In a fiscal climate where profit margin reigns
intensely supreme, we've got yet another dollop of bad news to heap upon the parfait of pain that is the $199 (after $50 mail in rebate) BlackBerry Storm. Research firm, iSuppli, estimates that the cost for the components and assembly of RIM's BlackBerry Storm are just shy of $203 -- an estimate that does not include software development and uh,
bug fixing costs or those attributed to patent licensing, physical distribution, marketing or anything else in the product lifecycle. The most costly component is the $35 Qualcomm MSM7600 processor that gives the Storm its dual GSM / CDMA personality. Now, $203 isn't that big of a spread compared to the per unit cost of a
$175 8GB iPhone 3G, $169 BlackBerry Bold, or
$144 T-Mobile G1. However, the lost
prophets profits add up quickly when you've moved over
a million units globally.
P.S. We're not implying that RIM is losing money here (the price is obviously carrier subsidized), only that the Storm is likely less profitable than its peers. But without knowing what VZW pays on a per unit basis, we can't say for sure who's getting the fiscal-shaft.
posted Jan 29th 2009 4:46AM
Fail.
Yep, first they ESTIMATE the cost, so we can't say they lose 4 bucks on every Storm sold. Secondly it's subsidized (and BB gains from that)
Also the reality might be that all those parts that they ESTIMATED the costs on cost actually much less in China, where they assemble these for pretty much nothing, then the REAL price might as well be about $20 USD including all the R&D and bonuses after TAX.
Sweet world, ain't it...
That's.... *pulls out calculator* ... 4 MILLION DOLLARS!
No f*cking way!
Dont cell phone companies pay RIM a certain percentage for every phone (contract) they sell? I really dont think RIM would be losing sleep over this.
I'm pretty darn certain that the $250 price is not the amount RIM receives for each unit sold. Verizon contracts with them, and hopes that by locking people into their service they'll recoup the money.
Fuck your greetz!
What the fuck?! :D
yea subtract the contract price from the msrp or no-contract price and the difference will give you a ballpark figure of what the subsides are...they defitnley wont be loosing...600 msrp - 199 = about 400 bucks profit for the companies..thomas ricker..you fail my friend..time to do some more research
Ding, Ding, Ding. You're the winnner. I'm not for sure what Mr. Ricker was thinking when he wrote this one. It's kinda hard to imagine BlackBerry not getting a cut from the provider.
Ok this is a stupid article. That's $4 more than the subsidized price of the phone, it's not like RIM is selling it for $199 unlocked. Carriers usually subsidize $200 or more from a smartphone, and the unsubsidized price from Verizon is $500, so RIM is still making a pretty penny on these phones.
the components may cost $203 but you'd think a company that pushing over a million units might get a bulk discount on some of those parts.
After you break above the quantities they advertise, e.g. $35 in 100 lots, the price is pretty negotiable. The bulk of the component cost is packaging, handling and shipping. Shipping in bunches of tubes at once makes it cheaper per unit.
I bought relays one time that were $4.20 for boxed in 100 lots at $2.56 in 500 lots unboxed.
My guess is that RIM is actually paying around $135 or less. However, that means that the T-Mobile G-1 is $96. As the article said, this implies relative cost.
isuppli is not stupid, of course they are considering quantities in their estimates.
Go try to build a cell phone from single quantity parts off digikey, and get back to me on how your estimate compares to isuppli's.
Well considering I have never paid for a phone in my life (even my storm was free with the contract) I am pretty sure the phone manufacturers would all be out of business if this research company was correct. However they seem to be another useless analyst comapny which know nothing about the subject on which they are supposedly analysing. We are in a recession and these guys get paid to be stupid!
Ergh? Tomorrows headline "Half of Nokias phones costs $XX more than its purchase price to build". I can get the 6120c for free, god nokia must be losing a ton of money.
Sure I'll have to pay some money monthly, but that's into the future and the future doesn't exist! Woowayh!
People, I think Engadget posters are smart enough to realize that there are carrier subsidies involved. (how else can a phone be "free"???) It's interesting to see how much the Storm costs to build when compared with it's peers. It could also explain why they have so many updates: the cost of the components for the phone forced RIM to spend less on SW support to keep the phone profitable.
I take it there must some sort of other income involved to be making some sort of profit.
Complete, utter, nonsensical BULLSHIT.
Not to mention that the rate of fulfilled rebates (for any product) is never 100%. So if 12% (small for rebates) fail to get back there $50 then its an even split on the phone. Then They make LOADS on or contract.
NOKIA E71 FTW!!
Remember, RIM takes a monthly cut from the BIS/BES service as well, something other smartphones don't have.
we need to be able to vote on articles..on a scale from 1 to 10 this article gets a -infinity!!!!!
People complaining about this article should calm down a bit. Often I find it interesting to know the price to build our everyday devices from scratch.
Of course, BlackBerry users have to pay RIM a monthly fee as part of BIS or BES packages, which is an income source the other companies don't have, so I guess they do have a bit more wiggle room.
I use BIS. I pay $0 per month for it. This is what most Storm users use. BES does cost money, though.
isuppli is a bunch of guys who know nothing of whats the price the companies receive for their products or about what are the things that affect device cost.
so. useless wanabe-technobabble for useless guys.
anyone see a wifi chip in there that could be hacked to work?
my work is oh so spendy and got me a 4mb data plan for my storm... 4mb, wtf!
Sorry but IT IS IMPOSSIBLE to obtain the manufacturer price. It is a corporate secret the deal used purchase (in a big amount of units) every electronic piece. Its the same as some ebay sellers, when they sell a brand new unit with a good discount but you don't known how they was able to give such discount, may be its can be a refurbished, or to obtained by a special sales a promotion or such.
That's the magic word of the article upstairs "subsidised" because the iPhone costs $150+ to make but the most tax/import free best price you can find it for is just over $650 in Hong Kong for the 8GB model, which shows an almost 400% price markup.
If I want to work for Blackberry, is it safe to say I am looking for a RIM job?
LOL, yes it is safe to say that. Hope you get one soon.
This is a ridiculous article and shows a complete lack of understanding of how the industry works. Verizon pays RIM $486 for each Storm. If you would like to appear intelligent, then you need to compare RIM's cost to the price they sell the device for. Don't even mention the customer price because that has NOTHING to do with RIM or their proffit margins. Juvenile article.
Considering that the price is subsidized, I'm not sure how we can call these "lost profits."
Hogwash. Sheer speculation. I doubt if any handset company would run a business that lost money on every device they sold. Especially with all the credit-rich fools buying and showing off with handsets they don't even need.
Reiterate Jacob's comment: you forget subsidy. Unless the device is sold "unlocked" (or is sold in a more free economy, such as China), then it has the synthetic subsidy-lock applied, meaning the carrier gives a part of the periodic costs (monthly fees, for example) to the manufacturer. The only case I've seen of subsidy-lock without subsidy is the $600 iPhone.
LOL@LOSTPROPHETS REFERENCE!!!!!!!!! AAAAAAAHHHHHH!!!!!!!!!!!!!
This article is stupid. Davo is spot on. What we're paying for the phone is completely useless info when talking about whether or not RIM is losing money on the phone. Its all dependant on what VZW is paying RIM for the phone.