In a fiscal climate where profit margin reigns intensely supreme, we’ve got yet another dollop of bad news to heap upon the parfait of pain that is the $199 (after $50 mail in rebate) BlackBerry Storm.Research firm, iSuppli, estimates that the cost for the
components and assembly of RIM’s BlackBerry Storm are just shy of $203 — an estimate that does not include software development and uh, bug fixing costs or those attributed to patent licensing, physical distribution, marketing or anything else in the product lifecycle. The most costly component is the $35 Qualcomm MSM7600 processor that gives the Storm its dual GSM / CDMA personality. Now, $203 isn’t that big of a spread compared to the per unit cost of a $175 8GB iPhone 3G, $169 BlackBerry Bold, or $144 T-Mobile G1. However, the lost prophets profits add up quickly when you’ve moved over a million units globally.
P.S. We’re not implying that RIM is losing money here (the price is obviously carrier subsidized), only that the Storm is likely less profitable than its peers.
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TELECOMMUNICATIONS January 28, 2009, 5:50PM EST
iSuppli took apart Research In Motion’s BlackBerry Storm to determine the cost of its components. Guess what? The iPhone parts are cheaper
EXCERPT: As the battle for the smartphone market heats up, comparisons abound between Research In Motion’s BlackBerry Storm, released in November, and Apple’s iPhone. For starters, both devices boast a touchscreen, forgoing the buttons found on more conventional phones. But the more important comparison, from the bottom-line perspective, lies in which device carries a fatter margin. And on a cost-per-unit basis, the advantage for the moment appears to belong to Apple (AAPL). A new analysis of the BlackBerry Storm by market research firm iSuppli indicates the cost of components and manufacturing for RIM (RIMM) is slightly less than $203. By comparison, those costs for Apple’s iPhone 3G, the second iteration of the device, are less than $175. iSuppli’s estimates factor in only the cost of components and assembly and don’t include estimates for the cost of software, licensing of patents, or distribution. But they do help fill in the blanks on how profitable a device may be.
Though it has yet to disclose official sales data on the Storm, published reports say RIM sold half a million during its first month on the market. In August-September 2007, the first two months the first-generation iPhone was on the market, Apple sold 1.1 million units. Apple quickly ramped up sales and moved more than 2.3 million during the following quarter. RIM declined to comment for this story.
APPLE IN HOT PURSUIT
Rapid-fire sales are bringing the iPhone to within spitting distance of the BlackBerry, which has been on the market for about a decade. During the quarter that ended on Dec. 2, RIM added 2.6 million new accounts and sold 6.7 million devices, bringing the total of subscriber accounts worldwide to 21 million. In its most recent quarter, Apple sold 4.4 million iPhones, bringing its total to more than 17 million.
Verizon Wireless, a joint venture of Verizon Communications (VZ) and Vodafone (VOD), sells the Storm for $249 in the U.S. and then offers a $50 mail-in rebate, reducing the purchase price to $199 for customers who agree to a two-year wireless plan. AT&T (T), Apple’s exclusive partner in the U.S., sells the iPhone for $199 with a two-year plan.
While the iPhone has a unique multi-touch screen that lets users use two fingers at once for various gestures when using applications like the Web browser, a common criticism among its users is that typing on the iPhone is tricky because there’s no tactile feedback. In RIM’s case, the Storm’s screen is “clickable,” essentially one big button, creating the tactile sensation that makes virtual on-screen buttons more like real buttons. On the other hand, Apple’s screen boasts multi-touch capabilities that mean it can register as many as 10 touches simultaneously, giving the software applications a lot of flexibility.
STORM SUITS MORE CARRIERS THAN IPHONE
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