Nokia’s smartphone component costs vs Apple’s iphone component costs

An article in the Wall Street Journal (May 31, 2012) describes an estimate by iSuppli that components for the Nokia Lumia 900 cost $ 209 while those for the 16GB iPhone cost $ 190. But the Lumia sells for $ 450 without a contract, while the iPhone sells for $ 649. The margin for Apple is thus twice as much as Nokia. Are the Lumia components more expensive because they are better i.e., larger screen and more wireless chips, and thus justified as a means to attract customers by lowering margins and being competitive ? Are Apple’s supply chain and procurement processes inherently superior to Nokia’s ? Or is it Apple’s cash hoard that enables early cash payments to suppliers, thus enabling lower component costs ?

Advertisements

About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s