Nokia 105 is giving 29% profit to Nokia

Interesting tidbits coming in from IHS. They says that Nokia is making good profits from its low end phone Nokia 105. According to research firm IHS’ teardown report of Nokia 105 (which is already expected to sell millions), Nokia is squeezing as much as 30% profit on the sell of each phone, which one expects to get from a high end devices.

The parts used to build the phone cost $13.50, which, after accounting for another 70 cents to assemble, leaves an implied margin of about 29 percent, IHS reckons.

The main component of Nokia 105 is the Intel PMB7900 chip which combines the baseband and the radio frequency transceiver pieces that talk to the GSM/GPRS wireless phone networks that dominate Europe. The only other two chips in the phone are from Skyworks and a NOR-type flash-memory chip from Micron.

IHS compared nokia 105 with Nokia 1110, a phone similar to the former and targeted to the same market segment. They found that Nokia 1110 required 6 chips to build while Nokia 105 requires only 1 chip, combining the work of those 6 chips into one.

That phone required six chips to build, and carried roughly three times the component cost. “Therein lies the 105’s secret: By keeping features the same for nearly a decade, the Nokia 105 can integrate nearly all system functions into a single chip, dramatically reducing the cost to produce a cellphone,” IHS analyst Wing Lam said in a statement.

That is indeed great work by Nokia. Nokia 105 is selling at $20 price giving Nokia a profit of $6 approx on each unit sold. Now making this much profit on a low end device is difficult. Very nice work by Nokia. This will help them improve the mobile device shipments which deceased in previous quarter and ultimately improve their cash position.

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