Hot news " Google Nexus One phone parts cost $174: iSuppli"

 Google Inc's new Nexus One smartphone, which retails for $529 without a service plan, is built from components that cost about $174, according to a research report.

But analysts said the big gap between the components' costs and the phone's price tag did not necessarily mean the Internet giant was making a hefty profit, since the retail price includes expenses such as licensing fees and marketing costs.


Google began selling the Nexus One, which is made by HTC Corp, on its website last week, its first foray into selling electronics devices directly to consumers. The retail price is $529, but if a buyer agrees to a two-year contract with Deutsche Telekom's T-Mobile USA, the carrier will subsidize the phone and it costs only $179.

According to the teardown by research firm iSuppli, the cost of the Nexus One's various components, including $30.50 for the 1Ghz Qualcomm Inc Snapdragon processor and $17.50 for the Synaptics Inc touchscreen, totals $174.16.

In a note to investors last week, Goldman Sachs analyst James Mitchell estimated that the Nexus One's component costs were $300.

The bill of materials cited by iSuppli does not include other costs such as manufacturing, software and royalties -- all of which are factored in when calculating gross profit margin on a product.

Charter Equity Research analyst Edward Snyder said smartphone vendors typically achieve gross margins around 30 percent.

He said the iSuppli report suggested Google would make a "decent" margin on the product, but added that it was impossible to know exactly how much.

Analysts also noted that the component costs are the costs borne by HTC to produce the phone, with Google then likely paying HTC a mark-up to buy and resell the phones.

The Nexus One, which competes with Apple's iPhone and Research in Motion's Blackberry devices, is the first of a variety of smartphones that Google said were in the pipeline as the company seeks to expand its reach from the PC to the mobile world and ensure its online products and ads get prominent placement.

During an event unveiling the phone last week, Google Vice President of Engineering Andy Rubin said the company had an opportunity for an undisclosed margin selling the Nexus One.

Phones, PCs to drive tech rally into 2010

As technology companies make their annual trek to Las Vegas to unveil their coolest gadgets at the Consumer Electronics Show in January, investors are laying bets on another good year for the industry
The mood at CES 2010 should be far more buoyant than in early 2009, when the economy was deep in recession and financial markets reeled from the credit crisis.

Tech stocks have since recovered, with the Nasdaq Composite Index ending 2009 up more than 40 percent, near a 15-month high. Analysts say stronger corporate IT spending, an explosion of activity around smartphones and mobile computing, plus consolidation, should further bolster the sector in 2010.

Broadpoint AmTech analyst Brian Marshall predicted a climb of roughly 15 percent in the Nasdaq in 2010, noting that some of the good news was already factored in to stock valuations.

"It's going to be tough to find areas that won't do well next year," Marshall said.

Topping the list for many sell-side analysts are perennial blue-chip favorites like Google Inc, Apple Inc, Cisco Systems Inc and Intel Corp.

But with economic recovery slowly taking root and companies starting to upgrade their IT systems again, analysts say 2010 will offer tech investors a wide range of opportunities.

Microsoft Corp's latest Windows 7 operating system should help spur sales of personal computers, with research group IDC forecasting double-digit PC shipment growth through 2013. Top PC makers Hewlett-Packard Co, Acer Inc and Dell Inc could be a way for investors to capitalize on that trend, analysts say.

Many like data storage giant EMC Corp as a way to play the anticipated uptick in corporate spending, along with its software unit VMware Inc.

FBR Capital Markets analyst Daniel Ives is recommending "defensive stocks with offensive characteristics" because of uncertainty about the strength and pace of recovery in 2010. He likes EMC, infrastructure software maker Citrix Systems Inc, and security software names McAfee Inc and Symantec Corp.

CHIPS STRONG

With a more stable economy, investors' risk appetite should be higher than a year ago. But given the rise in valuations, the question is how much run the tech rally has left.

Tech stocks are trading in line with other growth sectors, such as materials, at around 16-1/2 times forward earnings, according to Thomson Reuters StarMine. Tech's price-to-earnings growth (PEG) ratio, however, is less attractive for investors, badly trailing materials.

The XLK, which tracks S&P 500 tech stocks, recently cleared a key resistance level and could be aiming for 2007 highs next year, which would be a near 25 percent gain from current levels.

Chipmakers in particular enter the new year riding a wave of positive sentiment. Despite a jump of around 70 percent in the Philadelphia Semiconductor Index in 2009, many believe the sector could be poised for more gains next year.

Gartner expects 2010 worldwide semiconductor revenue to rise 13 percent and rebound to 2008 levels, driven by PCs.

"Demand has been good, inventories are lean and we have a number of areas that are starting to recover," said Canaccord Adams analyst Robert Burleson.

He pointed to companies with their own chipmaking facilities -- Intel, ON Semiconductor Corp, Fairchild Semiconductor and Analog Devices Inc -- as being particularly well-situated for 2010 due to cost-cutting.

Burleson said PCs make up roughly one-third of overall chip revenue, but noted that demand in less-flashy areas like automotive and medical equipment is also coming back.

Other analysts recommend graphics chipmaker Nvidia Corp and Marvell Technology Group Ltd, whose chips are used in storage products, as another way to benefit from a surge in PC sales.

SMARTPHONE STRENGTH

As computing becomes ever more mobile, smartphones will continue to be a hot area. CES should provide a showcase for more devices, while Google is widely expected to unveil the first Google-branded phone on January 5.

Gartner expects the smartphone market to grow to 525 million units in 2012 from 179 million in 2009.

Apple's iPhone and a growing universe of devices based on Google's Android mobile software dominated much of the conversation in 2009. Stumbles by Research in Motion Ltd took the shine off the BlackBerry maker, while Palm Inc's Pre-led recovery hit a stumbling block.

Frost & Sullivan analyst Ronald Gruia likes Google, Apple and Samsung Electronics Co Ltd in the smartphone race. He said Google is the biggest potential star, but is skeptical about revival efforts at cellphone makers Nokia, Motorola Inc and Palm.

Gruia said Nokia needs to innovate in operating systems, while Motorola may be too closely tied to the Android platform, and Palm will have to spend to attract new customers.

The rapid rise in data usage on mobile networks is pushing carriers to upgrade wired broadband connections to cell towers, providing demand for so-called backhaul equipment providers such as Alcatel Lucent, Gruia added.

Speculation rife on Google phone

The web is awash with gossip and rumour about the imminent arrival of a Google-branded phone.

The search firm is widely expected to unveil the Nexus One phone at a press conference scheduled for 5 January at its California HQ.

It is believed Google will sell the gadget directly to customers and that it will also be available, subsidised, from mobile operators.

Google has remained tight-lipped about what will be unveiled at the event.




Hands on

Photos of the Nexus One have appeared online at gadget sites such as Gizmodo, Engadget and many others. The first look at the slim phone reveals that it is built by HTC, has a 9.3cm (3.7in) screen, five megapixel camera and runs version 2.1 of Google's Android operating system.

Early reviews were underwhelming, with Engadget declaring that it was "really not very different" from existing Android phones such as Motorola's Droid.

Engadget said the phone shifted quickly between different applications but lacked what might be thought of as standard features for comparable smartphones such as a multi-touch screen.

Gizmodo said leaked documents showed that the phone will cost more than $500 (£308) unlocked, ie not tethered to a network, or $180 (£111) with a two-year contract from T-Mobile.

No information has yet been revealed about when, and if, the phone will be available outside the US.

Google has kept secret the exact details of what will be unveiled on 5 January. Media organisations are limited to sending one correspondent to the press conference. A spokesman for the company would only say the announcement was "significant".


"All eyes are on the Nexus One," said analyst Rob Enderle of Silicon Valley-based Enderle Group.

"It looks like Google is moving to see if they can do the Apple thing," he added.

The Nexus One is widely believed to have been tested out inside Google when the search giant issued the device to many of its employees.

"For Google to go into the business of selling phones just doesn't make a whole lot of sense," said Van Baker, an analyst with market research firm Gartner.

Before now Google has been content for established phone makers, such as SonyEricsson, to make the phones that run its Android operating system.

Chatter about the Nexus One sets the stage for the Consumer Electronics Show that takes place in Las Vegas from 7-10 January.

The giant gadget shindig will see more than 110,000 people stroll through halls in which they will find more than 20,000 new products.

This year the show is likely to see the unveiling of many netbooks, e-book readers and tablet computers. The conference officially opens on 6 January with an evening keynote from Steve Ballmer, Microsoft chief executive.