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Nokia’s new Lumia 900 smart phone has a bill of materials (BOM) totaling $209, according to an analysis of the device by researcher IHS. The Lumia 900 also has a manufacturing cost of $8, bringing the total cost for Nokia to produce the phone to $217.
With the retail price of the phone coming in at $450, the BOM represents 46 percent of the cost, IHS reported. The cost analysis includes the hardware and manufacturing costs and not expenses such as software, licensing, and royalties.
IHS noted that the Lumia 900 design reveals a close cooperation between Nokia, Microsoft, and semiconductor supplier QUALCOMM.
“With the Lumia 900, Nokia, Microsoft, and Qualcomm have taken a page from Apple Inc.’s playbook by closely tying together the hardware and software to produce a full-featured smart phone that is based on relatively inexpensive electronic components,” said Andrew Rassweiler, senior principal analyst, teardown services, at IHS.
He added that one of Apple’s advantages over Android has been the company’s complete control of both the hardware and operating system software, helping it to produce efficient and economical iPhone designs.
For the Lumia 900, Nokia and Microsoft worked in close partnership with QUALCOMM to develop and optimize the software stack in order to take full advantage of the hardware.
IHS reported that Microsoft substantially discounted its software licensing fees on the Lumia 900 to accommodate the overall lowered manufacturing costs.
“Microsoft has had limited success with its previous Windows Phone 7 original equipment manufacturers, such as HTC, Samsung and LG,” said Wayne Lam, senior analyst, wireless communications at IHS. “However, Microsoft now is looking to double-down with Nokia to promote Windows Phone 7 and grow the platform.”
The cost reductions of the Lumia 900 hardware mainly derived from its use of a single-core applications processor, and its low dynamic random access memory (DRAM) density requirements. Most new smart phone designs use dual-core applications processors with some even adopting quad-core ICs. However, because of its efficient hardware/software design, the Lumia 900 is able to employ a single-core APQ8055 processor from QUALCOMM while still achieving competitive performance.
IHS estimates the cost of this device at $17. In comparison, the Samsung S II Skyrocket employs Qualcomm’s dual-core APQ8060, which costs $5 more.
The Lumia 900’s design allows it to operate with only 512 MB of DRAM, half the 1 GB used in the Samsung Skyrocket and most other smart phones. Because of this, the Lumia 900’s total memory cost amounts to $20, $5 less than the $32 cost for the Skyrocket.
With its integral role in the development of the Lumia 900, QUALCOMM is a big design winner in the smart phone market. It supplies the applications processor, baseband processor, power management ICs, and radio frequency (RF) transceiver.
Other major design winners include Samsung Mobile Display, which supplies the Lumia 900’s display/touch screen module. At $58, or 28 percent of the BOM, the display/touch screen module represents the most expensive single subsystem in the Lumia 900.
Micron Technology is the supplier of the 16 GB of NAND flash memory for data storage in the specific Lumia 900, as analyzed by the IHS. Micron also provides 1 GB NAND for firmware support of the baseband chip.
IHS also reported that Elpida Memory supplied the synchronous DRAM in the Lumia 900. Nokia is likely employing other suppliers for these components.
The Lumia 900 is an effort by Nokia and Microsoft to re-establish their foothold in the smart phone business.