Needham: iPhone takes shine off RIM's Pearl
Research In Motion's first genuine chance at breaking out of its stodgy corporate niche may have been prematurely cut short thanks to Apple's introduction of the iPhone, financial analysts at Needham & Co. said on Tuesday in a research note.
In guidance provided to stock traders, analysts John Lynch and Charlie Wolf downgraded RIM's rating from Buy to Hold, pointing to new questions about the Canadian smartphone maker's long-term prospects now that it had to grapple with a more direct competitor to its recently introduced BlackBerry Pearl. Lynch and Wolf together observed that while the Pearl was still the friendliest towards business and government buyers, the iPhone's emphasis on strong performance with a media-savvy focus had the "potential to impinge" on RIM's newly gained toehold in the mainstream.
While RIM is a "moving target" and may have a fresh model on offer by the time the iPhone rolls out in June, the analysts said, Apple's first cellphone may be the only real competitor the Pearl has seen since its September launch. The slim BlackBerry was the first from its creator to integrate a camera -- normally a taboo item for secrecy-obsessed offices -- and shifted attention towards music and video playback while keeping the immediacy of "push" e-mail that earned previous BlackBerries their workplace throne.
The mix is said to have loosened RIM's once stiff public image and has helped bring legions of first-time buyers to its doors. Even so, the Needham analysts warned that this might not be enough to sway mainstream buyers, who might be lured to Apple through better media controls.
"We expect a lot of would-be Pearl buyers will find iPhone's email [sic] to be good enough," Lynch and Wolf wrote, "in light of its unprecedented multimedia functionality and web browsing experience."
Besides its more tempting touchscreen interface, the iPhone's 4GB or 8GB of flash memory makes it a rare breed in the typically storage-shy American market and gives it enough room to store some owners' entire music collections. The Pearl has little free memory built-in and depends almost exclusively on microSD cards to load songs, capping its storage at 2GB.
Still, the analysts note that the iPhone's success is far from a surefire prospect. "Some buyers will need the reliable push email of BlackBerry, and some will balk at iPhone?s gaudy price tag," they said, also expressing caution over the uncertainty of a device whose feature list is far from certain. "We prefer to wait on the sidelines while questions over iPhone?s functionality are hashed out.?
Price may well be the Cupertino's ultimate Achilles Heel as it tries to break RIM's grip. Although far less ambitious, the Pearl that users can buy through AT&T (the iPhone's eventual destination) costs only half the iPhone's intimidating $499 price when part of a two-year contract -- and doesn't require that contract for an eventual sale. The Pearl sells for $399 unattached to any service plan.
In light of such tall barriers, Lynch and Wolf have even raised the possibility of a compromise and suggested that the ascent of one company didn't have to mean the downfall of another. "Both Apple and RIM will be winners," Needham's researchers were quick to add when issuing the Hold rating. "We [only] think our prior estimates were too aggressive."
In guidance provided to stock traders, analysts John Lynch and Charlie Wolf downgraded RIM's rating from Buy to Hold, pointing to new questions about the Canadian smartphone maker's long-term prospects now that it had to grapple with a more direct competitor to its recently introduced BlackBerry Pearl. Lynch and Wolf together observed that while the Pearl was still the friendliest towards business and government buyers, the iPhone's emphasis on strong performance with a media-savvy focus had the "potential to impinge" on RIM's newly gained toehold in the mainstream.
While RIM is a "moving target" and may have a fresh model on offer by the time the iPhone rolls out in June, the analysts said, Apple's first cellphone may be the only real competitor the Pearl has seen since its September launch. The slim BlackBerry was the first from its creator to integrate a camera -- normally a taboo item for secrecy-obsessed offices -- and shifted attention towards music and video playback while keeping the immediacy of "push" e-mail that earned previous BlackBerries their workplace throne.
The mix is said to have loosened RIM's once stiff public image and has helped bring legions of first-time buyers to its doors. Even so, the Needham analysts warned that this might not be enough to sway mainstream buyers, who might be lured to Apple through better media controls.
"We expect a lot of would-be Pearl buyers will find iPhone's email [sic] to be good enough," Lynch and Wolf wrote, "in light of its unprecedented multimedia functionality and web browsing experience."
Besides its more tempting touchscreen interface, the iPhone's 4GB or 8GB of flash memory makes it a rare breed in the typically storage-shy American market and gives it enough room to store some owners' entire music collections. The Pearl has little free memory built-in and depends almost exclusively on microSD cards to load songs, capping its storage at 2GB.
Still, the analysts note that the iPhone's success is far from a surefire prospect. "Some buyers will need the reliable push email of BlackBerry, and some will balk at iPhone?s gaudy price tag," they said, also expressing caution over the uncertainty of a device whose feature list is far from certain. "We prefer to wait on the sidelines while questions over iPhone?s functionality are hashed out.?
Price may well be the Cupertino's ultimate Achilles Heel as it tries to break RIM's grip. Although far less ambitious, the Pearl that users can buy through AT&T (the iPhone's eventual destination) costs only half the iPhone's intimidating $499 price when part of a two-year contract -- and doesn't require that contract for an eventual sale. The Pearl sells for $399 unattached to any service plan.
In light of such tall barriers, Lynch and Wolf have even raised the possibility of a compromise and suggested that the ascent of one company didn't have to mean the downfall of another. "Both Apple and RIM will be winners," Needham's researchers were quick to add when issuing the Hold rating. "We [only] think our prior estimates were too aggressive."
Comments
I read up on the Pearl and decided that if I was ever gonna get one of these devices, that would be it given the Pearl is geared a little more toward consumer users. But then the iPhone came out...and now I'm definitely getting THAT.
So to make a long story short: RIM lost a potential customer in me when the iPhone came out.
This would be great if you could do the same on the iPhone, so that you don't have to carry a separate PDA, as we know OS X will be installed, but we don't yet know what the final version will include.
For me, iCal and Address Book would have to be a lot better before I buy, but let's hope they address this by the time it hits the market.
And what about iCal on the iPhone? Steve flashed the calendar icon but never showed it to us, right? I'm sure we can expect a fully functional iCal on the phone. And it's OS X so it'll be easy to incorporate a PDF viewer and even a Keynote viewer. And once iPhone is out it'll probably take just a couple of days before the hacking community has hacked it and found a way to install homebrew apps. And what's wrong with the addressbook? I think it look pretty good.
Could the iPhone become the next RAZR? I believe it can.
Whilst I have been eagerly awaiting the launch of the iPhone like everyone else, I was expecting more in the way of PDA capabilities. I know it can sync with iCal and Address Book, but these suck compared to my Palm apps. My Palm has Apple's Filemaker Mobile installed, so that I can use all my Filemaker databases, and Documents to Go installed so that I can load all my Word and Excel documents, and any photos from my iPhoto library, all seamlessly synced from my Mac.
This would be great if you could do the same on the iPhone, so that you don't have to carry a separate PDA, as we know OS X will be installed, but we don't yet know what the final version will include.
For me, iCal and Address Book would have to be a lot better before I buy, but let's hope they address this by the time it hits the market.
What is wrong with iCal and Addressbook? I don't use iCal so I have no comment about it's performance and robustness, but Addressbook is a great app. It integrates with my other OS X apps flawlessly, it's built on the opensource vCard format, and it syncs with other .Mac account and other Macs seemlessly.
...and some will balk at iPhone?s gaudy price tag.
This is the most ridiculous argument I've heard about the iPhone.
Could the iPhone become the next RAZR? I believe it can.
And it will....
It was obvious from the keynote, that the iPhone is a new platform for Apple to grow the company. It is not an iPod and it is not a Mac. It is the third leg upon which Apple will stand. What we saw at the keynote was beta. The software will improve by the time it is released and will continue to improve for many years to come.
Here are some apps that I think we will eventually see on the iPhone
Omni Outliner
Omni Graffle
Delicious Library
Medical reference software
Pharmacy reference software
FileMaker
Pages
Keynote
Numbers
MYOB -Expense Tracking
MYOB -Expense Tracking
Bearing in mind MYOB have currently 'No plans' to port MYOB to Universal Binary, is way behind technologically for even a MacOS app, never mind an OSX app, and it runs like a pig, I'd bet not.
I'd love to see a MoneyWorks Expense app though. Those guys know what Mac users want.
iCal is ok but has many limitations compared to the Palm Desktop, e.g. in iCal if you want to repeat an event on specific days, you can't - you can only select every day, every week, every month, every year.
It's just that the Palm Desktop is far more comprehensive but at the same time very Apple-like in use. I just hope Apple make the iPhone more like the Palm apps, that's all, then I won't need my Palm anymore.
There will be plenty of apps available for the iPhone and unlike over priced Palm software, it will be very affordable. Apple wants to control the platform to maintain a high degree of quality. FileMaker is owned by Apple so I can guarantee we will se FileMaker Mobile on the iPhone. You will also be able to open .doc and .xls files.
And what if what you "can guarantee" is wrong?
I can guarantee there's no certainty in your speculations.
iCal is ok but has many limitations compared to the Palm Desktop, e.g. in iCal if you want to repeat an event on specific days, you can't - you can only select every day, every week, every month, every year.
You criticize the entire iCal app because of this? I can understand if this is something you need. But you have to fair and say is this something that most people would need to do.
...
iCal is ok but has many limitations compared to the Palm Desktop, e.g. in iCal if you want to repeat an event on specific days, you can't - you can only select every day, every week, every month, every year.
....
You say you don't use iCal and then you go on complaining about a "missing" feature. Well let me tell you, you can select what days you want an event to appear on. Why don't you try selecting the "custom" option from the repeat menu. From there you can select what days this event will happen and even from there you can have this event happen weekly, monthly, or yearly. It's even possible to select every other day, every other week, or month or whatever combination you like. Next time why don't you check yourself before you complain about limitations.
It's just that the Palm Desktop is far more comprehensive but at the same time very Apple-like in use. I just hope Apple make the iPhone more like the Palm apps, that's all, then I won't need my Palm anymore.
Any calendaring I do is well served by the excellent DateBk6 on my Palm PDA without synching with iCal, Palm Desktop, or other desktop app. I'd like something analogously impressive (not identical) to DateBk on an iPhone, if developers with as much talent and dedication as C. E. Steuart Dewar are given that opportunity.
There will be plenty of apps available for the iPhone and unlike over priced Palm software, it will be very affordable.
There is plenty of Palm freeware, I have never needed to pay for any apps on my Palm. I did buy a couple games, but there are many free downloadable games too.
Apple wants to control the platform to maintain a high degree of quality. FileMaker is owned by Apple so I can guarantee we will se FileMaker Mobile on the iPhone. You will also be able to open .doc and .xls files.
There is no assurance of anything.
Some are wondering about word integration etc. Who knows the iPhone may get it? And when iWork '07 comes out bundled with Leopard as a built-in default, it may be good enough as to never need office again, who knows?
I'd imagine there would be hell from 3rd party developers if Apple started bundling iWork or iLife in with Leopard for free and allegations of Apple unfairly using it's position to bundle.
However, on the iPhone, it's a valid criticism that it doesn't so far come with something that can read MS office documents as most other smartphones do contain readers at least either using DataViz's app or QuickOffice, which is what I use on my Sony Ericsson phone - http://www.quickoffice.com/. QuickOffice is free on the SE P series phones.
Then in 2 years or so, new, better iPhone models will come out to sit in the high end of the market and the base model will be offered for free with a 2 year contract, just like the RAZR is now.
You think so? It doesn't feel like Apple to me.
I expect them to discontinue the current phone after a while, and replace it with another high end phone, and a lower end one. I don't think they want to sell old hardware. They never did with the iPod. Granted, they moved the drive capacity a snap down, but they also changed other things.
You criticize the entire iCal app because of this? I can understand if this is something you need. But you have to fair and say is this something that most people would need to do.
This was only an example, I didn't want to labour the post. The Palm Desktop has many more features than iCal and is extremely simple and intuitive to use, in an Apple like way. All I'm saying is that with this I have virtually everything I need from my Apple, in my Palm. I just hope Apple can do the same with the iPhone, that's all.