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(Credit: Corinne Schulze/CNET)

Research In Motion confirmed on Monday what many have speculated to be in the works: a BlackBerry Storm 2. While it may not ultimately be called the Storm 2, RIM co-CEO Jim Balsillie confirmed the news to Reuters, saying that sales of the BlackBerry Storm remain strong and that it's working on next-generation devices in the hopes of continuing to tap into the consumer market.

Balsillie did not provide any specifics about the device, other than to say that the Storm has been a success "in terms of sales and adoption" and that sales remain strong, which contributed to its decision to develop the line. The BlackBerry Storm was RIM's first touch-screen device and was quickly pegged as the company's (and Verizon Wireless') answer to the Apple iPhone.

Balsillie added that more than half of the company's 25 million subscribers now fall into the noncorporate category, and just today a report by The NPD Group revealed that the BlackBerry Curve 8300 series surpassed the iPhone 3G as the top-selling consumer smartphone in the United States. The BlackBerry Storm came in third and the BlackBerry Pearl came in fourth.

Yet, despite swift sales, the Storm received mixed reviews from the tech world and there were numerous customer complaints about buggy software and system failures. Currently, the Storm sits with a pretty lowly CNET user rating of 2.5 stars out of 5 based on 700 reviews, which begs the question: Should RIM stick to what it knows best and stay with the QWERTY/SureType messaging phones? It seems to be doing just fine with the Curve and Pearl series.

The next BlackBerry Storm may have a new screen and Wi-Fi, according to reports.

(Credit: CNET)

Research in Motion's next BlackBerry Storm might come with a tweaked touchscreen in hopes of alleviating complaints about the first edition.

Several publications including Unwired View have picked up on an interview given by RIM's Alain Segond von Banchet, channel sales manager for BlackBerry in the Netherlands, in which the executive discusses a BlackBerry Storm 2 in frank terms. Google translations can be sketchy, but feel free to evaluate the original interview published by Tweakers.net.

The Storm 2 may not wind up being the final name for the new device, von Banchet said, but the device will come with a new way of entering data. That jibes with claims made by The Boy Genius Report on Tuesday that the next Storm will use a new screen in order to make typing easier.

The first BlackBerry Storm helped RIM enjoy an excellent quarter, but some reviewers and users were a bit put off by the touchscreen, as well as the lack of Wi-Fi, which will supposedly be addressed with the second iteration of the Storm.

The revamped device might be pretty far away from store shelves, however. KPN, a wireless carrier in the Netherlands, is expected to have the Storm 2 by the end of this year or the beginning of the next, and there's no indication when other carriers might be in line to start selling it on their networks.

Research In Motion, maker of the popular BlackBerry smartphone, warned investors Wednesday that it will likely hit the low end of its earnings forecast for the fourth quarter.

The news comes despite the fact that RIM also predicts strong subscriber growth for the quarter. RIM said Wednesday that it will add about 3.5 million new subscribers by the end of the quarter. This figure is about 20 percent higher than the 2.9 million new subscribers the company said it had expected on December 18.

So what does this mean? Analysts believe the fact that RIM is growing subscribers but slipping in terms of revenue means that the company is likely sacrificing profit margins to win new customers. RIM also said its gross margins will be at the low end of the range it gave previously. Gross margins are expected to be around 40 percent to 41 percent compared to about 45.6 percent in the third quarter.

RIM is facing stiff competition from other phone makers, especially Apple. The new iPhone 3G device went on sale last summer, and Apple sold about 6.9 million new iPhones worldwide during the third quarter. Shipments slowed a bit in the fourth quarter, but were still strong. The company sold 4.3 million new iPhones.

RIM launched its own touch-screen phone, the Storm, in November to compete head to head with the iPhone. The device is sold exclusively through Verizon Wireless. Feedback from consumers so far has been lackluster, as many have complained that the device's software and hardware perform sluggishly.

Maynard Um, an analyst with UBS, said in a research note that RIM's lowered earnings expectations might also suggest that consumers are returning the Storm for the older and less expensive Curve.

James Faucette, an analyst at Pacific Crest Securities, told Business Week that the margin pressure appears to be coming from hardware. The Storm and the BlackBerry, another phone launched this fall, are expensive for RIM to make. This means that RIM makes lower gross margins on these devices.

Market research firm iSuppli recently took apart the BlackBerry Storm and priced its components at about $203. Verizon sells the device for $199 with a two-year contract. Another iSuppli report says the Blackberry Bold's hardware cost is about $158. Meanwhile, the iPhone costs $174.

The news might also indicate that the smartphone market may not be as resilient to the recession as some experts had thought. Market research firm IDC said earlier this month that smartphones are likely to be the bright spot in an otherwise dismal cell phone market. But the high prices of these devices might make it a difficult sell to cash-strapped consumers.

RIM's fiscal fourth quarter ends February 28. And the company reports quarterly results April 2.

(Credit: Slacker Radio)

When Slacker Radio first introduced its streaming Internet radio app for the BlackBerry, it only worked on standard BlackBerrys running version 4.3 and above. Starting Wednesday, the free app gets touchy-feely with a brand new version for the BlackBerry's touch-screen Storm.

Slacker Radio for the Storm brings with it everything we loved on the Curve and Bold, including its best feature ever, caching a song to play offline later. It also throws in some touch-screen specials, like support for landscape mode.

The app still serves U.S. customers only on the BlackBerry and iPhone.

To get it, go to www.Slacker.com from the BlackBerry browser.

Related stories:
First Look video: Slacker for BlackBerry
How to cache Slacker stations on BlackBerry

(Credit: James Martin/CBS Interactive)

Market research firm iSuppli has taken apart the BlackBerry Storm and discovered that the sum of its parts is worth more than those of Apple's iPhone 3G.

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.

Despite a multimillion-dollar advertising campaign, the new BlackBerry Storm has gotten off to a shaky start, according to The Wall Street Journal.

(Credit: Verizon Wireless)

The Storm, which is Research In Motion's first touch-screen device, was supposed to be Verizon Wireless's iPhone killer. Verizon is the exclusive carrier for the Storm. Apple's iPhone is sold exclusively by AT&T. Verizon and RIM had supposedly been working on the device even before AT&T launched the original iPhone two and a half years ago.

The Storm launched in November, in time for the holiday-shopping season. And while it sold well initially with about 500,000 shipping the first month, the Journal reports that many customers who bought the device are complaining of buggy software and hardware glitches.

Specifically, consumers say that the software used to type on the touch screen, which requires you to press down on the face of the phone, is sluggish. I have used the device on and off since it was launched November 21, and I'd agree that it is clunky.

Other examples: the accelerometer that senses and changes the view on the screen when it's turned on its side is slow. And sometimes the "sure press" screen is difficult to use because it registers the wrong character.

Verizon and RIM rushed the device to market, perhaps before it was really ready, according to the Journal article. 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.

Research In Motion is the latest smartphone maker to fall victim to the sagging economy.

The maker of the popular BlackBerry mobile devices late on Tuesday reduced its outlook for its fiscal third quarter, which ended on Saturday. The company said it expects to earn between 81 cents and 83 cents a share on revenue of between $2.75 billion and $2.78 billion. In September, RIM said it expected profits between 89 cents and 97 cents on revenue of between $2.95 billion and $3.1 billion.

RIM's executives blame the shortfall on the stronger dollar and the "general economic weakness in the United States." Other phone manufacturers have also reported lower-than-expected sales. Nokia, the largest cell phone maker in the world, warned last month that it expects to sell fewer handsets than it had expected during the fourth quarter of 2008.

Palm, which makes the Treo, also reported that it expects dismal earnings. The company said revenue for its second fiscal quarter will be just $190 million to $195 million. Meanwhile, Wall Street analysts had expected Palm to bring in about $331 million in revenue.

In addition to slowing demand due to economic troubles, RIM also faces stiff competition, especially from Apple. Market research firms have crowned Apple's iPhone the most popular phone in the U.S. market and the second most popular smartphone worldwide.

RIM recently introduced its iPhone competitor, the BlackBerry Storm. The device, which, like the iPhone, has a touch screen instead of a physical keyboard, launched two weeks ago exclusively on Verizon Wireless's network in the United States.

(Credit: Verizon Wireless)

RIM says response to the new product has been very strong. The company said it signed up a record number of new customers the day the BlackBerry Storm hit store shelves in the United States. Indeed, customers lined up outside Verizon Wireless stores in several cities to be among the first to get the device.

Of course, the hype and frenzy surrounding the Storm paled in comparison to that surrounding the launch of the original iPhone and then the iPhone 3G this past summer.

Still, RIM believes that the strong momentum for the BlackBerry Storm will continue into the fourth quarter. Other new BlackBerry models, such as the Bold and the clamshell Pearl, should also help spur growth, executives have said.

"Initial sales of new products have been very positive, and we believe we have the strongest smartphone portfolio in the industry by far; however, product launch timing, general economic conditions, and foreign-exchange volatility have tempered our results in the third quarter," Jim Balsillie, Co-CEO at RIM, said in a statement. "We believe RIM is well-positioned to capitalize on the increasing smartphone market opportunity, and we remain focused on driving growth in the fourth quarter of fiscal 2009 and beyond."

Hundreds of people lined up outside some Verizon Wireless stores to buy the new BlackBerry Storm on Friday, but many walked away empty handed.

The Storm, which has been hyped for months, went on sale Friday morning. The device is the first BlackBerry phone to have a touch screen, making it a strong competitor to the Apple iPhone on AT&T's network. Since Verizon Wireless announced it would be the exclusive U.S. carrier for the Storm, the wireless operator has been expecting it to be a hit. In fact, it's the only new phone the company is introducing before the busy holiday season. Last year, Verizon launched four new phones before the holidays.

Reuters reported earlier Friday that more than 200 people lined up outside a Verizon Wireless store in midtown Manhattan, and the store was sold out of the new phone within an hour of opening at 8 a.m. Other stores in Washington, D.C. and New Jersey also had lines of 100 people or more, Reuters said.

And in San Francisco smaller lines of about 20 people waited outside Verizon stores at 8 a.m. Of course, these lines are small compared to the frenzy surrounding launches for the Apple iPhone. For both the original iPhone and the iPhone 3G released in July, people waited in line for days outside Apple stores and AT&T stores around the country to be among the first to get their hands on the gadget.

Brenda Raney, a spokeswoman for Verizon Wireless, said that Verizon Wireless has plenty of BlackBerry Storms in its warehouses around and that customers who weren't able to get a phone on Friday will be able to order the phone and have it delivered to their homes within four to five days.

Raney also said that stores will be getting more shipments of Storms. She knew of three that had already gotten shipments this afternoon. Two stores in Manhattan, the Verizon Store on 34th St. and one at 1095 Avenue of the Americas, and one store in Paramus, NJ received shipments Friday afternoon.

Other stores may be getting shipments on Saturday, so customers may want to check out their local Verizon store over the weekend, she suggested.

Vodafone Group, one of Verizon Wireless's two parent companies, is selling the BlackBerry Storm in Europe. It also said it was struggling to meet demand for the storm when it launched the device, according to Reuters.

Initial reviews of the BlackBerry Storm have been fairly good. The device, which has a touch screen, media player, full browser and comes with 9 Gigabytes of storage (1 GB on the device and an 8 GB microSD card), is seen as a strong alternative to the iPhone for customers who prefer Verizon Wireless's network. But critics also point out the phone's shortcomings in comparison to the iPhone. For example touch screen requires users actually push down on the screen to select a button or click through a link, making typing on the device somewhat slow and cumbersome. And the biggest complaint is the Storm's lack of Wi-Fi, which is supported in the iPhone.

Verizon Wireless may have found its iPhone killer.

(Credit: Verizon Wireless)

On Friday, Verizon will be the first and only wireless carrier in the U.S. to offer Research in Motion's new BlackBerry Storm. The device, which costs $199 with a two-year contract and a $50 mail-in rebate, is the first phone that could give Apple's iPhone--offered exclusively on AT&T's network for the same price--a run for its money.

I checked out the new touch-screen phone this week and have been playing around with it for a few days. My first impression is that it's pretty cool. It shares many of the same features that have made the iPhone popular, such as a touch screen, media player, and full HTML browser, making it a strong alternative to the iPhone. (For a full review of the device check out CNET Reviews where editor Bonnie Cha has put the device through its paces.)

But RIM has also been careful to retain the popular features and functionality that have catapulted its BlackBerry devices to iconic status among corporate types.

Take the touch screen as an example, BlackBerry users are accustomed to pushing actual keys. And many people I know who carry both a BlackBerry and an iPhone say they prefer the BlackBerry when it comes to sending text messages or e-mail, because they like the feel of touching buttons.

RIM didn't want to lose this feeling, so the company made sure that users still have to push down on the touch screen as if they were actually hitting a button. As an Apple iPhone user, I have to admit, it took me a little while to get used to the Storm's "push" touch screen. But in some ways I think it's an improvement over the iPhone touch screen. I can't tell you how many times I've accidentally called someone or sent a text message before I was ready to hit send, because my finger brushed across that area on the iPhone touch screen.

Another improvement over the iPhone is the fact that the Storm has 1 gigabyte of internal storage and can use a standard microSD storage card to support up to an additional 16 GB of data storage. And because they are standard storage cards, they can be swapped out and replaced. By contrast, the iPhone 3G comes in two versions, an 8GB model and a 16GB model. The storage can't be removed or swapped.

(Credit: Verizon Wireless)

Also, the Storm has a removable battery. Again, this appeals to me, because the iPhone's battery can't be removed, which means if it dies, so does my iPhone.

The gloomier forecast
But the Storm isn't a perfect device either. And there are a few things that I prefer on the iPhone. For one, the Storm lacks Wi-Fi. Verizon Wireless' representatives told me they opted not to include Wi-Fi because it adds "bulk, cost, and is a drain on the battery."

But truth be told, I think Verizon didn't want Wi-Fi because the company would rather have customers surf its 3G wireless network. While 3G speeds are a huge improvement over 2.5G speeds, they simply don't hold a candle to Wi-Fi. I can download e-mails and Web pages on my iPhone when using Wi-Fi much faster than when I am using AT&T's 3G network. And I can't imagine it would be much different on Verizon's 3G network.

Beyond its lack of Wi-Fi, I'd say that I prefer the touch screen navigation and Web browsing experience on the iPhone to the Storm. This of course, is a matter of personal taste. The new BlackBerry browser is slick and it works well. It's definitely a huge improvement over its older browsers. But zooming in on pages on the Storm requires clicking a button or actually clicking the screen. And I prefer the iPhone's pinching and brushing movements. But that's just me.

Overall, I think RIM has come out with a device that will give any consumer seriously considering a new touch screen smartphone an alternative to the iPhone. As a result, I think it could help Verizon retain customers ,who have been tempted to leave the carrier for the iPhone.

Let's face it, Verizon's previous attempts at introducing a so-called iPhone kliller have been lackluster. The LG Voyager and the LG Dare, looked cool and sleek, but they weren't true smartphones. RIM's other BlackBerry models have lacked the touch screen and cool factor.

Even though Verizon has not seen huge numbers of its subscribers leave its network since the iPhone was first introduced a year and a half ago, it has lost some as a result. But now, customers who are satisfied with Verizon Wireless's coverage and network reliability, won't have to leave to get a really cool device.