Thought Nokia sold phones for dirt cheap with barely any margin? Well, the Finnish company makes profits even on their cheapest feature phone, the Nokia 105, which costs just $20.
Have you seen… the Nokia 105? Well, it is the Finnish company’s cheapest phone, sold for a retail price for just $20. Did you think that the company made any profits on that handset? No way, not much. Probably a dollar? Wrong! Nokia makes nearly $6 profit on every Nokia 105 that it sells. That’s 30% of the retail price, on a $20 handset.
A component breakdown by IHS revealed that paying for materials, components and manufacturing, the total cost of production of a single Nokia 105 stands at just $14.20. This translates to an impressive 29% margin per handset, a handsome amount for such a low-cost phone. While the three ICs (integrated circuits) in the phone cost $5.25, the 128 x 128 display costs $2.25. Nokia has also managed to increase cost savings by using an Intel PMB7900 that combines the baseband and RF Transceiver (handles GSM/GRPS functions).
“This is the fruit of nearly a decade’s worth of integration. By riding Moore’s law and holding the line on features, Nokia has gone from six discrete integrated circuits (ICs) to just one core device plus two other ICs” says analyst Wayne Lam.
The Nokia 105 is targeted at developing countries, where more people spend and buy a feature phone than a Smartphone (those who do mostly buy a high-end phone). Nokia sells millions of these babies, and with 55.8 million feature phone shipped in Q1 2013, you realize why the company hasn’t yet abandoned its lowest end market, despite having let go of Symbian and MeeGo platforms completely.
Personally, I’d love to buy one of these babies as a backup device, especially for the 35 day standby battery life (promised) and the included flashlight on the phone.