but it's not like they own the factories and have the workers on their payroll. meyerweb alluded to the factory equipment and labor to which palm doesn't directly own or pay. The equipment will probably be used to make an HTC device in a few weeks.
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    #14  
    Quote Originally Posted by freeridstylee View Post
    Indirectly yes, but it's not like they own the factories and have the workers on their payroll. meyerweb alluded to the factory equipment and labor to which palm doesn't directly own or pay. The equipment will probably be used to make an HTC device in a few weeks.
    Exactly. Palm is paying for all direct and overhead costs when they pay their manufacturer. Outsourcing allows Palm to only incur these costs when they manufacture products instead of incurring them 24/7. This turns fixed costs into more controllable variable costs.
  15. #15  
    Quote Originally Posted by wynand32 View Post
    Okay, so: if I already have a 2-year contract with Sprint (long story, ouch), then I'll pay the same as the off-contract price?
    No, if your stuck in a contract, you'll be paying the full retail price of the phone which most likely will be $549.99. If your a Premier Customer, I believe you can get the upgrade every year instead of two? I may be wrong.
  16. #16  
    Quote Originally Posted by tntsniper View Post
    If your a Premier Customer, I believe you can get the upgrade every year instead of two? I may be wrong.
    Correct.

    If it weren't for this perk, I'd be waiting till next June to get my Pre!
    "Never regret yesterday. Life is in you today, and you make your tomorrow." óL. Ron Hubbard
  17. #17  
    Quote Originally Posted by tntsniper View Post
    No, if your stuck in a contract, you'll be paying the full retail price of the phone which most likely will be $549.99. If your a Premier Customer, I believe you can get the upgrade every year instead of two? I may be wrong.
    Okay, here's a question... If the Pre costs $199 with a new contract, and if it costs someone $175 to cancel their current 2-year contract, then what's stopping that someone from cancelling, paying the fee, then starting a new contract? Total cost in this case would be $374.

    Does Sprint have a waiting period to account for such shenanigans?
  18. #18  
    Yes, they have a waiting period of 3 months i believe.
  19. #19  
    Quote Originally Posted by wynand32 View Post
    Okay, here's a question... If the Pre costs $199 with a new contract, and if it costs someone $175 to cancel their current 2-year contract, then what's stopping that someone from cancelling, paying the fee, then starting a new contract? Total cost in this case would be $374.

    Does Sprint have a waiting period to account for such shenanigans?
    Quote Originally Posted by DougB541 View Post
    Yes, they have a waiting period of 3 months i believe.
    And you'll most likely lose your number.
  20. #20  
    Quote Originally Posted by DougB541 View Post
    Yes, they have a waiting period of 3 months i believe.
    Ah, the bastages!!!

    Oh well, looks like it's full price for me.
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