Motorola Droid's $187.75 BOM Costs Tops iPhone, Nexus One

The Motorola Droid costs $187.75 to make, according to iSuppli. This makes it the priciest among today's major smartphone competitors, including the iPhone 3G S, the Palm Pre and the Nexus One. While the camera is notable, the Droid's priciest bits are its screen - and the 16GB microSD card it comes with.

The Motorola Droid has a bill of materials (BOM) totaling approximately $187.75, iSuppli reported on Jan. 14, following a "dissection" of the device. That total includes electronic components adding up to $179.11 and manufacturing costs of $8.64.

It's the priciest of the recent smartphones iSuppli has taken apart. The research firm recently estimated that the Google Nexus One, which is made by HTC and, like the Motorola Droid, runs the Google Android operating system, costs $174.15 to make. Similarly, it estimated a BOM of $172.46 for the Apple iPhone 3G S and a BOM of $170.02 for the Palm Pre.

"Motorola has pinned all its hopes on one little Droid," said Andrew Rassweiler, iSuppli's director and principal analyst of teardown services, in a statement. "Indeed, the Droid is a critical product for Motorola, which has suffered from dwindling market share and declining market relevancy over the past few years. The last hit for Motorola was the RAZR, launched in 2003."

In the third quarter of 2009, Motorola ranked fifth worldwide, shipping 13.6 million handsets during the quarter - which was down from 25.4 million a year earlier, according to Strategy Analytics.

Competitor Samsung, however, had a particularly strong third quarter that garnered it 20.7 percent of industry market share. It was the first time that a vendor other than Nokia had shipped more than one-fifth of the world's handsets, said analyst Neil Mawston, since "Motorola's RAZR-heyday performance in 2006."

While Palm, HTC, Samsung and LG have had some success with their smartphones, the Droid represents Motorola's attempt to regain its place within the global handset device market.

"For Motorola, the Droid represents an attempt to get on the comeback trail with a competitive smartphone product," said iSuppli's Rassweiler."

iSuppli revealed that the most expensive aspect of the Droid is also its major differentiating feature - a microSD slot for expanding its NAND flash memory. The Droid comes with a 16GB microSD card that costs $35.

As for its integrated components, the priciest bit is the Droid's 3.7-inch TFT LCD display with 16 million colors and a resolution of 854 by 480 pixels - a praised-by-reviewers feature that also sets the Droid apart. The display costs $17.75, which is closely followed by its capacitive touch screen overlay, priced at $17.50.

At $14.25, the camera module is the third-most pricey integrated component. Still another distinguishing trait, its flash capabilities and 5 megapixels are markedly better than the flash-less, 3-megapixel camera in the iPhone 3G S.

"The [Droid's] camera module appears to be sporting a new type of auto-focus actuation technology that iSuppli's Teardown Analysis Service has not previously seen, and still hs not yet been identified," iSuppli wrote in the Jan. 14 report. "iSuppli hypothesizes that this may be bimetallic strips that are heat actuated. In contrast, most auto-focus camera modules at this scale feature voice-coil actuation."

The Droid's Qualcomm core semiconductor, supporting CDMA200 1x and EV-DO standards, GPS and tri-band 800MHz/1900MHz/AWS (1700/2100MHz) frequencies comes at a cost of $14.04. The Texas Instruments' application processor adds $12.90 to the bill, and the Bluetooth/WLAN/FM transmitter/receiver, also from Texas Instruments, costs $6.50.

"With the inclusion of all these features, Motorola is attempting to address what it considers to be shortcomings in the iPhone," said Rassweiler.

"However, at the end of the day, it's Google's software that will determine how well the device actually operates. This is critical because whatever the perceived shortcomings of the iPhone's features, it's the actual user experience that has made it so popular," Rasswwiler continued. "The real lesson of the iPhone is how well the whole device comes together and actually functions, no how many features it has."