Verizon Earnings Up, but Are BlackBerry Storm Sales Slow?

Verizon Communications announced a rise in net revenue for the fourth quarter, although the worldwide economic crisis has had a slowing effect on the company’s mobile phone division.

Verizon, the United States' second-largest phone company, said fourth-quarter profits rose 15 percent to $1.24 billion, or 43 cents a share, from $1.07 billion, or 37 cents a share, in the same quarter last year.

However, Verizon Wireless’ would-be iPhone killer, the Research In Motion-designed BlackBerry Storm, has seen sales hampered by a delay-and-bug-plagued launch since the device’s debut in November. The Wall Street Journal reported that unnamed sources “familiar with the matter” of Storm sales said about 500,000 Storms have been sold since the debut on Black Friday. In contrast, AT&T, the sole carrier offering Apple’s iPhone 3G, reported 2.4 million iPhones were sold in the touch-screen device’s first three months on the market.

Verizon kept silent about Storm sales when announcing fourth-quarter earnings figures today, stating only:

Customers across the country lined up to purchase the new BlackBerry Storm, available exclusively in the U.S. from Verizon Wireless and launched in November. Designed for both consumers and business customers, the BlackBerry Storm offers customers the reliability of the Verizon Wireless 3G network and the full power of a revolutionary touch-screen, multimedia smartphone with global connectivity.

The company decided not to attach a sales number to the above statement. The Storm, RIM's first touch-screen device and first device without a physical keyboard, was met with generally mixed reviews after its debut. Many reviewers encountered software bugs that caused the system to crash, although ongoing firmware updates have been released since Dec. 5 that addressed most of these issues.

Michael Gordon, a member of the 25-person Verizon Wireless Customer Council, a focus group run by Verizon's PR company R/GA, said if he hadn’t been given the Storm for free to test, he would have returned it. He thinks a high return rate is why Verizon didn't mention specific sales figures for the Storm. “If they have to talk about sales rates, then they have to talk about return rates, and that wouldn’t have been good,” he said.
Gordon mentioned bug-ridden, slow software as one of the main problems he had with the Storm. “When you would rotate the screen, you would wait 5 seconds, and then [the image] would rotate for you,” he said. “It was very buggy; it didn’t work right.” He said he’s gone back to the BlackBerry Curve, which he used before the debut of the Storm. He’s also happy to have the physical keyboard back, a point echoed by many who dislike the Storm’s touch-screen functionality. 

Although he said firmware updates solved many of the problems, a software glitch that causes the smartphone to constantly reboot persists in some models. “My phone used to reboot itself all day without my doing anything,” he said. “One of my friends who has it with the latest firmware said it’s still rebooting on her. That’s a serious problem.”

Gordon saids with all the emphasis Verizon says it is putting on testing its devices, he wonders what it was doing releasing the product so quickly. “What I told them, which is what everyone on the council thought, was that we were very excited about the Storm,” he said. “But what I said was, ‘OK, they pushed back the launch date once.’ I’d prefer them to wait until they get it right because otherwise the tech reviewers are going to slam it, and it will never sell.”

The Journal reported the advertising campaign for the smartphone topped $100 million, and reported RIM co-CEO Jim Balsillie said Verizon and RIM successfully met the kick-off holiday shopping “Black Friday” deadline "by the skin of their teeth," after blowing past the planned October launch date.

Despite slow sales of the Storm, RIM recently had what it called a “record” quarter, shipping roughly 6.7 million smartphones between September and November. On Oct. 21, 2008, Apple announced it shipped 6.9 million handsets of the iPhone 3G in the fourth quarter, and that same day revealed the company had sold 13 million iPhones to date.