Smartphone material costs fell in 2010, report says

The rapid growth of the smartphones business led to significantly lower costs for materials such as displays, processors and software in 2010, according to InStat.

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The price of smartphone materials dropped by 13 percent last year compared to 2009, according to In-Stat, as volumes of low-cost smartphones increased amid surging popularity.

The biggest costs in a smartphone are its display screen and processor and the price of both dropped sharply in 2010, In-Stat said in a statement. Other significant material costs are for the device's memory, camera, software and case.

In-Stat analyst Allen Nogee said component prices were also affected by the integration of GPS, Bluetooth, Wi-Fi and sometimes FM radio onto a single chip. All were previously on separate chips, he said.

Also, increased use of free or low cost open-source software played a role in lowering the cost of smartphone software and licensing.

In-Stat projects that half of US mobile phones shipped in 2012 will be smartphones - in 2010, less than 30 percent of US wireless subscribers used a smartphone, according to Nielsen research.

In-Stat didn't detail actual costs for smartphones in the announcement about its report on smartphones, which is available for $3,495.

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