Nokia Lumia 900 Costs $209 to Manufacture - Teardown Analysis

Nokia Lumia 900 Costs $26.5 Less than Samsung Galaxy SII to Make

by Anton Shilov
04/11/2012 | 11:19 PM

Perhaps, Microsoft Corp.'s Windows Phone is not the most impressive operating system available today. Nonetheless, Nokia Corp.'s Lumia 900 flagship model seems to be one the finest smartphones on the market right now. According to teardown analysis from IHS iSuppli, the company decided to use rather simplistic, which made Lumia 900 less expensive to manufacture than competing models.

 

“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.

Nokia’s new Lumia 900 smartphone features a cost-reduced design that reveals close cooperation between Nokia, Microsoft and semiconductor supplier Qualcomm, an approach that mimics Apple's holistic approach to hardware and software development. This has allowed Nokia to produce a smartphone that has high-end features, but employs less expensive electronic components than are used in comparable products based on Google Android operating system.

The Lumia 900 carries a bill of materials (BOM) of $209, according to a preliminary IHS iSuppli teardown analysis. When the $8.00 manufacturing cost is added in, the cost to produce the Lumia 900 rises to $217. The BOM represents 46% 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% of its retail price. Both smartphones are equipped with the same 4.3" (800*480) Samsung Mobile Display AMS427GL18 display which uses Super AMOLED Plus technology with ClearBlack polarized filter and covered with Corning Gorilla Glass.

“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,” explained Mr. Rassweiler.

The Lumia 900 represents a make-or-break effort by Nokia and Microsoft to re-establish their foothold in the smartphone business. While Nokia is willing to accept hardware lower margins to carve out smartphone market share, Microsoft also is 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. Microsoft has had limited success with its previous Windows Phone 7 original equipment manufacturers, such as HTC, Samsung and LG. However, Microsoft now is looking to double-down with Nokia to promote Windows Phone 7 and grow the platform,” said Wayne Lam, senior analyst, wireless communications at IHS.

The cost reductions of the Lumia 900 hardware primarily are derived from its use of a single-core applications processor (Qualcomm APQ8055), and its low dynamic random access memory (DRAM) density requirements. Most new smartphone designs at present employ dual-core system-on-chips, with some even adopting quad-core SoCs. However, because of its efficient hardware/software design, the Lumia 900 is able to employ a single-core APQ8055 processor from Qualcomm while still achieving competitive performance. The IHS estimates the cost of this device at $17. In comparison, the Samsung S II Skyrocket employs Qualcomm’s dual-core APQ8060, which costs $5more at $22.

The Lumia 900’s design allows it to operate with only 512MB of DRAM, half the 1GB used in the Samsung Skyrocket and most other comparable smartphones. Because of this, the Lumia 900’s total memory cost amounts to $27, $5 less than the $32 cost for the Skyrocket. Even lower memory densities are possible for use with Windows Phone, allowing the development of even more cost-competitive smartphones in the future.