Apple is known for its ability to secure a large volume of parts at very affordable prices. It’s one of many factors that go into the cost of producing a handset. It’s also one that the Cupertino company is leveraging to make more money off its smartphone than its competitors.
According to a recent Wall Street Journal report that looked at component prices, Apple’s margins on the iPhone 4s are an impressive $459. This compares to the $241 Nokia is making off the parts for each Lumia 900 handset. The bulk of Apple’s savings can be found in the touchscreen, which cost $37 each, and the wireless chips which are priced at $23. Overall, Apple is spending $19 less on parts per device than Nokia. This might not sound like much, but it adds up when you look at millions of handsets instead of just one.
The Wall Street Journal then points out that the iPhone commands an off-contract price of $649, while the Lumia 900 sells for $450 and jumps to the conclusion that “Apple makes nearly twice as much on iPhone sales as Nokia does on the Lumia 900.” This claim is a bit off-base as it excludes other costs like research & development, manufacturing, marketing and distribution. It’s the whole package of the handset, from its design to its inexpensive parts, that explain why Apple will continue to make money hand over fist with the iPhone, while Nokia barely scrapes by.
[Via The Wall Street Journal]