Verizon Wireless' U.K. partner, Vodafone, recently announced that it will give the BlackBerry Storm to users for free if they sign up for new contracts. Can Verizon Wireless afford to do the same thing?Competition in the smartphone landscape is fierce at the moment. The Apple iPhone costs $200 for the 8-GB model and $300 for the 16-GB model. The HTC G1 costs either $148 or $179, depending on where you buy it. Myriad other smartphones land in the $100-to-$250 price range.
The BlackBerry Storm, the much-awaited touch-screen device from Research In Motion, is due to arrive in November. Many have been asking how much Verizon will charge for the device, which is laden with desirable features.
According to Fortune magazine, many analysts believe it will be priced "at or below the iPhone." Whether that means $200 or $300, Fortune (or the analysts) doesn't say. Fortune also suggests that Verizon may follow in the footsteps of Vodafone and give it away. Analysts aren't so sure. Nielsen IAG's Roger Entner tells Fortune, "It's likely that they will put it at $150 and maybe $99 if they want to ship massive volumes during the holiday."
A $99 price point would allow Verizon to make a killing during the holiday season. But can Verizon afford it? Right now, many believe the BlackBerry Storm will cost at or above $500 if purchased unsubsidized without a contract. If Verizon chooses to sell the Storm for just $99, it will have to cover the rest of that $500 cost, which is $400 per phone. Can Verizon make that money back over the course of a two-year contract? It will depend on how Verizon prices the Storm's voice/data plans.
Verizon will have to make up less ground if it prices that Storm at $150 or $200, but it will still be subsidizing more than half of the cost of the handset.
Verizon has not made a final decision on the matter and probably won't until the device is officially launched closer to Thanksgiving. Until then, we can only guess how much it will be.