Report: BlackBerry Storm Pricier to Produce than Apple iPhone 3G

Verizon is hoping the BlackBerry Storm, designed by Research In Motion, will be a serious competitor to Apple's wildly successful iPhone 3G. However well the Storm may be selling, Apple is doing a better job of keeping manufacturing costs down, according to a teardown report by iSuppli.

RIM's Storm, its first touch-screen BlackBerry, is more expensive and more complex to manufacture than the iPhone 3G, the El Segundo, Calif.-based research firm found. The Storm carries a combined materials and manufacturing cost of $202.89, according to iSuppli's Teardown Analysis Service. In comparison, a preliminary estimate iSuppli calculated in July found the 8GB iPhone costs $174.33 to produce, $28.56 less than the Storm.

iSuppli also discovered the Storm is more complex than the iPhone 3G, with the total component count at 1,177, of which 151 are mechanical in nature. The iPhone 3G includes 1,116 components. iSuppli determined the most important of these components is the Storm's touch-screen, which makes it a serious competitor to Apple's smartphone.

"The touch-screen and the resulting user interface represent the focal point of the Storm's design from the user's point of view, as it is with the iPhone," said Andrew Rassweiler, iSuppli's principal analyst and teardown services manager. He noted RIM added a special differentiating feature from the iPhone: the "clickable" screen, though ironically, some Storm uses have complained this is not a suitable replacement for the physical keyboard that CrackBerry addicts have long grown accustomed to.

"The one thing that existing touch-screens lack is the feedback mechanism users get from a conventional keyboard that clicks when a key is depressed, letting you know quickly that your choice has been registered," he said. "Clearly, RIM felt this was lacking and added an actual physical button that allows users to feel and hear a click when they make a selection on the display."

The report also found that the touch-screen does not quite match up to the standards of the iPhone 3G, as it lacks Apple's multitouch technology. "The Storm uses a simple physical button under the primary touch-screen to serve to provide haptic feedback," said Tina Teng, iSuppli's senior analyst for wireless communications. "This allows one physical key press at a time, meaning there is no double-tapping capability with the Storm."

iSuppli's teardown report found $186 out of the total $202.89 bill of materials/manufacturing cost were tied to components and other materials, while  manufacturing accounted for $16.07 of the total cost. The Storm's most expensive component-a $35 chip from Qualcomm-may give the Storm a competitive advantage over the iPhone, iSuppli found. The Qualcomm chip allows the Storm to function on GSM-GPRS technology-based wireless networks as well as CDMA networks. The iPhone only has the ability to work on GSM networks.

In addition, iSuppli said the Qualcomm part eliminates the need for multiple basebands and radio frequency chains, saving some cost. The Storm is also capable of roaming with more operators globally than the iPhone due to its support for the EvDO air standard, iSuppli found, which allows Storm users to roam around the world without having to rent a separate device.

Rumors of sluggish Storm sales ran rampant earlier this week after Verizon declined to provide specific sales figures for the smartphone during a fourth-quarter earnings report. In response to an article in The Wall Street Journal, which reported the glitch-ridden Storm had gotten off to a "bumpy start," Verizon shot back with an interview in Computer World claiming that 1 million BlackBerry Storms have been sold in just the first two months. In contrast, Apple sold 6.89 million iPhone 3Gs in the fourth quarter of 2008.