The real deal on G1's virtual teardown

Setting the record straight on the G1's retail price, as well as offering a caveat for virtual teardowns' real value.

No disassemble! Wikimedia, Matt Hickey

Tuesday, I linked to a Dow Jones story on CNN's Money Web site about a virtual teardown iSuppli did on T-Mobile's fancy G1, the first commercial smartphone to run Google's Android. Some readers had issues with the story, and I'm going to address those here.

First, I quoted the price of the G1 at $399 instead of the $179 new customers typically get. This was due to a communications mixup between me and one of my T-Mobile marketing contacts. He was giving me the unsubsidized price, not the retail price, probably thinking I was inquiring to buy a G1 for myself, not get a quote for a story. Sorry for the confusion.

Second, we'd like to stress that virtual teardowns like the one iSuppli did on the G1 (which showed it's 10 percent cheaper to manufacture than the iPhone) can't be taken at face value. The research firm didn't disassemble an actual device, but rather did a "best guess" as far as the parts involved. In addition, the pricing comes from sources in the Taiwanese parts market, and is an estimate.

Besides the hardware and manufacturing costs, other factors--such as marketing, R&D, shipping, and testing--aren't accounted for in any teardowns, even the real ones. The numbers in Tuesday's post were for manufacturing only, meaning raw parts and assembly. I'm sorry if I wasn't more clear on that point.

In conclusion, the reader feedback was great. Comments are the key to blogs. It's you guys who keep us on our toes. And up late. And stressed. And we thank you for it.

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