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Report: Storm Costlier to Make Than iPhone

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LR Mobile News Analysis
Light Reading
1/29/2009

BlackBerry 's first touch-screen BlackBerry is more expensive to make than its rivals, according to a breakdown by IHS iSuppli

The company said the BlackBerry Storm costs about $203 to make, compared with the $173 it costs Apple Inc. (Nasdaq: AAPL) to make an iPhone 3G. The most expensive part of the Storm is the $35 Qualcomm (NSDQ: QCOM) chip, which could make the Storm available in more countries eventually because it can use GSM and CDMA networks. The iPhone is currently only available for GSM networks.

The Storm often gets compared with the iPhone 3G because both handsets sport a large touch screen, have messaging, and feature strong multimedia capabilities. The major difference between the two is the input method, as Apple's smartphone utilizes a capacitive touch screen capable of multitouch manipulation. The Storm's touch screen uses SurePress technology, and the customer has to physically push down on the screen for input. RIM took this approach because it wanted a more tactile feel, which would make sending messages more familiar to BlackBerry users.

Despite coming out to mixed reviews and shaky software, Verizon Wireless was able to sell 1 million Storms in about 72 days. While this is a good pace for nearly any phone, the iPhone 3G was able to hit that figure in its debut weekend, although it was available in more countries.

While the breakdown does not represent the full cost of the device because it doesn't include research, marketing, distribution, and other factors, it does give a good estimate on the margins of the devices. Additionally, those cost differences begin to add up when the shipment volumes increase. Verizon is the exclusive U.S. carrier of the Storm, and it sells the smartphone for $199 after a rebate and a two-year contract. AT&T Inc. (NYSE: T) is the exclusive carrier of the iPhone 3G, and it costs $199 with a new two-year contract.

— Marin Perez, InformationWeek

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