Nokia’s new Lumia 900 smartphone features a cost-reduced design that reveals close cooperation between the handset brand, Microsoft Corp., and semiconductor supplier Qualcomm Inc. This cooperation mimics Apple Inc.’s holistic approach to hardware and software development. This has allowed Nokia to produce a smartphone that has high-end features, but employs less expensive electronic components than are used in comparable products based on Google Inc.’s Android operating system.
The Lumia 900 carries a bill of materials (BOM) of $209, according to a preliminary IHS iSuppli Teardown Analysis. When the $8.00 manufacturing cost is added in, the cost to produce the Lumia 900 rises to $217. The BOM represents 46 percent of the Lumia 900’s $450 retail price, without a service contract. In contrast, Samsung’s S II Skyrocket—an Android smartphone that has a very similar feature set to the Lumia 900—carries a $236 BOM, and a retail price that is $100 higher, at $550, as presented in Table above. The Skyrocket’s BOM amounts to only 43 percent of its retail price.