Tag: suppliers

RIM to use strong financial status to leverage supply cost reduction

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RIM is a growing company during this recession and it can use this to leverage price reductions with its suppliers.

“Being a strong growth company in a challenging environment makes you an important customer,” said Jim Balsillie, Co-CEO of RIM.

According to iSuppli, BlackBerry devices are fairly expensive to produce. The BlackBerry Storm, costs $203 to produce, while the Bold costs $170.

RIM’s five biggest suppliers account for almost 90 percent of its production costs, according to data from relationship- mapping software Connexiti. Electronics manufacturer Elcoteq SE makes up a third of RIM’s costs and relies on the company for 20 percent of annual sales.

If RIM could make headway bargaining with these five suppliers, we can see a few things happen: lower costs per unit, greater profit margins for RIM and an increase in the all-around financial security of the company. It’s just a matter of whether these companies will budge, and if RIM has other suppliers it could go to should talks break down.

“Markets are getting more difficult and everyone is trying to minimize costs,” said Elcoteq spokesman Carsten Barth. “We obviously always try to help our customers because if they are successful, we are successful.” He declined to comment specifically on RIM.

[Via]