Date: 12/04/2012

Tear down of Windows smart-phone Nokia's Lumia 900: $209 worth of ICs and components

IHS iSuppli has reported tear down analysis of Nokia's new Lumia 900, the recently launched most talked about Windows smart phone. Nokia has worked at high-level of co-operation with Microsoft in developing Lumia 900, so that it can offer cost, performance, feature benefits over Apple's iPhone and leading Android smart phones. Semiconductor chip vendor for Lumia 900 project is Qualcomm.

The new tear down analysis of Lumia 900 by IHS finds a bill of materials (BOM) of $209. The total cost of producing this smart phone including $8.00 per unit manufacturing cost is $217, as per IHS. The material and manufacturing cost represents 46% of retail selling price of $450 (Approx 23000 Rupees) without service contract. IHS compared this to similar featured Samsung's Android smart phone S II Skyrocket, which carries a BOM material cost of $236 and selling at retail price of $550 ( Approx 28,000 Rupees), $100 higher than the Lumia 900. See the table below to get deeper idea of BOM comparison. IHS warns its analysis does not include additional expenses such as software, licensing, royalties or other expenditures.
April 2012 Nokia Samsung
Lumia 900 SII Skyrocket
Components / Hardware Elements Column1 Column2
Retail Pricing (As of April 2012) 449.99 549.99
Total BOM Cost 209 235.5
Manufacturing Cost 8 8
BOM + Manufacturing 217 243.5
Major Cost Drivers
Memory
NAND Flash + DRAM 27 32
Display & Touchscreen
Display + Touchscreen 58 64
Processor 17 22
Camera(s) 18 20
Wireless Section - BB/RF/PA 38 37
User Interface & Sensors & Combo Module (WLAN/BT/FM) 14 16.5
Power Management 9 11
Battery 4.5 5
Mechanical / Electro-Mechanical / Other 18 22
Box Contents 5.5 6
Source: IHS iSuppli Research, April 2012 All in US$

Andrew Rassweiler, senior principal analyst, teardown services, at IHS says: One of Apple's advantages over Android has been the company's complete control of both the hardware and operating system software.
For the Lumia 900, Nokia, Microsoft worked in close partnership with Qualcomm to develop and optimize the software stack in order to take full advantage of the hardware. But while Apple capitalizes on its low hardware costs to attain industry-leading margins, Nokia is using this approach to offer an inexpensive phone intended to compete on the basis of price, He adds.

IHS says the Lumia 900 represents a make-or-break effort by Nokia and Microsoft to re-establish their foothold in the smartphone business. While Nokia is willing to accept hardware lower margins to carve out smartphone market share, Microsoft also is pitching in on the operating system software side, finds IHS.

Wayne Lam, senior analyst, wireless communications at IHS comments: Given the highly strategic partnership with Nokia, we believe 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. However, Microsoft now is looking to double-down with Nokia to promote Windows Phone 7 and grow the platform, he adds.

According to IHS, the cost reductions of the Lumia 900 hardware primarily are derived from its use of a single-core applications processor, and its low dynamic random access memory (DRAM) density requirements. The Lumia 900 has used single-core APQ8055 processor from Qualcomm. The IHS estimates the cost of this semiconductor device at $17.00. In comparison, the Samsung S II Skyrocket employs Qualcomm's dual core APQ8060, which costs $5.00 more at $22.00.

The Lumia 900 uses 512 Mb of DRAM, less compared to 1 Gb used in the Samsung Skyrocket and most other comparable smartphones. Due to this, the Lumia 900's total memory cost amounts to $27.00, $5.00 less than the $32.00 cost for the Skyrocket. By making the OS software more efficient with lower memory footprint, Nokia and Microsoft could reduce the BOM cost by using less DRAM memory.

Fables semiconductor vendor Qualcomm is said to be the big gainer from this product. Its applications processor, baseband processor, power management ICs and radio frequency (RF) transceiver are said to be used. See table below for more details.

Electronics Engineering Herald
Other gainer include Samsung Mobile Display, which supplies the Lumia 900's display/touch screen module. At $58.00, or 28 percent of the BOM, the display/touch screen module represents the most expensive single subsystem in the Lumia 900.

DRAM vendor Micron has supplied 16 Gigabytes of NAND flash memory for data storage in the specific Lumia 900 analyzed by the IHS. IHS says Nokia almost certainly is using multiple sources for these commodity memory parts.

Elpida Memory has supplied synchronous DRAM (SDRAM) in the Lumia 900 as analyzed by IHS. IHS suggests Nokia is likely employing other suppliers for these components.