To Make the Same Profits on Phones, Nokia Would Need to Sell Twice as Many Lumias as Apple Sells iPhones
It looks like Apple has its supply nailed down to an near science, and that makes it harder for rival phone manufacturers to compete when it comes to commodities pricing. As a result of this, Apple will generate more profits on its iPhone than a comparable model from a competing manufacturer. In fact, Apple takes in twice as much money in profits on its iPhone 4S flagship than Windows Phone rival Nokia generates with its Lumia smartphone thanks to lower supplies costs enjoyed by Apple. Another reason for the discrepency is that Apple also charges a premium for its phones–the cheapest iPhone retails for $200 more than Nokia’s top of the line Lumia despite Nokia paying more for parts.
According to an IHS report, the flagship Nokia Lumia 900, which is currently selling for $450 on AT&T’s 4G LTE network without a contract, uses $209 in parts while the 16 GB iPhone 4S retails for $650 without a contract and uses $190 in parts. This gives Apple a profit of roughly double what Nokia takes in, and this is only from the lowest-end flagship iPhone–Apple also offers more expensive 32 GB and 64 GB iPhone 4S models as well.
The figures do not account additional costs, such as marketing, manufacturing, and distribution.
Part of the reason that the Lumia 900 costs more to make may be due to the larger screen size, though Apple’s higher resolution Retina Display packs more pixel and would be more expensive than a comparable size display with the Lumia’s WVGA resolution, as well as a more advanced radio chip that supports 4G LTE networks.
The Wall Street Journal is reporting that this may be troublesome given Nokia is trying to regain lost market share and revenue as it tries to bankon Microsoft’s Windows Phone OS.
In a separate report, Google has filed a complaint in Europe against Microsoft and Nokia for colluding over patents and IP licensing, leading to higher smartphone prices for everyone else.