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Mobile Devices

Nokia Lumia 900 (AT&T - LTE) Mobile Handset Teardown

30 November 2012
The following is an overview of a teardown analysis conducted by IHS Technology Teardown Services.

IHS Insight Perspective

The Nokia Lumia 900 represents a critical attack from Nokia to achieve some meaningful penetration back into the smartphone space, where they have largely been left behind, despite many years as the world's largest player in the global handset market. Since Nokia chose to partner with Microsoft for their smartphones, many have been waiting and watching to see if they can make an iPhone-style comeback with a singular product that could show them as back in the game. Initial sales of the Lumia 900 reportedly were beyond AT&T's expectations, but Nokia has a long way to go, as they are on the cusp even of losing their number one market position to Samsung worldwide as the world's largest handset maker.

Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Device View 1Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Device View 1
The Lumia 900 furthermore demonstrates that it is increasingly difficult to distinguish a phone design in the current atmosphere, as this phone is composed of building block components (primarily from Qualcomm) that many other handset OEMs such as HTC (a fan of Qualcomm in their designs) can design in. How to distinguish your product when you are using all the same parts as everyone else? You focus on industrial design, and hope that Microsoft's OS will distinguish itself from the Android pack.

Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Primary Camera ModuleNokia Lumia 900 (AT&T - LTE) Mobile Handset - Primary Camera Module
It's worth noting that Microsoft's lighter hardware requirements (to run WP7.5) allows the Lumia 900 to run on a less powerful processor (single core vs. so many dual core and now even quad core phones coming), with less DRAM (than other competing current smartphones), as a metric of "light hardware" requirements. It's interesting because for many years this was Apple's PC hardware argument ('Don't judge us by clock speeds, our software runs better. We don't need to compete on clock speeds.'). That may be Microsoft's angle here - and ultimately lighter hardware requirements means a lower cost BOM, and the ability of Microsoft and Nokia to attack the lower end of the smartphone market - which Nokia does here by dropping the price tag to a subsidized $100 price at retail with contract.

Overall Significance

Nokia's most recent salvo in the war to have a chart-topping smartphone - and does a competent job by trying to distinguish itself on industrial design (brightly colored plastic enclosures give it a distinctive look), and offering the latest LTE wireless interface with Windows Phone 7.5 OS. But the Lumia 900 ends up stuck building with the same building blocks everyone else is using to compete with them (Samsung Super AMOLED display, Qualcomm chipset). this phone undercuts most of their competition on price ($99 USD with contract in the US), which is possible thanks to the lighter hardware that Microsoft's WP7.5 OS requires.

Feature Significance

This is a Windows Phone 7.5 (Mango) smartphone featuring 4.3 inch diagonal Super AMOLED+ display (16.7M Colors, 480x800 Pixels, w/ Corning Gorilla Glass ), LTE/4G connectivity, 1.4GHz Qualcomm apps processor, WLAN 802.11 b/g/n, Bluetooth V2.0, 8MP camera, and 16GB embedded NAND Flash storage.

Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Display / Touchscreen ModuleNokia Lumia 900 (AT&T - LTE) Mobile Handset - Display / Touchscreen Module
Design Significance

Designed from all of the common building block components that Nokia's competitors are all using (or have access to at least) including Samsung's 4.3" SuperAMOLED+ display with on-cell touch, and Qualcomm's chips such as the core MDM9200 baseband processor - Apple (iPad) and others using the MDM9600 dual-mode version that runs on CDMA networks as well as legacy GSM networks - this version does not and cannot run on CDMA networks, meaning a second design for Nokia to manage should they decide to offer this model to legacy CDMA carriers. The APQ8055 is a single core standalone apps processor, which is related to the previously seen APQ8060 processor (dual core). It is hard to say if Microsoft's support of the single core processor is a weakness or a strength, as the lighter platform hardware requirements may be "by design" in order to get the bill of materials costs down and compete in the lower end of the smartphone spectrum.

Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Main PCB TopNokia Lumia 900 (AT&T - LTE) Mobile Handset - Main PCB Top
Target Market

Entry-Level Smartphone

Based on retail pricing and the lighter processor/DRAM requirements, it seems that Microsoft's strategy (or accidental happenstance) may be to enable less expensive smartphone designs to attack the $99 subsidized price point - or "entry-level" smartphones.

Released

April 2012

Pricing and Availability

$99 USD with 2-year contract

The "real" price point at retail is a "no-contract" price of $450 USD, which, when compared with a $650 USD price point for an iPhone 4S without contract (16GB).

US / AT&T

This LTE version of the Lumia is only available in the US currently - an HSPA+ version will be made available globally.

Volume Estimations

1,500,000 Total Units
1 Total Years

For the purposes of this teardown analysis, we have assumed an Annual Production Volume of 1500000 units and a Product Lifetime Volume of 1 year(s).

Teardown volume and production assumptions are primarily used for our cost analysis in terms of amortized NRE and tooling costs, especially for custom components specific to the model being analyzed (mechanical components especially). Unless assumed volumes are different by an order of magnitude, minor changes in volume (say 1 million vs. 2) rarely have a large net effect on our final analysis because of this.

Market Performance

Smartphones have become an increasingly important part of the market for handset manufacturers. According to IHS iSuppli's Mobile & Wireless Communications research practice and the Mobile Handset Q1 2012 Market Tracker: unit shipments of smartphones in 2011 were about 483 million units shipped, versus less than half that (or about 182 million units) in 2009. It's a fast growing area, but one that Nokia is still struggling for relevance in. In fact since Q1 of 2008 when Nokia still had roughly 40% share - as of Q4 2011, our research indicates they have slipped to less than 13% share of unit shipments in this critical segment.

Windows Phone smartphones represent Nokia's "make or break" strategy... if they lose this one, they will become irrelevant in terms of being a smartphone player since they have no other fall back strategy for the time being.

Overall as of Q4 2011, Nokia still reigns as overall handset market leader with about 113M handsets shipped. However, in Q1 2012 Nokia shipped 83M and Samsung will likely overtake them.

Cost Notes

Nokia, Qualcomm, and Microsoft have a joint interest in making this and other WP phones succeed. For that reason we are assuming, and because Nokia still have a very strong position in terms of overall unit volume (and therefore purchasing), we assume that they are still achieving world-class pricing.

Mystifying margins - The hardest part for us to comprehend is the APQ8055 - as our modeling suggests that Qualcomm has to take very low margins to compete with dual core processors, such as the Tegra 2 that can sell for even less than this chip, more profitably (and the Tegra 2 is dual-core!). This chip just cant be in the high teens to compete as a single core device. Having said this, despite those specs, this phone still comes in about $25 higher than the iPhone 4S BOM, which we would expect to see, based on the 3G vs./ LTE functionality and typical BOM differentials for those functions.

Total BOM: $203.47
Top Cost Drivers below: $146.78
% of Total BOM 72%


Main Cost Drivers below

$50 - Display / Touchscreen Module - 4.3" Diagonal, On-Cell Touch ClearBlack AMOLED, 16.7M Colors, 480x800 Pixels, w/ Corning Gorilla Glass Window- (Qty: 1)
$19.29 - Qualcomm MDM9200 Baseband Processor - Multi-Mode, Multi-Band, GSM/EDGE/HSPA/LTE, Integrated QDSP6 600MHz & ARM926 256MHz Processors, 512Mb Mobile DDR, 45nm- (Qty: 1)
$19 - Micron MTFC16GJSEC-IT Flash - eMMC NAND, 16GB, MLC- (Qty: 1)
$15.52 - Qualcomm APQ8055 Apps Processor - Single-Core 1.4GHz CPU, Adreno 205 GPU, PoP- (Qty: 1)
$12.4 - Primary Camera Module - 8MP, FSI CMOS, 1/3.2" Format, Auto Focus Lens, w/ Carl Zeiss Optics- (Qty: 1)
$7.3 - Ibiden 12-Layer - FR4/RCF HDI, Any Layer Stacked Via, Lead-Free- (Qty: 1)
$6.8 - Elpida B4064B2PD-6D-F SDRAM - Mobile DDR2, 4Gb, PoP- (Qty: 1)
$6.52 - Qualcomm QTR8615L RF Transceiver - Multi Mode, GSM/EDGE/WCDMA/HSPA+/LTE, Multi-Band, 65nm RF CMOS- (Qty: 1)
$5.2 - Battery - Li-Polymer, 3.7V, 1830mAh, w/ Board to Board Connector- (Qty: 1)
$2.8 - Qualcomm PM8058 Power Management IC- (Qty: 1)


Not Included in Analysis

The total materials and manufacturing costs reported in this analysis reflect ONLY the direct materials cost (from component vendors and assorted EMS providers), AND manufacturing with basic test. Not included in this analysis are costs above and beyond the material manufacture of the core device itself cost of intellectual property, royalties and licensing fees (those not already included into the per component price), software, software loading and test, shipping, logistics marketing and other channel costs including not only EMS provider and the OEMs margin, but that of other resellers. Our cost analysis is meant to focus on those costs incurred in the manufacture of the core device and exceptionally in some circumstances the packaging and literature as well.

We do provide an Excel tab "Overall Costs" where a user can enter their known pre and post production costs to build a per unit cost reflective of theirs actual expenditures.

Manufacturing Notes

Per IHS iSuppli's Manufacturing & Pricing research practice, and their most recent Global OEM Manufacturing & Design Analysis (GOMDA) Q1 2012 report: only about 13% of all of Nokia's phone production is outsourced. Interesingtly, this unit is made in Korea. In the past, most of the newer, higher-end flagship phones we would have expected to see them produced in Finland (at least initially). Nokia do have a production facility in Masan, South Korea. The Nokia 8800 was produced there, and that facility has an annual production capacity of approximately 20 million units, per our estimates, though to our knowledge, in the past at least, was dedicated to CDMA phones.

Nokia has outsourced production of the Lumia 800 and Lumia 610 to Compal Communications.

Country of Origin

For the purposes of this analysis, we are assuming the following country(ies) of origin for each level of assembly, based on a combination of "Made In" markings, and/or assumptions based on our knowledge of such equipment.

Box Contents - Korea, South
Camera Assembly - Korea, South
Display / Touchscreen - Korea, South
Main PCB - Korea, South
Misc PCB Assemblies - Korea, South
Other - Enclosures / Final Assembly - Korea, South

Country of origin assumptions relate directly to the associated cost of manufacturing, where calculated by iSuppli. In the cases of finished sub-assemblies (such as display modules or combo (WLAN/BT) modules), we do not calculate internal manufacturing costs, but rather assess the market price of the finished product in which case country of origin assumptions may or may not have a direct effect on pricing.

Labor rates are applied directly only to hand inserted components and systems in our bill of materials, and although regional assumptions do, these new rates do not have a direct effect on our modeled calculations of placement costs for automated SMD assembly lines. Auto inserted components (such as SMT components) placement costs are calculated by an iSuppli algorithm which allocates a cost per component based on the size and pincount of the device. this calculation is affected by country or region of origin as well.

Design Complexity

Component counts by assembly and the number of assembly are indicators of design complexity and efficiency.

Component Qty: 999 - Main PCB
Component Qty: 49 - Display / Touchscreen
Component Qty: 73 - Other - Enclosures / Final Assembly
Component Qty: 49 - Camera Assembly
Component Qty: 13 - Box Contents
Component Qty: 53 - Misc PCB Assemblies
Component Qty: 1236 - Grand Total

Most of the smartphones we used to see over the last few years, seemed to average component counts of about 1000 components (before LTE). But with LTE, certainly counts seem to have risen somewhat. The component counts for this phone seem a bit elevated, but component counts are also a function of feature sets - and feature rich phones tend to clock in with high component counts, period. But component counts don't always tell the whole story of manufacturing complexity or cost. In this case, the Lumia 900 was touted as somehow featuring some fancy milled plastic enclosure which was thought to have the complexity of an aluminum unibody (with all of it's machining features which are complex and costly), but in the end we discovered little more than a single piece of injection molded plastic for the body which features some machined holes for the speakers, and a routed opening in the back of the case - nothing really akin to the complexity of aluminum unibody design. Overall - the complexity of this build is totally in line with most competing smartphones. Still - it's a far cry from the recent "simplicity" of the Nokia N9-00 design which we analyzed back in January - and came in at a component count of only 768. Interestingly - the Samsung Skyrocket SGH-i727, which offers a similar feature set is nearly identical with a component count of 1263 vs. 1236 here. Overall complexity of the two designs is very similar.

Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Main PCB BottomNokia Lumia 900 (AT&T - LTE) Mobile Handset - Main PCB Bottom
Design Notes

Designed from all of the common building block components that Nokia's competitors are all using (or have access to at least) including Samsung's 4.3" SuperAMOLED+ display with on-cell touch, and Qualcomm's chips such as the core MDM9200 baseband processor - Apple (iPad) and others using the MDM9600 dual-mode version that runs on CDMA networks as well as legacy GSM networks - this version does not and cannot run on CDMA networks, meaning a second design for Nokia to manage should they decide to offer this model to legacy CDMA carriers. The APQ8055 is a single core standalone apps processor, which is related to the previously seen APQ8060 processor (dual core). It is hard to say if Microsoft's support of the single core processor is a weakness or a strength, as the lighter platform hardware requirements may be "by design" in order to get the bill of materials costs down and compete in the lower end of the smartphone spectrum.


Nokia Lumia 900 (AT&T - LTE) Mobile Handset - Box ContentsNokia Lumia 900 (AT&T - LTE) Mobile Handset - Box Contents



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