A new study by research firm iSuppli suggests that the new HTC-manufactured G1 smartphone is 10 percent cheaper to produce than Apple’s iPhone 3G, one of the G1’s principal competitors. The study found that the G1 – the first handset to be based on Google’s Android mobile operating system – carries a ‘Bill of Materials’ (BOM) cost of US$143.89. The firm previously estimated iPhone 3G’s BOM cost to be around US$173 at launch and now around US$160. The most costly aspect of the G1 is considered to be the baseband, at US$28.49 or 19.8 percent of its total BOM. The other main costs were revealed to be the G1’s display (US$19.67, or 13.7 percent of the BOM), camera (US$12.13, 8.4 percent) and the Radio Frequency / Power Amplifier (US$9.84, 6.8 percent). iSuppli’s analysis covered only the component and material costs for the G1, and did not account for other expenses such as software, research and development, manufacturing and accessories.

The difference in BOM costs between the G1 and iPhone 3G reflects the different pricing of the devices. T-Mobile USA offers the G1 for US$179 while rival AT&T offers the 8 GB iPhone 3G for US$199, though both are subsidised by the operators. In her analysis of the G1, iSuppli’s Tina Teng noted the device’s support of free open source applications as being a key advantage over its competitors. “Each day there are about five or six new G1 applications for download,” Teng said. “Eventually the G1 will have its own software community, much like the Linux applications in the wired world or the Sun OS has for workstations. This will produce a rich suite of free software for a variety of purposes that anyone can access.”