November 22, 2008

BlackBerry Storm


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RIM's new BlackBerry Storm is proving to be popular with some people -- many Verizon Wireless stores sold out of their first batches yesterday. But while Verizon initially promised quick Internet orders, shipment for new orders has been delayed to "by Dec. 15." This is potentially bad news for RIM, whose third quarter ends Nov. 29. (See below for details.)

Why the delay? Engadget reports that Verizon is being forced to downgrade the phones in its inventory to an older version of RIM's operating system to potentially avoid a "security glitch," which was first alleged by mobile blog Boy Genius Report. (We don't know if this is true. We're checking with Verizon and will update if we hear back.)

Engadget: Supposedly the Storm was set to launch with OS version 4.7.0.82, but due to a last-minute security glitch every last handset had to be downgraded to .65 -- a surely time-consuming task that resulted in many fewer handsets in-store and online for release. Right now Verizon is indicating that orders placed before noon on November 21 should ship on the 25th, those received after noon will ship on December 5, and anything received on November 22 or later will not ship before December 15. That's close enough to a certain major holiday to make BlackBerry-loving kids of all ages nervous.

Nervous indeed -- and something that, if true, could potentially negatively impact RIM's Q3 results -- the quarter that ends Nov. 29 -- and Q4 guidance. We assume RIM's Q3 device shipments are at lower risk because, in theory, the phones have already been sold to Verizon, whose staff is tinkering with them. (Though it's possible Verizon's orders in Q3 and Q4 will be lower while they can't ship phones they already have.)


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More important: If thousands of people can't buy new Storms until next month, they can't sign up to be new BlackBerry service subscribers until next month -- which is part of RIM's Q4. Which could negatively impact RIM's Q3 subscriber growth. How much? We don't know. But it's definitely not good news for RIM or Verizon.

And if the delay extends further into the Christmas buying season, it's even worse. Why? Besides delaying Storm purchases, it could push on-the-fence buyers to consider other phones, such as Apple's (AAPL) iPhone.

That could be happening already. We've seen some anecdotal evidence -- like multiple Twitter conversations -- panning the Storm's "click" touchscreen, which you have to press down hard to type with -- and dismissing the phone's threat to Apple. (We think it's a decent phone, but we personally find the keypad more gimmicky than helpful.)

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Source: Alleyinsider.com

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