Google phone costs $144 in materials: iSuppli

LONDON (Reuters) - The first phone to be built on Google's Android operating system, which T-Mobile is selling for $179 in the United States, costs $144 for the components and materials, research firm iSuppli said.

The T-Mobile G1, made by Taiwan's HTC, has a touch screen and full keyboard as well as popular Google applications such as search, maps and mail. And it is considered the most likely contender to the iconic status of Apple's iPhone.

The company iSuppli said its "bill-of-materials" estimate, which does not include costs for software, research and development, manufacturing or accessories, was based on a cost model rather than a physical examination of the phone.

It has not yet conducted a physical teardown to determine whose components are inside the phone, but said on Tuesday the G1 contained a multimedia microprocessor and modem core designed by Britain's ARM.

As well, iSuppli said it believed the G1 was well above the industry average in terms of ease of use but still had a gap to close with the iPhone's user interface.

It also observed that the phone's industrial design and finish lacked the "wow factor" of slicker competitors.

"The G1's... major advantage is its integration with Google Internet services and its capability to accommodate the flood of free applications that are becoming available," iSuppli's senior wireless communications analyst Tina Teng said in a statement.

(Reporting by Georgina Prodhan; Editing by Sharon Lindores)