Data & Research

Nokia makes $200 less on every Lumia 900 sold than Apple does with iPhone 4S

Components cost more, bur RRP is less

Nokia makes $200 less on every Lumia 900 sold than Apple does with iPhone 4S
Even if Nokia's flagship Lumia 900 starts to sell at the same rate at Apple's iPhone 4S, the Finnish firm could still only make half as much profit on units sold as its American rival.

That's according to a costing analysis of the two handsets conducted by iSuppli, with the firm highlighting the difficulties a rejuvenated Nokia is having making its mark in the smartphone market.

All in the numbers

Excluding costs such as manufacturing, marketing and distribution, iSuppli's figures suggest the cost of the components in Nokia's Lumia 900 come in at $209, with the handset selling for $450 out of contract.

That gives Nokia a margin of $241 per device sold.

Apple's iPhone 4S is actually cheaper to produce – iSuppli pegging component costs at $190 – but is sold at a higher RRP, retailing at $649 out of contract.

That hands Apple a healthy margin of $459 for every handset that ends up in a consumer's pocket.

This is no happy accident for Apple, however.

iSuppli concludes that Apple is making twice as much on every iPhone sold than Nokia is its Lumia 900, but that's because the American giant commands more of its supply chain.

All about relationships

While the Lumia 900's more advanced wireless chips – the North American version LTE equipped – and larger screen inflate its costs, most of the difference between the two devices comes from the fact Apple is more embedded with suppliers and manufacturers than Nokia is.

Apple has been able to invest in developing new technology for its handsets over the course of the last few years, which means it controls the infrastructure behind said features.

Equipping the technology that results within its phones therefore costs Apple far less than its rivals, who in turn are forced to pay out to license it.

Indeed, many regard Apple's ability to get quality components for its devices for less money as the work of current CEO Tim Cook, who has long focused on ensuring Apple makes as much profit from its products as possible.

Such disparity isn't unique to Nokia, of course, and it's likely the Finnish firm will be able to drive down costs the longer its Lumia range is on the market.

[source: The Wall Street Journal]

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.