Nokia’s Lumia 900 carries a bill of materials (BOM) of $209, according to a recent teardown of the device conducted by IHS iSuppli.
IHS said in a report that Nokia’s new smartphone features a cost-reduced design that reveals close cooperation between the handset brand, Microsoft and semiconductor supplier Qualcomm.
“This cooperation mimics Apple Inc.’s holistic approach to hardware and software development,” IHS wrote in its report.
The $209 BOM represents 46 percent of the Lumia 900’s $450 retail price, without a service contract. In contrast, Samsung’s S II Skyrocket, an Android smartphone that has a very similar feature set to the Lumia 900, carries a $236 BOM and a retail price that is $100 higher, at $550. The Skyrocket’s BOM amounts to only 43 percent of its retail price.
IHS previously found that the BOM on Apple’s iPhone 4S was $189.
“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,” said Andrew Rassweiler, senior principal analyst, teardown services, at IHS, in a statement.
Rassweiler also notes that while Apple capitalizes on its low hardware costs to attain its industry-leading margins, Nokia is using this approach to offer an inexpensive phone intended to compete on the basis of price as part of the company’s strategy to enter the hyper-competitive market as a third ecosystem.
IHS notes that Microsoft also may have helped reach the lower price point by pitching in on the operating system software side.
“Given the highly strategic partnership with Nokia, we believe Microsoft substantially discounted its software licensing fees on the Lumia 900 to accommodate the overall lowered manufacturing costs,” said Wayne Lam, senior analyst, wireless communications at IHS, in a statement.