More iPhone vs. Storm: Comparing component costs

More iPhone vs. Storm: Comparing component costs

Summary: There's some buzz today about an iSuppli report that dove deep into an analysis of component costs for the Blackberry Storm, compared to a similar breakdown of Apple's iPhone. In the end, the electronics research firm found that the cost of components and manufacturing cost about $203, compared to Apple's costs of less than $175.

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There's some buzz today about an iSuppli report that dove deep into an analysis of component costs for the Blackberry Storm, compared to a similar breakdown of Apple's iPhone. In the end, the electronics research firm found that the cost of components and manufacturing cost about $203, compared to Apple's costs of less than $175.

The Storm, launched in November, was touted as being RIM and Verizon's answer to Apple and AT&T, which grabbed headlined and attention with the revolutionary iPhone. Verizon, in its quarterly earnings call with analysts, did not cough up sales data on the Storm, though a Business Week article cites published reports that put Storm's sales figures at about a half-million in the first month. You'll recall that, upon launch last November, there was an immediate inventory issue that kept Verizon and RIM from putting the device in the hands of people who wanted one.

Before anyone starts multiplying the $28 or so difference between the component and manufacturing costs to figure out how much cash Apple (and RIM) are making on these devices, consider the iSuppli caveat: the estimates only look at component and assembly costs. They don't take into account the software, patent licensing or distribution costs. I also didn't see where it took into account the battery.

In a post yesterday, I wrote about how I ended up taking back my iPhone (blaming the poor AT&T voice service) and buying a Storm instead. One of the tidbits of information I left out was the battery issue. The iPhone couldn't keep a charge to save its life - and the best advice I was given by other iPhone users was to turn off the 3G connection to help reduce the drain on the battery. Seriously.

I don't know what the locked-in battery on an iPhone costs and whether that was a penny-pinching item over at Apple. iSuppli gave the exclusive advance interview about the Storm analysis report to Business Week and, as of Thursday morning, hasn't officially released its report so I could do my own digging.

I recognize the whole bit about lowering component prices and beefing up profit margins. And I also get that, given the hype and lovefest that's surrounding the iPhone, Apple really has no incentive to make any significant changes. AT&T appears to be happy. Apple is moving up and closing the gap on RIM, which had a decade head-start in what is now called the smartphone business. And consumers, even if they have issues with the battery, are willing to turn off the 3G connection or make other sacrifices just to keep that iPhone in-hand.

One other note about the iSuppli report and the Business Week piece. The magazine reports that the Storm uses a $35 chip from Qualcomm that allows it to work on both GSM-GPRS networks (AT&T and T-Mobile) and CDMA (Verizon and Sprint) while the iPhone only works on GSM-GPRS. That means that RIM can sell to all the major carriers while Apple cannot. Imagine the iPhone world domination (and potential app store revenue) if Apple made the iPhone compatible on all networks. I'd buy one again. (Remember, I liked the iPhone A LOT. I hated the AT&T service.)

Take that $35 out of the equation and suddenly the component cost of the Storm is less than the iPhone (at least based on the data points we know about.)

I'm glad that firms like iSuppli are doing the deep analysis of these products. But without the full picture - the costs of software, licensing and distribution - it's misleading to draw any definitive conclusions.

The folks at iSuppli said they will send me the details of the research when they're available - presumably, today. If there's anything worth noting or if I've missed some sort of critical piece of information,  I'll definitely update this post.

Topics: Apple, Enterprise Software, Hardware, iPhone, Mobility, BlackBerry, Smartphones, AT&T

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13 comments
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  • Another item iSuppli doesn't count...

    R&D costs.

    Apple had to start from scratch with the iPhone, while RIM used R&D
    from other phones for much of the Storm.
    msalzberg
    • R&D Costs????

      Are you saying that the components inside the iPhone are all researched, designed, developed and manufactured by Apple??? I find that hard to believe.
      mrjoctave@...
      • Its something like that

        but Apple does research, and sometimes design parts of the hardware for the iPhone/iPod touch in conjuntion with the hardware manufacturers. no Apple dont make the hardware that goes inside of them themself. all they do is send what they want in a chip to the hardware manufacturer and then it gets built. then the parts go to someplace to get put together.
        madmax_2069
  • RE: More iPhone vs. Storm: Comparing component costs

    No one except North Americans use CDMA, that's why you don't get the worldwide chips in an iPhone.

    You are also mistaken that the Storm works on all carriers because it doesn't have the 850Mhz or 1900Mhz GSM or North American 3G unlocked so it doesn't work on North American GSM networks. Verizon had this blocked off so people couldn't buy the device and put it on AT&T or T-Mobile.

    CDMA is too restrictive and a dead voice technology. Only North Americans and Koreans still use the technology. Apple doesn't need Verizon's business when it gets everyone elses.
    cloonatic
  • RE: More iPhone vs. Storm: Comparing component costs

    You are correct to a point. Australia ran a CDMA network until mid 2008 when it was shut down. Whether USA and Korea are the ONLY remaining countries with CDMA I cannot say. What I can advise is that there IS a storm that has CDMA. The usual Storm 9500 is 2100Mhz only for 3G that is true, but there is also a Storm 9530 which is both HSDPA 2100Mhz and CDMA.

    That doesn't help us in Australia now that CDMA has gone. Currently all Storms are exclusive to Vodafone. No doubt in time they will be available to Optus and "3" who also run on 2100Mhz. The largest carrier - Telstra - will miss out as they followed AT&T with the 850Mhz band.
    Khun_Tilt
  • You can unlock the Verizon Storm

    I believe that the decision to make the iPhone's battery not user replaceable was influenced by a design decision, not cost.

    Also, since the storm also has the necessary radio frequency for working in the American GSM market, you can unlock the GSM portion. I found http://www.unlockcellphone.com and they did it.

    I know in the past, another hybrid GSM/CDMA Blackberry, before the STORM, did not support the 850/1900MHz GSM frequency in the US and it could only be used in other countries.
    idealab
  • RE: More iPhone vs. Storm: Comparing component costs

    I love my Storm. My son has an iPhone we compared and found the storm has some better features. One of them is battery life. I am watching for applications as they become available for the storm.
    reluhrs@...
  • RE: More iPhone vs. Storm: Comparing component costs

    In regard to the iPhone battery life issue I've found that the users who have a problem with it are the ones who fail to use the screen lock button.

    When the phone is not in use all you need to do is turn the screen off. Ever since I started doing this I have no a single complaint against my iPhone's battery life.
    designerdre101
  • I would not buy either

    If people in the US would go out and buy their phone equipment outside of the phone company channels I think that you would start to see more features being available. Since the phone companies sell or give these things away half the feature set on these things end up crippled by the phone companies wanting to lock you into phone company feature set specific offerings from them. The Iphone does not have a replaceable battery because apple wants us to go out and buy a new phone or pay for a service contract. IPhone does not have and SD slot because apple wants you to buy the next IPhone offering with more memory. You guys are being sucked into these things that all have incomplete feature sets and that's by design.
    pebear
  • Problem with most other smart phones

    The biggest drawback of a lot of the non iphone smart
    phones is that the features they have when you buy then is
    all they will ever be able to do. But the iPhone along with the
    Apple app store there is no limit to the feature 3rd party
    developers can bring to your iphone. And that is why all
    these other smart phones are not really all that smart.
    Michael Fournier
    • Don't be hating

      The App Store took 10 to 12 months to show up after the iPhone was released. Give RIM and Google that amount of time to develop their stores before making the comparison. There is plenty of Blackberry software on the market right now. It just isn't all in a nice little store where one company gets their piece of the action on every sold app.
      Middle_Age_Man
  • RE: More iPhone vs. Storm: Comparing component costs

    VERY satisfied with battery life of the storm....
    Verizon rocks...I LOVE my iThouch....But if Apple made
    iphone GSM-GPRS and beefed up the battery...imagine the
    foothold they'd have.
    dlights@...
  • RE: More iPhone vs. Storm: Comparing component costs

    nt
    mrjoctave@...