Infographic: Nokia Lumia 900 vs iPhone 4S costs/margins.

| June 1, 2012 | 35 Replies

This is a very interesting infographic above that compares the margins between the Nokia Lumia 900 and the Apple iPhone.

Nokia are apparently making a margin of $241 per each Nokia Lumia 900 sold $450 whilst iPhone are getting $459 out of each iPhone sold at $649.  Were Nokia to charge at the same price, they would get a very similar profit of $440 – but Nokia can’t do that with this product (not in the US anyway). The key to the Nokia Lumia 900 selling well is that it is at a very good price in comparison to competitors. Note this price does NOT include marketing, R&D and distribution.

Apple uniquely makes sky high profits on their devices like no other. Credit where credit is due, they just have some incredible business practices that have led them to be able to command such prices: Unparalleled marketing, the creation of iCulture to the point some zealots would act similar to those in cults, genuinely good premium products. Their portfolio is relatively small for a company so large but this works in their favour in that pretty much all their products can be recognised easily and they can spend more time refining each individual device, with larger teams per device.

WSJ points out the Lumia 900 costs more than the iPhone because of the larger screen and LTE. They also add that,

cost differences also reflect Apple’s command of the electronics supply chain and its ability to extract lower prices from suppliers

http://online.wsj.com/article/SB10001424052702303640104577436443119293310.html?

Phone Arena adds that on top of Apple’s state of the art supply chain perfected over the years, with a bargaining power unmatched, Samsung can make their own components. They reckon that when the new iPhone comes, Nokia’s margins could become thinner – but they expect that Nokia should continue because they command a higher premium than Nokia’s Symbian handsets.

http://www.phonearena.com/news/WSJ-infographic-of-the-Lumia-900-and-iPhone-4S-costs-and-margins-shows-how-hard-it-is-to-be-like-Apple-or-Samsung_id30748

That’s true. If Nokia keeps producing handsets relative to the Nokia Lumia 900 then Nokia’s job will get so much harder. We want these new high end devices. Sure they’ll cost even more to make, but they’ll be a darn sight more attractive as they’ll at least have the standard paper specifications not to be ignored or dismissed – it will then just be on the experience/the marketing.

Although Nokia has been around longer in phones, for a long time, Nokia’s reputation has been battered and severely declining. This was even before the days of N8. iPhone will be around for 5 years now – each year improving their reputation and being able to demand more. The same goes for Samsung. The iPhone line steadily improves year after year, as does SGS and other galaxies. Nokia’s phones have a habit of being random and not always being completely 100% better than the previous model. We’ve had Nseries/Eseries/Xseries/Cseries as well as the myriad of number phones to dilute the brand. Those other two have been able to concentrate their devices reputations on a few handsets – it makes it at easier choice to go with handsets people feel their familiar with – simply being the ‘new’ iPhone or the ‘new’ galaxy S. You can’t take for granted what a ‘new’ Nokia or ‘New Nseries’ would have been.

It could be something great but more often than not it’s something mediocre or for the low end (note low end does not necessarily mean mediocre). Nokia now have a new brand in Lumia now coming to its 8th month of existence in a world where there are just very much better, well known established brands. It’s going to take a lot of time and effort from Nokia to ensure awareness of the Lumia brand and to do that, they must first and foremost focus on creating excellent noteworthy products, produced in a timely fashion. As much as I love the Lumia series, Nokia, no, you have NOT produced a noteworthy products.

We’re all eagerly awaiting for Nokia’s WP8 devices that will hopefully lift a lot of this fussy WP7.5 restrictions. PureView has been exciting Nokia’s fans and even their most harshest critics. So much show that they’re all eagerly anticipating future versions, especially a Lumia PureView. It’s in Nokia’s best interest to allow as many people as they can to experience the 808 PureView. If the aim is to bring PureView to the Lumia series, then allow the 808 to make a start on solidifying that reputation of the phone that made pocket cameras  obsolete – the one that set a new bar in mobile imaging. Symbian Belle FP1 seems to be a decent enough user experience. If it was on Anna or plain S^3, I would be worried that unleashing that user experience would be more detrimental to Nokia’s reputation – but at least in the demoes, FP1 seems to be night and day difference. Extended usage and testing will still be needed to confirm these hopes of mine (I hope not to experience the same gradual decline in performance over time as I did with my N8).

PureView, beefier processors, higher resolution screens, more RAM – these are things that are going to cost more. All of that, sans PureView, is what many of the Droid manufacturers must contend with at the high end in order to compete – and they’re doing so against Samsung. But it’s more than OK to have an incredible high end if you’ve made it right, if it’s exciting enough that people will be crying out for it and so will fork out the cash. Mediocre devices rely on good pricing. Fantastic products at the high end can demand higher prices that are warranted because they’ll be worth it.

Source: WSJ via phonearena

Cheers stylinred for the tip

Category: Nokia, Nseries, Symbian, Windows Phone

About the Author ()

Hey, thanks for reading my post. My name is Jay and I'm a medical student at the University of Manchester. When I can, I blog here at mynokiablog.com and tweet now and again @jaymontano. We also have a twitter and facebook accounts @mynokiablog and  Facebook.com/mynokiablog. Check out the tips, guides and rules for commenting >>click<< Contact us at tips(@)mynokiablog.com or email me directly on jay[at]mynokiablog.com

Comments (35)

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  1. S2korpio says:

    Interesting, but I believe the flow would forever be an oscillating spectrum. There will be the time where Apple would experience its downfall while Nokia rises. Right now Nokia (and Microsoft) needs to fix their own consumer culture (Nokia needs to fix the civil conflict between fans). Until then Apple and Samsung would remain as the undisputed puppeteers for now.

    • gordonH says:

      +1
      The first Samsung Galaxy S scored over 24 million sales in two years. Its successor, the Galaxy S II sold much faster, reached 28 million sales in just 13 month.
      The killing of symbian and meego that did give Android a big boost.

  2. stormtroller says:

    When people takes their time to do this nice infographic, means that Nokia’s impact in US market quite obvious.

  3. ilan says:

    nasdaq is short on nokia all the wy from 2007.
    they want to destroy nokia corp.

    if apple fail 580B go down.

  4. Ebon & Unicorn N9s says:

    Doesn’t the 4S has a GSM\CDMA dual-radio chipset? That should make up for the LTE one on the 900.

  5. Harangue says:

    Cut out another $15 for the OS cost and the margin shrinks even more. However, Apple probably needs to spend a whole load more on the OS development side per device to keep that up to date.

    One thing is for sure though, Apple is raking in the cash with their iOS devices. Apart from the iPad perhaps, it has similar components to the iPhone yet has a bigger battery and a bigger screen. I’m willing to bet that the margins on the iPad (especially the new one) are close to a $100 or even below that.

    • Ebon & Unicorn N9s says:

      I think Apple maintains the OS cost by having it across the different iOS devices.. The volumes of iPod Touch, iPhone & iPad will probably cost them less per device than Nokia’s WP license.

  6. huh? says:

    Sorry, but how do they know what Nokia and Apple pay for their parts? Sure, that’s what the parts cost but does iSuppli really have access to the deals Nokia or Apple have made for them?

  7. steelicon says:

    Just some random sample pricing:

    http://bit.ly/JDiDUm

    27,990 Philippine Peso = 643.88196 US Dollars with 12% tax.

    $450 USD is probably heavily subsidized. Or some Nokia distribution ripping off people.

    • Jay Montano says:

      Thanks for the reminder.

      Nokia’s USA prices are shockingly cheap for Lumia 900.

      You can’t even buy the 800 for 450USD in UK let alone the 900 (there’s a trend with US to UK prices where on occasion, the currency conversion is not in operation, the same number just that USD becomes GBP :/).

      I’d say based on what it’s offering, that price is more than fair.
      600-700USD is about the relative price of this handset everywhere else apart from USA. Without LTE, the global variants should be cheaper, no? And perhaps at that price of a minimum 600USD, 391USD margin? Is that even possible?

      • Pökö says:

        In Finland (Gigantti store):
        - Lumia 900 = 652$ (including taxes)
        - iPhone 4S 16Gb = 775$ (including taxes)

        • Jay Montano says:

          Good point Pökö

          776USD is the equivalent exchange of iPhone 4S 16GB in UK. So Nokia Lumia 900 can make more margin outside of US, but then again so does iPhone.

          Very understandable given how far iPhone has come, imo.

          • dss says:

            The can charge whatever they want for it, but volume wise they don’t stand a chance against the iphone at this point, so it doesn’t matter.

            The only way to do it is exactly what they’ve been doing here in the US.. very low margin, take the hit, and see what happens later…

      • steelicon says:

        And take note: The Lumia 900 in some markets with this pricing is not even LTE capable, even though LTE infrastructure and mobile plans are already present. Most notable are Indonesia, Philippines, Singapore, etc., CMIIW.

  8. sendous says:

    Lumia 900 better than any smartphone

    • Jay Montano says:

      Actually, no it isn’t. It depends what you’re looking for. 900 does some things very, very well and for those reasons it might be a great smartphone but there’s no product right now that’s better than any smartphone.

  9. efekt says:

    What kind of a joke is that? The Lumia’s retail price is 450$, the total components cost is 209$ so Nokia is “earning” from the 241$ margin?
    How much does the carving of the Nokia’s polycarbonate body cost? How much does it cost to train a worker in the assembly line on how to assemble all the pieces? How much does it cost to box it in the factory, put it on a truck and ship it worldwide? How much does it cost to train the customer care labs on how to fix the device, and ship them the spare parts they need? How much does it cost to train the sales representatives so they’d know how to market the device, and also what about advertising?
    And of course the same applies to the iPhone…

    “241$ margin” – give me a break… This comparison is a joke, it’d better not have been made in the first place…

  10. mdev says:

    Lumia 900/800 are better than any featurephone! :) Unfortunately, they are marketed/priced as smartphones… ;)

  11. mcjw says:

    27 bucks for 16GB of memory?

    Why don’t they just put in a memory card slot and throw in a 32GB microSD, for less, instead of blindly copying Apple’s fixed memory/battery obsolescence “feature”?

    It’s not like they can charge $100 for 16GB of flash or something like that as Apple does.

    • ashok pai says:

      most of the memory that goes in the best kind – fast. Like in my E7 it’s not some cheap memory – its the best possible, transfer rates are the best in the business, perhaps. also they need the memory to be stable and error free, which perhaps is seen in the high end sd cards. So , I would not be surprised to see a high price on memory

  12. twig says:

    Let us not forget the carrier rebates for phone and contract service per phone. The carriers are using the lumia to reduce the rebate money flow to Apple. We or WSJ do not know the terms of contract between Nokia and the carriers. They would love to reduce that $1000 going to Apple per phone and so would their shareholders.

    • ashok pai says:

      but there’s also another thing with iCult, the buy into the cult no matter what, many i know secretly like a keyboard and other form factors/ improvements, but they will not admit to it. they “only” wish apple had come up with something like it. I’d say a fool and his money is easily parted. best bang for buck ≠ apple

  13. Keith too says:

    That’s a really good point you make Jay. Nokia hasn’t had a consistently updated flagship model for quite some time which we could anticipate and expect the next iteration of the line knowing that it will keep getting better with every release like the iPhone or Nexus for instance. Now Nokia has a great start on creating such a model with the Lumia’s.

  14. iluvn says:

    But take note of the Intelectual property right (IP) that apple is paying to Nokia (and others if applicable) per device. I would think that Nokia is paying less in this aspect(IP).

    • dss says:

      Does anyone know if Nokia is paying for IP to someone on “per phone” basis ? I would be very surprised… maybe for the LTE tech ?

      I know they are paying to MS for WP.. but that doesn’t count as IP

      • ashok pai says:

        “I know they are paying to MS for WP.. but that doesn’t count as IP”

        IP “tax” seems to be the new refined extortion

  15. torcida says:

    Crappy Apple

  16. ashok pai says:

    “Unparalleled marketing, the creation of iCulture to the point some zealots would act similar to those in cults”

    iCULT

  17. Mark says:

    Apple products are overpriced – news at eleven :)

    What’s ridiculous is that this piece of Nokia FUD is being spun by the mainstream media as something to praise Apple for (I don’t mean this article here – but I’ve seen the news story all over the place, spun with an Apple bias). I mean, here we have an argument showing that the Apple phones are more overpriced – yet it that’s spun as a positive for the Iphones? A positive for Apple shareholders, but not for anyone else. Never in the most heated Windows vs Mac/etc debate did an MS fan go, “But look how much money MS make!”

    That Apple make loads of money by selling expensive products to a smaller number of people is nothing new. Nokia should be praised for being more interested in bringing products at a lower cost, to a larger number of people.

    Any why do they compare only these two phones? This tells us nothing about what the reasons are. Perhaps there’s a difference based on the US versus Finland. Perhaps Nokia pay a better deal to its suppliers. Perhaps Nokia is more interested in things other than just being obsessed by profit.

    The mad thing is that we get endless stories in the media praising Apple for being rich – yet when Jobs died, we had zealots telling us “Jobs didn’t care about money, unlike other companies”!

    (It’s also interesting to note the other recent story about how Nokia are making more from Iphones than Windows Phone – again, spun as a negative for Nokia, but hang on a mo – if we should be praising companies for making money, surely Nokia should be praised that they make money even from competing phones…)

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