Components used to build new Research In Motion smartphone cost about $203, according to iSuppli. Verizon Wireless, the exclusive carrier of the Storm, sells the device for $199 after rebates and with a two-year service contract. Meanwhile, the total cost of components in Apple's 8-gigabyte iPhone 3G, which was introduced last summer, is $174. AT&T, the iPhone's exclusive carrier, sells the 8GB device for $199 with a two-year service contract.
These total device prices don't include the cost of software, licensing of patents, or distribution, but rather just the cost of the actual physical components. While the roughly $29 difference may not seem like much, it certainly adds up after millions of phones are sold.
Neither Verizon nor RIM has disclosed how many BlackBerry Storms have been sold, but published reports suggest that RIM sold about 500,000 of the devices during the first month the phone was on sale. Apple sold 1.1 million units of the first-generation iPhone, by comparison, in the first two months it was on the market. And sales after that quickly ramped up.
So why are Storm's components more expensive than those of the iPhone?
There are a likely several reasons. For one, the iPhone 3G is a second-generation product, and Apple may be getting better component prices from suppliers. But iSuppli also notes that the Storm is a more complicated device that requires more components. According to the research firm, the Storm's total component count is 1,177, of which 151 are mechanical in nature. The iPhone 3G includes 1,116 components.
The Storm also packs in more wireless technologies than the iPhone. For example, it offers the EV-DO air standard, along with CDMA 2000, GSM, WCDMA, and HSDPA. This allows the device to roam around the world on different carrier networks.
Another reason the Storm may be more expensive is because it's using an expensive chip from Qualcomm. The Qualcomm MSM7600 baseband processor costs about $35 and accounts for 17.2 percent of the Storm's total component cost.
The Storm is also more expensive than other RIM devices, such as the BlackBerry Bold, which costs about $177 to build. The Bold uses Marvell Technology Group's PXA9xx Integrated Baseband processor, which is less expensive than the Qualcomm chip. But iSuppli says the cost differential can mainly be attributed to the Storm's touchscreen and its supporting electronics.
The Storm, RIM's first touch-screen device, was supposed to be Verizon's iPhone killer. But customers who bought the device are complaining of buggy software and hardware glitches. A Wall Street Journal article published earlier this week suggests that Verizon and RIM rushed the device to market, perhaps before it was really ready. The newspaper notes that Jim Balsillie, RIM's co-CEO, said the companies reached the Black Friday deadline "by the skin of their teeth," after they had missed a planned October debut.