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Verizon Says BlackBerry Storm Selling Well Despite Barbs
12:13 PM

By Barry Levine

Despite negative reviews for the touchscreen Blackberry Storm, Verizon Wireless says one million have been sold. Meantime, iSuppli said its analysis shows Research in Motion is selling the BlackBerry Storm at a loss, since it costs more to make than Apple's iPhone 3G. BlackBerry Storm complaints have focused on bugginess and performance.

The first touchscreen BlackBerry, the Storm, received a mixed reception from reviewers when it launched in late November. But Verizon Wireless, the exclusive U.S. carrier, said earlier this week that the smartphone has taken the market by storm, with one million sold.

Verizon is using that sales figure to counter a report in The Wall Street Journal on Monday, which characterized the Storm's launch as a "bit of a bumpy start." Despite a marketing campaign of more than $100 million, the newspaper said, some buyers complained that it was buggy.

Selling at a Loss?

At launch, the Storm was immediately compared to the best-known touchscreen smartphone, Apple's iPhone 3G. Verizon's sales figure of one million over about two months compares well with Apple's sale of about 2.4 million iPhone 3Gs in its first full quarter.

But a new report from iSuppli raises a new area of comparison. The market researcher said that its analysis of the Storm's components show that not only are the constituent parts more expensive than the iPhone's, but its maker, Research in Motion, is essentially selling the phone at a loss.

iSuppli indicated that the Storm's cost of components and manufacturing is a bit less than $203, while the iPhone 3G comes in at less than $175. Software and other costs are not calculated. The Storm and the iPhone are roughly equal in price, about $200, after accounting for the Storm's rebate.

That comparison misses the point, said Current Analysis' Avi Greengart. While not commenting directly on the specific pricing assessment by iSuppli, Greengart pointed out that, even if the prices are accurate, "Verizon Wireless is subsidizing the cost of the phone over the life of its contract," as AT&T is doing with the iPhone.

Keyboard Expectations

Greengart also noted that the news of one million Storms sold is good from a public-relations perspective, to counter some of the less-than-rave reviews the smartphone has received. "There are certain expectations that BlackBerrys will have a terrific keyboard," he noted, "and the Storm's is subpar."

He also pointed to the complaints about bugginess and performance, as well as the fact that the Storm "basically just ports the BlackBerry user interface over to the Storm" rather than providing new approaches that could improve ease of use. Until the Storm, BlackBerrys were designed for a keyboard with a clickwheel or trackball, instead of a touchscreen.

The sales trumpeted by Verizon, he said, derive from two main reasons. "It's the most exciting product in the Verizon Wireless lineup," Greengart said, plus many people "choose their carrier first and then see what is the best phone available." Verizon is spending heavily to promote the Storm, he said, resulting in many people knowing about it.

"And the BlackBerry brand still draws people," he said, including one new resident of 1600 Pennsylvania Avenue, whose BlackBerry devotion has not exactly diminished its appeal.

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