Palm Pre Will Cost Less Than iPhone to Build

By all accounts, Palm Inc. has a last chance to turn its ailing business around with the upcoming Palm Pre. But a new analysis by iSuppli reveals that even if the vendor doesn’t manage to sell a bunch, it can still make a bundle.

That’s because the Pre will cost about $138 to build. iSuppli also said it expects Palm to charge exclusive carrier Sprint-Nextel Corp. $300 each – adding up to a nifty 54 percent profit margin for Palm, just taking into account hardware costs. Niiiice.

iSuppli also said Sprint will probably sell the handset for $200, meaning it’s kicking in a $100 subsidy and will come out with a 50-percent profit margin on the hardware side.

The build cost is cheaper than the iPhone, which iSuppli pegs at $174, and the T-Mobile/Google G1, which comes in at $144. That’s likely due to falling component prices, according to analysts. While the software the Pre runs is innovative – the webOS – the components are the same found in handsets everywhere.

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