List Price of Samsung’s $499 Chromebook Is $165 Above Manufacturing Cost, IHS Says

Samsung’s Series 5 Chromebook costs $334.32 to produce, IHS iSuppli said Monday, based on a stripping of the product by IHS’s Teardown Analysis Service. Total bill of materials for the device, which packs a 12.1-inch display, 8.5-hour battery pack, dual-core Atom processor, two gigabytes memory and a 16-gigabyte solid-state hard drive, is $322.12. Manufacturing cost of the China-sourced device is $12.20, IHS said. Bill of materials doesn’t take into account manufacturing software, licensing, or royalties, IHS said.

Suggested retail prices for the Chromebook, due in stores Wednesday, are $499 for the 3G version and $429 for the Wi-Fi, IHS said. By contrast, Amazon is taking pre-orders for Acer’s Cromia Chrome competitor at $379 for the Wi-Fi version and $449 for the 3G model, according to our Monday check. Verizon will be a partner on Chromebook, offering free 100 megabytes of 3G service a month for two years, IHS said.

IHS performed a similar teardown on Samsung’s Galaxy Tab GT-P1000 at introduction, which tallied a materials bill of $205.22, plus $9.35 in manufacturing costs for a total cost total of $214.57, IHS told us. The Wi-Fi Galaxy tablet is also $499 at Amazon. The device includes a 7-inch screen, gyroscopic microelectromechanical systems (MEMS) sensor for gaming, three-megapixel auto-focus camera and 1.3-megapixel front-facing camera. IHS hasn’t done a tear down of a Samsung notebook computer, IHS told us.

Google has placed its “formidable weight” behind the Chromebook in hopes of providing an always-connected user experience, IHS said. It described Chromebook as a “new take on mobile computing” distinct from smartphone and tablets with a boot-up time of eight seconds and “effortless” connection to the Web. Chromebook stores all of its data in the cloud.

Despite the new approach to computing, which “should make the physical hardware less crucial and more disposable,” IHS said Chromebook’s focus on providing a compelling user experience has produced “advanced hardware features not typically found in low-cost notebooks.” The tradeoff was a trim in spending on certain features but a bump in spending on display, battery pack and enclosure, IHS said. Samsung was able to benefit from vertical integration and tapped in-house resources for memory, battery and display which allowed for cost reduction and differentiation, it said.

The motherboard consumed most of the budget for the Series 5 Chromebook, running an $86.37 tab, 26 percent of the cost of the device. The 2-gigabyte SDRAM was the major cost driver of the motherboard, IHS said. The motherboard also includes a dual-core Intel Atom N570 processor and Infineon Technologies’ Trusted Platform Module (TPM) for computing security that’s typically found only on enterprise computers, IHS said. The next most costly element of the Chromebook is the 12.1-inch LED-based LCD display at $58, 17 percent of the cost, IHS said.

The six-prismatic cell battery pack assumes more than its share of space, taking up nearly two-thirds of the total volume of the Chromebook, IHS said. At $48.20, it assumes 14.5 percent of the cost of the device and is sourced from Samsung SDI. The $70 premium for the 3G version owes to the fourth-priciest component on the list, the global 3G wireless wide area network (WWAN) module from Hon Hai Precision Technology of Taiwan, which boasts a quad-band EDGE/GPRS/GSM, a quad-band HSPA/UTMS and a dual-band CDMA, IHS said. Samsung compensated for that cost by using an older Gobi 2000 baseband platform from Qualcomm, according to the teardown report. The 3G WWAN module totaled $42.85, 12.9 percent of the bill of materials, it said.

Other components, including the mechanicals, enclosures, and keyboard assembly, comprise $40.45, 12.2 percent of the bill, followed by the 16-gigabyte SSD drive at $28, 8.4 percent of the total cost. Ironically, the SSD drive was sourced from SanDisk and not from Samsung, which IHS speculated was due to Samsung not having SSD of equivalent capacity along with a desire to keep costs down by not over-delivering on storage capacity. The peripheral printed circuit board, containing the Wi-Fi and PC camera modules, is $17.85, 5.4 percent of the bill, IHS said. Box contents, including an AC power adapter and other accessories, add up to $10.40, 3.1 percent of the total, IHS said.