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
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.
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.
Cheers stylinred for the tip
About the Author (Author Profile)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
Sites That Link to this Post
- Infographic: Nokia Lumia 900 vs iPhone 4S costs/margins. | All about Lumia | June 1, 2012
- Nokia is in big trouble - Android Forums | June 17, 2012