What makes the Nokia N95 $750?
By Stefan Constantinescu on Saturday, April 21st, 2007 at 11:44 PM PST In Ideas and rants
I grew up on computers. I have the bill of materials stored in my memory for every gaming PC I’ve ever owned or have ever wanted.
I just want to know what the breakdown is:
- How much does the QVGA display cost?
- How expensive is the TI OMAP 2420?
- Bluetooth chip?
- GPS?
- etc
It’s a computer so SW plays a big part and that data you won’t be able to find anywhere
Hi. You already ignore a lot info. Such as TFT display 16 million color chip, GPS chip, 3D gaming chip, HSDPA, 3g, TV output, s60. so is’t it fair to be a high priced phone?
I don’t think Stefan is saying $750 is not a fair price. I think he’s just interested in the cost breakdown. Personally I am curios too… and I agree with Jukka that SW plays a big part!
Ya, I was thinking the same. I think smartphones as they are now are somewhat overpriced. Well, the market lives with this price just fine so the companies don’t bother lowering the price. -_-”
I mean, the N95 doesn’t even have image processing chips digicams have and stuff.
This is just guesswork, and my figures are off the top of my head but here goes – if anything, my costs to Nokia are way too high and their profit levels much greater!
Apart from the GPS chip and camera, the Nokia N800 has a higher spec than the N95 while sharing several of the same components – the N800 sells for $360 retail so lets say BoM for the N800 is somewhere in the region of $200-$250 (and probably less). Nokia profit at retail might be as low as $60, but as it’s a new product category for Nokia my guess is razor thin margins is the price to be paid when creating a new market.
Using the N800 BoM as a guide for the majority of the components found in the N95 that are also present in the N800, this leaves the N95s GPS and camera which combined shouldn’t add more than $40-$50 at most, leaving a rather healthy $450+ profit margin. However we don’t know what the “cost” price is to retailers or network providers, so the approximate profit for Nokia is probably nearer $300.
Obviously this level of profit won’t be sustained for very long and is merely a case of Nokia recouping their investment from the early adopters for as long as the market will bare it – in a year or so the N95 will probably be free on most contracts and less than $400 SIM-free.
The software cost is incalculable, however it’s largely common to several devices in which case the cost is amortized across a range of products and not specific to the N95. I can’t think of any features in the N95 software that are unique to the N95 and not shared with existing or already announced devices planned for later this year.
R&D on the slide mechanism would appear to be the only substantial cost unique to the N95, but unfortunately it looks as though Nokia didn’t budget enough in this area – the slide appears to be one of the biggest failings of the N95 design.
nokia are employing value pricing in setting the $750
5 mpix camera – $200
pocket gps – $300
MP3 player – $100
Competent phone – $200
so the phone functionality is worth $800 to consumers based on equivalent cost of aquiring the items separately
it doesnt matter what the cost to produce is as a consumer will not pay more
> it doesnt matter what the cost to produce is as a consumer will not pay more
Not sure I understand this comment as clearly consumers will pay more than it costs to produce – the phone doesn’t cost $750 to manufacture yet this is what people are paying.
Phoneaddict, but the phone doesn’t do such a great job cheap 5mp cams do. These cam doesn’t even cost $200 now, more like 100, with all the image processing chips the N95 lacks. The GPS is also slow. Although, it’s a perfect MP3 player, I’d say.
Hi Deckard,
Agreed, the phone does not do the GPS and Cam functions on par with point solutions.
I think the $750 price point wont last long, but that it is important for nokia to capture any consumer surplus for as long as they can, lest they fall into the accelerated commoditization trap that Motorola has done w/ the RAZR and the Q.
Rgds,
Phoneaddict