In the heavyweight match between Reseach In Motion's ( RIMM) BlackBerry Storm and Apple's ( AAPL) iPhone, the iPhone is still the smartphone to beat. As devices go, the iPhone has its "oh-wow" pluses (the multi-touch screen) and a few "oh-no" minuses (no keyboard). But as a product, it's pure gold for Apple. The same case can't be made for Research In Motion's Storm.
The AT&T's ( T) subsidized 3G iPhone hit the 1 million sold mark in the first three days. In 2008, Apple sold 14 million iPhones. This year, amid a nasty recession, analysts expect Apple to sell about 16 million. In contrast, Verizon's ( VZ) subsidized BlackBerry Storm took two months to hit the 1 million sold milepost after its Nov. 21 introduction. That puts it on track to sell 6 million phones this year, well below the iPhone sales rate. If anything, the Storm has been a disruptive force for RIM. The BlackBerry maker has been taking on high costs trying to rush the Storm's production rate and keep its exclusive partner -- Verizon -- happy. The Storm is Verizon's hottest phone and its best weapon to stop big-spending subscribers from switching to AT&T's iPhone. But all the new expenses have helped narrow RIM's margins to 40%, an alarming drop from the 50.7% level it enjoyed half a year ago. This margin squeeze came as a surprise to investors who now fear that RIM's entry into the hotly competitive consumer market will erode its once-lucrative business built on high-paying corporate customers.