Apple Makes Nearly Twice as Much on iPhone as Nokia Does on Lumia 900

Nokia’s flagship smartphone, the Lumia 900, is almost $200 cheaper than Apple’s iPhone 4S. Despite that, Nokia ends up paying more for Lumia’s components than Apple does for the iPhone.

The specifics: It costs Nokia $209 to acquire components for the Lumia 900, which is currently sold for a retail price of $450. The $649 16GB iPhone 4S on the other hand uses components which cost Apple just $190.

The figures come via a story published in The Wall Street Journal based on analysis done by research firm iSuppli.

While a difference of $19 in the cost of parts might not seem much at first, but when you consider the scale at which Apple works, it works out to an amount in millions of dollars. Leaving out costs other than component acquisition, Apple’s margin works out to double that of Nokia’s on each device sold.

One of the reasons behind the price disparity is, of course, Apple’s strong relationship with component manufacturers and assemblers in Asia. Apple is known to leverage its unique position in the market, as well as its huge cash pile, to extract the lowest possible prices from its suppliers, a competitive advantage Nokia doesn’t enjoy.

In many cases Apple even helps manufacturers financially, helping them set up new factories and secure equipment for the production of new technology. In return, Apple  gets not just the cheapest prices, but also exclusive access to new technologies for several years. Matthew Panzarino over at The Next Web sums it up perfectly:

  1. Pay someone to manufacture crazy new technology for you
  2. Get new stuff no one has ever seen
  3. Get huge discounts on that stuff, even when competitors finally have access
  4. Profit

But despite the competitive advantage, Nokia possibly could have worked out a cheaper deal with manufacturers if it weren’t for the 4G LTE chip and the larger screen of the Lumia 900. According to the chart embedded below, Nokia pays $21 more than Apple for a single touchscreen and $15 more than Apple for wireless chips used on the device. We’re not saying that Nokia’s costs for these two components would have been the same as Apple had they been equally spec’ed, but it would surely have been a little less.

Nokia Lumia cost of components

Nokia’s cash balance is depleting at a faster rate than its incoming revenues, which, considering its low margin devices, is a worrisome sign for its survival. Sadly, the only way Nokia can currently differentiate itself from other smartphone manufacturers in the market is by selling lower priced devices.

See also: Nokia’s Lumia smartphones not good enough for European carriers.

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  • Que

    Being an Iphone owner, why doesn’t this sound like good news 🙂

    • Jimjamurface

      Yea sounds like it getting ripped off. Kinda sucks

    • Grime

      Que, you said a mouthful. I have nothing more to add.

    • sparky

      Yes, if you own an iPhone 4[S] you have been ripped off!

  • JorgeG

    Where i can get the nokia to $450 ? Because in all place say 600 locked and 800 unlocked

  • Yo Mama!

    So in others words Nokia Lumia is better phone than iPhone? I feel like a been raped..!

  • Bobo

    Not really a ripoff you are paying more for the amazing software that apple packs in the iPhones

    • ha

      fanboy speaking

  • Grime

    The one thing I’ve always liked about Microsoft’s Windows is that you could always buy cheap hardware that got the job done. With Apple their aren’t many choices with the exception of overprice memory upgrades. I’d switch over to Android or Windows phone but 3rd party hardware integration is lacking as well as the plethora of apps available. I’m happy with the iphone experience but I just wished Apple wasn’t so money hungry. The Macs are nice but with Windows offering nearly identical software I’ll never make the jump. I’m not concerned about minor software tweaks. Its always been about the apps. If Android could release the same apps on their hardware its would be a no brainer. Until then its Apple and its overpriced iphone/ipad (notice I didn’t mention any other Apple products).

  • Grime

    I believe Apples holding out on releasing a 4 inch + screen because its hands down the single most important feature consumers desire. After that Apple won’t have much to offer besides free ios upgrades and faster processor speeds. When that day comes I can breath a sigh of relief knowing that my pockets will be safe from Apples greed. You can bet the new iphone will only offer a vertical increase in screen real estate. That’s only so Apple can extend hardware cycle and sell more iphones before releasing a true 4 inch iphone. Its sad that most innovation is fueled by a bigger desire to get “filthy” rich. Guess that’s the way of the world. I don’t envy Apple, I despise them.

    • ha

      faster processor speeds? the iphone 4s has a 800 mhz dual core processor. The galaxy s III has a 1.4ghz quad core. Looks like they need to up the game a bit.

      • Grime

        I was comparing older iphones to newer ones. I don’t want to get into semantics and yes I’m only a layman, but comparing processor speeds from different cpu lines or manufactures is like comparing “Apples” to oranges. Yes, pun was fully intended. But I digress, the point was and is that Apple charges a lot more than the competition. Always have and probably always will. Apple should change their name to Greedy Money Hungry Gluttons its more fitting and easily identifiable considering their business practices. Its a great device but not easily accessible to many people because of prohibitive pricing. As far as subsidizing is concerned you can pay up now or later it makes no difference. Actually if you choose to pay later you’ll end up paying more than if you’d shelled out the cash in the beginning.

  • Steve

    There are several main points that everyone is missing here are 1) You don’t pay the margin, your carrier does and smartphone plans are basically the same cost no matter which phone you have. 2) While the metro look and feel is quite unique and eye catching about this Lumia, it feels much more cheap and plastic-y. This begs the question of why does a platic-y feeling phone actually cost more to make than something like an Iphone? The answer to this question is my next point which is completely missed by this post 3) The iphone is cheaper to make because there are way more iphones in the world produced and purchased than lumia’s manufactures and a lot of the parts have been in production for several years. It is likely that over the course of the past few years these prices have gone down due to the shear quantity that have been ordered for current and previous phones manufactured.

    • Que

      iPhone prices will never go down until the Supply And Demand goes down. But you do rise some good points.

  • Frank

    Yes we have this wonderful phone that don’t feel like plastic…. Just don’t drop it cause it doesn’t hold up as well as plastic does…….

  • Guy

    Nokia sells alot alottt in Middle Eastttt.

  • don

    how is it possible that nokia cost more lol?