The Eye of the (BlackBerry) Storm
iSuppli took apart Research In Motion's BlackBerry Storm to determine the cost of its components. Guess what? The iPhone parts are cheaper — As the battle for the smartphone market heats up, comparisons abound between Research In Motion's BlackBerry Storm …
Context & Ripple Effects
The Storm entered the market framed as a direct challenger to Apple and Google handsets, with one outlet calling it an iPhone-and-G1 challenger and Verizon pricing surfacing before launch. A November Storm teardown had already made the device’s hardware a subject of close scrutiny.
iSuppli’s component comparison shifts the contest from features and reviews to cost structure: the iPhone’s lower-priced parts give Apple a potentially stronger hardware-economic position at comparable retail pricing.
First-order effects
- Research In Motion faces a less favorable component-cost comparison for the Storm, limiting the gross-margin cushion available on a handset designed to compete directly with the iPhone.
- Apple’s iPhone gains evidence that its hardware can be built with cheaper parts than the Storm, strengthening its position in price and margin comparisons.
Second-order effects
- Verizon and Research In Motion have less room to use Storm discounts or carrier subsidies without putting additional pressure on device economics.
- Component suppliers to competing smartphones face greater scrutiny from handset makers seeking to match the iPhone’s bill of materials rather than only its feature set.
Third-order effects
- Smartphone competition is becoming a contest of both software experience and bill-of-materials discipline, rewarding vendors that can pair touch-screen features with lower hardware costs.
- As teardown comparisons become a regular benchmark, retail price ceases to be a sufficient measure of competitiveness; margin flexibility becomes a strategic differentiator.
The trend: The smartphone race is expanding from product imitation into cost-structure competition, with teardown economics shaping pricing power alongside features.