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View Full Version : Interesting article on Nokia production costs and advantage over competition


Viipottaja
12-05-2005, 09:47 AM
It's in Finnish, but in short says that Nokia's CFO (I think) says they have 20% advantage in costs over competition (Motorola closest, Samsung next).

The advantage is formed by production in Nokia's own factories, use of standard components/circuits/parts and procuring components from outside suppliers.

In cheap phones ($40/phone) advantage is sought from production in China and India. BUT THE ADVANTAGE IS "ONLY" $2/phone.

Quality control and losses GIVE AN ADVANTAGE OF $1/phone.

MORAL OF THE STORY IMO: We should all keep this in mind the next time we bitch and moan about Nokia or Motorola or SE or whoever not including the latest screen instead of "just" the 65k one,the 2mpx camera instead of 1mpx etc etc etc. The margins are very slim and adding an "unnecessary" cost of even one dollar could wipe out the cost advantage a particular manufacturer might have over the competition in any given phone. This is a business after all, and being able to add few hundred million dollars (accross the portfolio) to profits is no small matter in terms of investors.


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Nokialla on 20 prosentin kustannusetu verrattuna lähimpään kilpailijaansa, yhtiön talousjohtaja Rick Simonson sanoo.

Simonsonin mukaan matkapuhelinvalmistuksen kustannusetu tulee valmistuksesta omissa tehtaissa, standardiosien käytöstä sekä komponenttien ostamisesta muilta valmistajilta.

- Kustannusetuamme ei saa kiinni kovin nopeasti, Simonson sanoi Wall Street Journalille.

Nokian lähin kilpailija on Motorola ja Samsung on seuraavana.

Edullisten, noin 40 dollaria maksavien puhelinten valmistuksessa Nokia käyttää erityisiä tehtaita Kiinassa ja Intiassa kustannusten laskemiseksi. Etu tästä on noin kaksi dollaria puhelimelta.

Nokia pyrkii myös parantamaan puhelimiensa laatua ja vähentämään hävikkiä. Näistä toimista pitäisi syntyä dollarin kustannusetu puhelinta kohti.

FullMetalKid
12-05-2005, 11:32 AM
Very interesting. But that won't change how a consumer thinks.

Viipottaja
12-05-2005, 11:56 AM
Of course not. But it does change how an investor thinks = he/she/it invests in Nokia = Nokia invests in R&D and quality control = products improve = consumer is happy. And a lot of consumers already think Nokia is the way to go = 32% of the market.