Based on Google’s Android mobile operating system, the T-Mobile G1 smart phone required a bit of design innovation—and $143.89 in bill-of-materials (BOM) costs, according to iSuppli, which conducted a virtual teardown. The G1, designed to compete with the iPhone, offers e-mail and Internet access, a camera, and music playback as well as a high-resolution display, a touchscreen interface, and a QWERTY keyboard.

The market research company determined the $143.89 figure based on information from its mobile handset cost model (MHCM), which provides detailed analysis of present and future expenses to build mobile phones with any possible feature set. This estimate only includes the G1’s component and material costs. It doesn’t account for software, research and development, manufacturing, accessories, or other expenses.

The baseband is the phone’s most expensive segment, with $28.49 or 19.8% of the total BOM. Like other recent handsets from various brands that iSuppli examined, the baseband uses a combination of an ARM11 microprocessor for multimedia applications and an ARM7 core for modem functions.

Next, the display accounted for $19.67 or 13.7% of the BOM. This 3.2-in. TFT-LCD flat, projective touch-sensitive screen provides HVGA resolution with 320 by 480 pixels. The 3-Mpixel camera, which includes autofocus, represents $12.13 or 8.4% of the costs. At $9.84, the RF power amplifier was 6.8% of the BOM. It supports high-speed 3.5G network connections using the HSDPA standard.

G1 Versus iPhone

“The G1’s differentiation resides in its use of the Android operating system, which has won praise for its ease of use, but whose major advantage is its integration with Google Internet services and its capability to accommodate the flood of free applications that are becoming available,” said Tina Teng, senior analysis, wireless communications, for iSuppli.

The G1 supports the HSDPA air interface at the 1700/2100 bands for 3G, which limits its U.S. end users to T-Mobile subscribers. Yet the G1 suits markets outside the U.S. using the 2100 frequency band. The iPhone supports the HSDPA air standard at the 850/1900/2100 bands. The 850/1900 bands are designed for the AT&T network. So, an unlocked G1 using AT&T can only achieve EDGE download speed.

The G1’s full QWERTY keyboard gives it the advantage for texters, while the 3G iPhone uses a touchscreen for input. The G1 has a touchscreen too, but it uses projective touch technology, while the iPhone uses a capacitive multitouch glass touchscreen. So, the G1 doesn’t support multitouch capability.

Teng believes the G1’s user interface is well above the industry average, but still needs to close the gap with Apple’s interface. Still, G1 users can scroll through playlists and albums with finger flicks. Also, the G1 is well integrated with many Google services like Gmail, YouTube, and Google Maps.

Meanwhile, the G1 and iPhone both include Wi-Fi, so subscribers can take advantage of T-Mobile’s hotspots. Both can download music as well, though unlike iPhone users, G1 users must rely on Wi-Fi to do so. Apple’s downloads are transparent, with smooth and seamless integration, Teng said. And compared to the iPhone and other platforms like the BlackBerry Bold, the G1 lacks enterprise friendliness, Teng noted.

“The G1 presently supports only Post Office Protocol version 3 (POP3) mail, which doesn’t work with many corporate e-mail systems,” Teng said. “However, this problem can be solved if Google licenses Microsoft’s ActiveSync synchronization system, as Apple did to make the iPhone more suitable for corporate use. This will allow the G1 to receive pushed mails from Microsoft Exchange servers or manually synchronize e-mails through a connector.”

Yet the availability of free open-source applications gives the G1 real differentiation and an advantage over its competition. “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 operating system has for workstations. This will produce a rich suite of free software for a variety of purposes that anyone can access.”

• iSuppli
• T-Mobile

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