Thursday, April 12, 2012

Nokia's flagship Lumia 900 costs $20 more to build than the iPhone 4S

Nokia's Lumia 900 AT&T Windows Phone has been torn down by iSuppli, and its Bill of Materials (BoM) cost has been estimated. The phone, which sells for $99 or less subsidized and $449.99 unsubsized has a BoM cost of $209, or $217 including manufacturing cost (labor).

Compare that to a different device that the market research firm tore down, the AT&T Samsung Galaxy S II Skyrocket, an Android device with a very similar feature set to the Lumia 900, although superior specs in some areas. The Skyrocket carries a $235.50 BOM, only $26.50 higher than the Lumia 900, but a retail price that is $100 higher.

Interestingly, enough, the iPhone 4S in its lowest price tier costs Apple $196 (including manufacturing) to make.

In both the case of the Skyrocket and the iPhone 4S, Nokia's components are outclassed in some areas. For example, the Lumia 900 uses a single-core SoC, vs. the other two phones' dual-core processors, and its screen resolution is easily surpassed by the iPhone 4S' "retina display."

All that said, iSuppli believes that by working together, Nokia, Microsoft, and Qualcomm have created a device that has advantages over Android because, unlike Google and its hardware partners, the close relationship between Microsoft and Nokia has resulted in a device that is more like the iPhone, in that the manufacturer has control over the hardware and software to the point that fragmentation shouldn't be an issue. Andrew Rassweiler, senior principal analyst, teardown services, at IHS, said:

“With the Lumia 900, Nokia, Microsoft and Qualcomm have taken a page from Apple Inc.’s playbook by closely tying together the hardware and software to produce a full-featured smartphone that is based on relatively inexpensive electronic components. One of Apple’s advantages over Android has been the company’s complete control of both the hardware and operating system software, helping it to produce efficient and economical iPhone designs. For the Lumia 900, Nokia and Microsoft worked in close partnership with Qualcomm to develop and optimize the software stack in order to take full advantage of the hardware. But while Apple capitalizes on its low hardware costs to attain industry-leading margins, Nokia is using this approach to offer an inexpensive phone intended to compete on the basis of price.”

We'll see how this all shakes out in the U.S., where Nokia has been a non-factor for a long time. The Lumia 900 is its first real big to re-enter the U.S., and it didn't start well with the device being released with a rather nasty bug.

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