In a recent article over at The Wall Street Journal, Nokia’s challenges trying to make a dent in the iPhone 4S with the Lumia 900 are highlighted by some pretty grim numbers: Nokia makes more than $200 less on each Nokia Lumia 900 sold compared to Apple’s profit on an iPhone 4S.
Part of the problem is that Nokia is forced to sell the Lumia 900 for about $200 less than the iPhone 4S to even compete in the iPhone-driven US smartphone market, but Apple’s mastery over the global supply chain also rears its ugly head: Nokia has to pay more for all of its components than Apple does.
The components of the Nokia Lumia 900, which sells for $450 without a phone contract, uses $209 worth of parts, according to research firm IHS iSuppli. Meanwhile, the comparable 16-gigabyte iPhone 4S, sold for $649 without a phone contract, is made of components that cost $190, iSuppli says.
Nokia’s top-of-the-range Lumia 900 costs $200 less than the cheapest iPhone 4S. But Nokia pays more for the parts. Ben Rooney in London explains how big a problem this is for Nokia.
The findings indicate Apple makes nearly twice as much on iPhone sales as Nokia does on the Lumia 900, excluding costs like manufacturing, marketing and distribution.
It really shows how difficult it is to even put a dent in Apple’s dominance. The only way to really sell non-iPhone smartphones is to undercut the iPhone in price, but because Apple orders in such bulk they get a huge discount on components, that ends up leading to significantly smaller profit margins. It’s a shame, because the Lumia 900 is actually an excellent phone, and the iPhone can only become a stronger device if faced with serious competition. Cupertino’s got such a stranglehold on the industry, though, that there’s literally no way to even compete.