The Nokia Lumia 900 in the foreground, with the Lumia 800 in the center and… (Armand Emamdjomeh / Los…)
Nokia's new Lumia 900 costs $109 more to make than its $99 price tag and demonstrates a tight association between Nokia and Microsoft, IHS iSuppli said.
With both companies looking for a big comeback with Lumia 900, the partners kept cost of parts to $209 by using less expensive components that achieve comparable function, according to IHS' teardown cost assessment. Manufacturing costs totaled $8.
A comparable Android phone, the Samsung S II Skyrocket, has a $236 cost of materials, with an unsubsidized price of $550. The Lumia 900's $209 materials cost is 46% of its $450 unsubsidized -- with contract, it's going for $99.
"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 of teardown services at IHS, in a statement.
The Lumia manages to stay inexpensive without being cheap, according to IHS findings. Its efficient design means that it was able to function on 512 megabytes of dynamic RAM instead of 1 gigabyte and use a single-core processor from Qualcomm instead of the dual- and quad-core processors in many of today’s leading handsets, IHS said.
“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. “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.”
In fact, IHS suggests Windows Phone allows for lower memory requirements, which could foreshadow the possibility of even more cost-competitive smartphones in the future.
"Currently, the minimum requirement for Windows Phone 7.5 is a Qualcomm MSM7x27 series integrated applications processor with just 256 megabytes of DRAM," Lam said. "This expands the addressable market for Windows Phone 7.5 devices, allowing Nokia and Microsoft to compete in the low-cost smartphone market now dominated by Android."
Qualcomm, it seems, gets the most buck for its bang, playing a pivotal role supplying the processors, power-management integrated circuits and radio frequency transceiver.
The AMOLED display and touchscreen, supplied by Samsung Mobile display, had the big price tag at $58, IHS said.
Following the phone's launch April 8, however, Nokia has had to eat another cost – a publicity hiccup and $100 per handset sold -- as the result of a software bug recently discovered. Nokia offered everyone who had purchased the Lumia 900 a credit on their AT&T bill and said the software fix should be available about April 16.
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