BlackBerry maker downgraded in light of blistering iPhone sales

[AppleInsider]

Although it believes Research In Motion's dominance of the enterprise market remains secure for the time being, Needham & Co. downgraded shares of the BlackBerry maker this week, explaining that the same cannot be said for its primary growth driver of the past two years -- the consumer market.

In a report sent to clients Wednesday, the investment bank cited metrics reported by RIM each quarter which show its subscriber additions in the enterprise market to have increased 28 percent in fiscal 2008, and 31 percent in the first fiscal quarter of 2009. At the same time, however, the company's additions in the consumer segment grew nearly 300 percent and 174 percent, respectively.

Analyst Charlie Wolf explained that much of this success has come as a result of the firm's consumer-oriented BlackBerry Pearl, which was met with a paucity of competitive offerings from other smartphone manufacturers for the past seven quarters.

Although rival vendors such as Motorola, Samsung and HTC each took a stab at the Pearl's core market segment, the offerings from those companies relied on the "justifiably maligned Windows Mobile operating system" which has proven to be anything but user-friendly.

"But the days of no competition are over," Wolf told clients. "They ended with Apple’s July 11th launch of the iPhone 3G. [...] Apple announced that it sold over one million phones in just three days, [and] our checks indicate that demand has continued almost unabated since then."

Key to Apple's assault on RIM's turf are two key moves, according to the analyst. First, the iPhone maker has drawn up plans to expand distribution from just a handful of countries to approximately 70 by the end of the year. Secondly, and most critically, it's built a massive developer community that has produced around a thousand native applications in just under four months.

It's that software front, Wolf argues, that's destined to emerge as the "next battleground" in the smartphone market. RIM's "primitive" Java development tools have "no hope of catching" up with Apple's powerful and easy-to-use iPhone SDK, he says.

BlackBerry Bold, due some time in the third quarter.

Still, the analyst points out that RIM holds ambitions of fighting back "or at least attempting to." Earlier this Spring it announced the BlackBerry Bold and will launch the iPhone look-alike BlackBerry Thunder later this summer.

"In our opinion, the Bold is not even on the iPhone’s radar screen," he said. "Thunder should be. But what distinguishes the iPhone is not its pretty face. It’s the superb integration of hardware and Apple’s OS 10 operating system that makes the device one of a kind."

BlackBerry Thunder, due some time in October. | Source: Crackberry.com

Those comparisons aside, Wolf acknowledged the view of some industry watchers, who argue that Apple and RIM aren't necessarily engaged in a winner-take-all battle. With the smartphone market having posted more than 50 percent growth in 2007, it's conceivable that several firms could come out winners in the end.

"At the same time, it has quickly become obvious that the iPhone is bound to slow the red-hot growth of Blackberry Pearl and RIM’s new consumer-oriented entries," he said. "That’s why we’re downgrading RIM from a hold to an underperform rating."

[ View this article at AppleInsider.com ]

[echosonic]

Look, here's you:

"Oh look at me, I'm RIM and I have the Blackberry, and--"

And here's me:

"Buh-bye."

[anantksundaram]

Hmmmm. RIMM is up 5.5% today, as of the time of posting (~$112).

However, the stock had fallen to $102 yesterday, from ~$119 last Friday, a 14% drop. So it is still down despite today's uptick, and there's no doubt that some of this drop is attributable to the iPhone V2.

[DimMok]

Rim - ftw

[SpamSandwich]

Originally Posted by dimmok

rim - ftw

rim - wtf?

[Thomaspin]

As predominantly corporate buyers stock up on Blackberries to enhance efficiency during these tough times, this analyst concludes that consumer spending on iPhones will rise whereas corporate spending on Blackberries will fall.

100% wrong on both counts.

Apple no more 'gets' the corporate buyer than RIMM 'gets' the retail consumer. It's the same corporate buyer who buys Microsoft's wretched products because a) It's safe - everyone does it, and b) You need someone to blame when things blow. So no IT chief is going to take a mass migration risk away from Blackberries regardless of what the CEO wants. Sure, give the CEO his so you stay employed but the whole corporate staff? No way.

Plus, it's irrelevant how good the iPhone is (and it is very good) - the consumer has the simple choice to make between a new phone and bread on the table. You can eat cereal but you cannot dial it up.

Get with it, Mr. Analyst - Apple is a Consumer Discretionary stock. And rational investors are shorting those, right?

[PatsFan83]

I literally had to stop and look at each icon on the Thunder's home screen to figure out what they were...talk about some terrible graphic designs...the rest of the screen looks good, but a little more TLC to the icons would be nice.

mail, book, grid, travel the world, some crazy formula, compass?

compass..as in safari/internet? wait no it must be the world icon, like world wide web!

[Tauron]

Originally Posted by Thomaspin

As predominantly corporate buyers stock up on Blackberries to enhance efficiency during these tough times, this analyst concludes that consumer spending on iPhones will rise whereas corporate spending on Blackberries will fall.

100% wrong on both counts.

Apple no more 'gets' the corporate buyer than RIMM 'gets' the retail consumer. It's the same corporate buyer who buys Microsoft's wretched products because a) It's safe - everyone does it, and b) You need someone to blame when things blow. So no IT chief is going to take a mass migration risk away from Blackberries regardless of what the CEO wants. Sure, give the CEO his so you stay employed but the whole corporate staff? No way.

Plus, it's irrelevant how good the iPhone is (and it is very good) - the consumer has the simple choice to make between a new phone and bread on the table. You can eat cereal but you cannot dial it up.

Get with it, Mr. Analyst - Apple is a Consumer Discretionary stock. And rational investors are shorting those, right?

I don't know. I don't quite agree with you.

Blackberry getting the consumer market now that iPhone v.2 is out is a fool's errand, that is for sure.

But the iphone getting the enterprise market is a definite possibility. Sure there is an energy barrier due to IT staff having to do things a different way and possibly being shrunk in side since stuff doesn't go wrong all of the time when running Apple software and OS. But look at the perks: the SDK which reduces development time and cost while keeping the same safety protocols and access to more features including faster down/upload speeds.

I would say it is time for Blackberry to start thinking about plan B: switch to agriculture crops such as berries or mass producing self-sealing stembolts.

[tobyfoote]

Was the word "blistering" really needed?

[digitalclips]

What I want to see next is the ...
"Hello I'm an iPhone"
"Hello I'm a Blackberry"
ads.

[dofo]

I don't know about your company, but I work for a mid-sized company (2000 employees) and our IT Dept has committed to supporting the iPhone by Aug 1st. I'm sure we can't be the only ones doing this. When I joined 5 years ago we were 100% PC, now we are about 95% PC and 5% Mac, which is not huge, but it's progress.

[physguy]

Originally Posted by tobyfoote

Was the word "blistering" really needed?

Yep

[JeffDM]

Originally Posted by Thomaspin

As predominantly corporate buyers stock up on Blackberries to enhance efficiency during these tough times, this analyst concludes that consumer spending on iPhones will rise whereas corporate spending on Blackberries will fall.

100% wrong on both counts.

I think you got it half right / half wrong. The article said that BB's enterprise share is more secure, that the iPhone is going to take BB's consumer share. The consumer side is where BB grew the most recently, but iPhone is competing very strongly there.

Plus, it's irrelevant how good the iPhone is (and it is very good) - the consumer has the simple choice to make between a new phone and bread on the table. You can eat cereal but you cannot dial it up.

The consumer landscape is a lot more broad than that. While there are plenty of people having a tough time such that they can barely keep up with their necessities, I don't think they were necessarily Apple customers in the first place, or seriously considering an iPhone either way. I don't think those people would be in line for BlackBerry units either. Apple seems to be weathering economic difficulties so far, as I understand it, luxury brands often do pretty well despite economic conditions.

[auxio]

The quarter has expired for RIM's one trick pony ride.

If my company forced me to get a BB, I'd find a new job. I prefer to work with people with a passion for technology, not a passion for job security. Tech companies with too many of the latter usually don't last long.

[mtsfestivus]

Oh my god. Is that COMIC SANS?

RIM is doomed...

[mh71]

Originally Posted by PatsFan83

mail, book, grid, travel the world, some crazy formula, compass?

compass..as in safari/internet? wait no it must be the world icon, like world wide web!

mail, phonebook, calendar, travel the world(that'll be fun!), media, mobile safari

What's really cool is the way it tells you "you've got mail" with that little red asterisk in a circle.

[solipsism]

RiM is a good company with good products. Sure, they have to reshuffle soem things to compete with the iPhone, hence the upcoming Thunder, and they will probably have to lower network fees and enterprise product pricing considerably to maintain their accounts but RiM is not going anywhere. As much as I love my iPhone, it's not for everyone.

[elroth]

Originally Posted by mtsfestivus

Oh my god. Is that COMIC SANS?

RIM is doomed...

Nice pick-up. I totally agree - any device that uses such an ugly typeface is in trouble. I guess it's meant to distinguish the 'consumer-oriented' Thunder from their business-oriented phones, but it's an awfully ugly typeface (I deleted it off all my computers). I've never gotten the "let's design something that looks like a third-grader drew it" kind of thinking.

[murphyweb]

Get a grip people and get over yourselves.

Blackberry is a fantastic device and excellent for business. While I am getting an iPhone for my wife in the next week or two there is not a chance in hell I would consider replacing my BB for one. BB works brilliantly all the time, my Pearl is the best phone I have ever owned and for my business needs the iPhone will not come close at this time.

Stop with the tired old nonsense that if it aint Apple it must be crap.

iPhone will of course start to take some market share from BB, this is just natural. But as all the forecasts are predicting sales of BB's are still going to rise, the market is getting bigger, especially the consumer market, taking market share from someone does not automatically mean their sales are in decline.

The truth of the matter is that there will be far, far, far more BB's sold than iPhones over the coming years. The percentage of business's switching to BB in the next few years is going to be tiny in comparison.

I do this for a living, believe me iphone has a very long way to go before it can be considered a BlackBerry killer.

[JeffDM]

Originally Posted by elroth

Nice pick-up. I totally agree - any device that uses such an ugly typeface is in trouble. I guess it's meant to distinguish the 'consumer-oriented' Thunder from their business-oriented phones, but it's an awfully ugly typeface (I deleted it off all my computers). I've never gotten the "let's design something that looks like a third-grader drew it" kind of thinking.

I've never understood the objection, it has always sounded like silliness to me.

[davey-nb]

I love it!
iPhone is good enough for the woman but a real man needs tiny metal buttons and a tiny screen!
No sissy iPhone will ever be good enough for me!
(Cus I'm a manly MAN!)

[solipsism]

Originally Posted by murphyweb

iPhone will of course start to take some market share from BB, this is just natural.

On a lesser note, the iPhone will also help spurs sales of other smartphones as it had made the previous business/geek device très chic and phone developers are now working harder on their firmware to make them easier to use, and better PMPs and MIDs. It's good for everybody!

[solipsism]

Originally Posted by JeffDM

I've never understood the objection, it has always sounded like silliness to me.

Me neither. But coming to this forum has shown me that some people are just fervent about fonts.

[justflybob]

Yeah, I'm lovin' it.

About a year ago, RIM cut a deal with our corporate types for push email, etc. through the Blackberry. At the time I was ridiculed for not making the jump.

Two months ago our corporate IT types announced that the push email and contact mgmt through the Blackberry was "being delayed indefinitely"

Friday evening I picked up my iPhone. Within two hours time later (most of that making sure my sync, etc was properly set up) I was receiving emails from our corporate system.

If I were RIM execs, I would be cashing in my stock options as quickly as the regulators would let me.

[SpamSandwich]

Originally Posted by murphyweb

The truth of the matter is that there will be far, far, far more BB's sold than iPhones over the coming years. The percentage of business's switching to BB in the next few years is going to be tiny in comparison.

I do this for a living, believe me iphone has a very long way to go before it can be considered a BlackBerry killer.

Of course you're right about this. They both are carving out niches for their products and both can continue to grow. iPhone does not appeal to me yet, but once the at&t tentacle has been severed, I'll be on board.

[YTV]

Originally Posted by PatsFan83

I literally had to stop and look at each icon on the Thunder's home screen to figure out what they were...talk about some terrible graphic designs...the rest of the screen looks good, but a little more TLC to the icons would be nice.

mail, book, grid, travel the world, some crazy formula, compass?

compass..as in safari/internet? wait no it must be the world icon, like world wide web!

Yea some themes are hard to figure out. But thats whats good, you can have hundreds of different themes on your BB and change them anytime you want.

Originally Posted by auxio

The quarter has expired for RIM's one trick pony ride.

If my company forced me to get a BB, I'd find a new job. I prefer to work with people with a passion for technology, not a passion for job security. Tech companies with too many of the latter usually don't last long.

I'm pretty sure that was sarcasm, at least I hope it was. RIM has had a lock for years, and will for years to come. Mac OS will overtake windows, before the iphone overtakes Blackberries.

[Tantrum]

iPhone 3G is a fantastic device for consumers and will completely stifle RIMM's consumer growth potential. However, in the enterprise, Apple did not licence the full ActiveSync capability from Microsoft and their Exchange functionality is more hype than reality in matching BlackBerry right now. As a person who has commented favorably on iPhone, I say this without much optimism that Apple will fix it any time soon.

I'm not a techie, but this comprehensive article covers in great detail why Apple is still 2 or 3 years behind RIMM in enterprise communication. It's sad that it seems to be by choice.

http://www.robichaux.net/blog/2008/0...ail-device.php

A list of reproducible bugs and user experience shortcomings of the iPhone MS Exchange is also available in the wiki mentioned in the article.

Apple surely knows that CIOs don't buy stuff the way consumers do and enterprise IT will rarely experiment on something that could potentially cost them tons of money in downtime and support, not to mention aggravation. Unfortunately, by picking and choosing capabilities and leaving out crucial ones, Apple has put iPhone 2.0 software squarely in this unfortunate category. iPhone 3G will be allowed in some enterprise Exchange systems, but only on a self-support basis. There wont be many mass rollouts beyond user-driven enthusiasm. In a word, enterprise support for iPhone's current Exchange offering will be at best, perfunctory. I'm not saying this will be permanent, just that Apple doesn't yet have the goods. If Apple moves in the right direction, the situation will improve but I don't think they have the capacity to handle both consumer and enterprise full-feature richness right now.

The AppStore's usability, on the other hand, is a goodie unlike anything most mobile developers have seen before. It's actually worth writing a free application and releasing it, just to test the user feedback you receive from people all over the world. With the suggestions you get, you can refine your application to greatness and release a feature-filled app for $0.99 that hits , say, 300,000 downloads. A hit like that gets you $210,000 before expenses and taxes in three months. Not bad for a smart dude coding on the side. Graphics artists who know how to create great-looking Apple UIs are already in short supply. The mediocre are plentiful. Apple is on the cusp of turning mobile software development into a truly global cottage industry.

Google scored an own-goal by getting caught-out releasing Android SDK updates secretly only to developers who won its contest last year. A number of miffed people who have been frustrated about Android's inertia can see the potential of iPhone 2.0 and will be trying their luck with quality apps on Apple's platform. Maybe Google did it to maintain secrecy, but the effect will be to make some developers choose the devil they know with millions of eager beta testers and an iconic device over the devil with a promise of trust broken and no path for them to cash before Christmas. Developers must be poring through user reviews like crazy, user feedback on usability and features is something only large companies could get quickly in the way AppStore developers have now, there must be more than 10,000 app reviews by now. Useful and "constructive" reviewers will begin to dominate as the market realizes that nobody (not even the often unfairly maligned Microsoft) wants to write bad software. Applications will become better as "the market" decides what works and suggests features that would make it even better. Some of the suggestions and criticisms we're seeing are fantastic. Even among those who don't like Apple and wont buy iPhones, there is growing recognition only 5 days after launch that this platform-based iterative capability is something we've never seen before on a global level. It can only be good for everyone.

[der passant]

Originally Posted by Tantrum

iPhone 3G is a fantastic device for consumers and will completely stifle RIMM's consumer growth potential. However, in the enterprise, Apple did not licence the full ActiveSync capability from Microsoft and their Exchange functionality is more hype than reality in matching BlackBerry right now. As a person who has commented favorably on iPhone, I say this without much optimism that Apple will fix it any time soon.

I'm not a techie, but this comprehensive article covers in great detail why Apple is still 2 or 3 years behind RIMM in enterprise communication. It's sad that it seems to be by choice.

http://www.robichaux.net/blog/2008/0...ail-device.php

snip

Read the article. The limitations are very minor. I quote:

create a meeting request and invite other people to attend. Without this, the wireless calendar functionality is largely useless unless you're the Unabomber or some other kind of Luddite hermit who never works with others. (Oddly, you can view the attendee status of meetings you create on the desktop!)

I schedule meetings from my desk. I use the calender to keep track where I am going

create a recurring meeting unless it is repeated daily, weekly, bi-weekly, monthly, or yearly. That's right-- no more "first Thursday of every month" or "every Monday, Wednesday, Friday" appointments. This is disgraceful. Even Palm managed to eventually get this right, for crying out loud.

Yes this is a real killer.

create a meeting in a time zone other than the one you are currently in. I guess you might be able to do this by changing the device time zone, but that doesn't seem like a very good idea to me, and I haven't tried it. I have tried (in vain) explaining why I created a meeting request for 4:30am Pacific time because I forgot my device was still on Eastern time, though.

I sure this happens ALL the time

view suggested meeting times or free/busy times, either for your own calendar or for others'. That makes sense, given that you can't invite other people, but it's still super lame.

Again I have my laptop or desk top. Shame you don't

move to an arbitrary date, in either the future or the past. Say you want to check your schedule for 331 days from now so you can grab some frequent-flyer tickets to Maui. Hit the "month" button, then flick until you get to June 2009. Let's hope you don't need to look at dates in the far future or you'll end up with a pulled tendon or something.

Another deal breaker

Been using my iPhone with out exchange server since Monday and doing great. Don't listen to the FUD.

[anantksundaram]

Originally Posted by justflybob

Yeah, I'm lovin' it.

About a year ago, RIM cut a deal with our corporate types for push email, etc. through the Blackberry. At the time I was ridiculed for not making the jump.

Two months ago our corporate IT types announced that the push email and contact mgmt through the Blackberry was "being delayed indefinitely"

Friday evening I picked up my iPhone. Within two hours time later (most of that making sure my sync, etc was properly set up) I was receiving emails from our corporate system.

If I were RIM execs, I would be cashing in my stock options as quickly as the regulators would let me.

You just about summarized it.

[JimDreamworx]

RIM is so 2001. They were cutting edge then. RIght now, this is catchup to that Cupertino company that the press claims (claimed?) is beleaguered?

AAPL vs RIMM smackdown!

C'mon Blackberry, give us something other than an also-ran copycat concept to the iPhone.
Who are you? Microsoft?

[8CoreWhore]

They had a nice run while it lasted.

[solipsism]

Originally Posted by WidnowsGuy

excuse the typo I couldn't scroll from my iPhone on this site

Welcome back! Competition is good and I'm glad someone finally put a fire into the cellphone market.

PS: You can edit your posts.

[Booga]

Speaking as someone who does both Java development and who has experimented with Apple's iPhone SDK (and paid the $99 and put some test apps on my own Touch), I can say that "full" Java is still far ahead of Apple's SDK in IDE quality, code maintainability, enterprise functionality, "ecosystem" of existing resources, ease of debugging, sandboxing, security, and depth of language capabilities. Apple has, by far, the best UI tool with Interface Builder, animation, and multi-touch built in at a fundamental level.

But this article seems to imply that Java is a generation behind Apple, while I see it as completely opposite. Apple put a lot of effort into (re-)inventing a sandboxing solution, a signing solution, etc. These are all things Java has had for a decade. Lots of stuff still feels pretty klunky in Apple's tools that is a breeze in any halfway decent Java development environment.

The real thing holding Java back, IMHO, is that JavaME is still based on Java 1.4, and that most mobile platforms haven't taken the jump to JavaSE 1.6.

Personally, I wish Steve Jobs didn't hate Java so much and Apple had had an SDK 6 months earlier that had more functionality and actually added to the state of the art for the whole industry, instead of the old "not invented here" syndrome and trying to re-invent the wheel.

[csimmons]

Originally Posted by WidnowsGuy

I think what everyone is forgetting is competition is a great thing for all consumers.

The iPhone is clearly dominant in "user friendly". It still lacks much for corporate users.

Here's a thought:

user friendly = more productive

There's no RATIONAL reason why the iPhone can't upset BB dominance in the enterprise.

[syklee26]

iPhone's problems are more than anything related to AT&T. overall performance of blackberries on Verizon network is just unmatched. Voice quality is so much better on BB (somewhat because of verizon network).

plus, they are aimed at different markets. One is not better than the other. iPhone is targeted more for everyday consumer use with heavy emphasis on media features, whereas BB is aimed more for businessmen with heavy emphasis on emails and security.

I absolutely love all Apple products but this is what I hate about mac boards. These Apple fanboys just throw all logics and objectiveness out of the window whenever an Apple product is compared with rival products.

[steviet02]

Originally Posted by csimmons

Here's a thought:

user friendly = more productive

There's no RATIONAL reason why the iPhone can't upset BB dominance in the enterprise.

user friendly != business productive

Big difference between media usability and actually conducting business in a mobile environment. iPhone isn't there yet. And if you think companies are going to drop Verizon for AT&T you are beyond mistaken.

[digitalclips]

Originally Posted by WidnowsGuy

I think what everyone is forgetting is competition is a great thing for all consumers.

The iPhone is clearly dominant in "user friendly". It still lacks much for corporate users.

I HOPE the Blackberry Bold & the Instict rule. This will only force Apple to be better. Let's hpoe Steve's arrogance doesn't get in the way for all of us.

I want my next phone to have the best of both. I'll trade my iPhone in as soon as their is competition. I do t care if it's Apple or Blueberry.

It's not just you so don't take this personally, but I get so sick of reading the "Steve's arrogance" thing. Can we let up on the parroting of this or leave it to the jealous types? SJ is without equal in four industries in recent history; Computers, Software, Phones and Animation (the now sold off Pixar) so I think he is remarkably humble considering. If something were "getting in the way" of his ability to be successful I bet a few other industry leaders wished that had some of it!

[csimmons]

Originally Posted by steviet02

user friendly != business productive

Big difference between media usability and actually conducting business in a mobile environment. iPhone isn't there yet. And if you think companies are going to drop Verizon for AT&T you are beyond mistaken.

Never said the iPhone was there. But the potential is clearly there. The iPhone has only been enterprise ready for a couple of months (well, realistically since July 11th).

Are you trying to say to me say giving a user - regardless if consumer or business user - an easier way to complete a task makes them less productive!?!? That simply defies logic and common sense.

Furthermore, what does the choice of carrier have to do with the device itself or how productive the end user would be with said device?

BTW, If I'm not mistaken, AT&T carries both the Blackberry AND the iPhone, whereas Verizon only carries the Blackberry (other smartphone models are not relevant to this particular discussion), so one could argue that AT&T already has the upper hand on Verizon in this regard as far as business customers are concerned.

[csimmons]

Originally Posted by digitalclips

It's not just you so don't take this personally, but I get so sick of reading the "Steve's arrogance" thing. Can we let up on the parroting of this or leave it to the jealous types? SJ is without equal in four industries in recent history; Computers, Software, Phones and Animation (the now sold off Pixar) so I think he is remarkably humble considering. If something were "getting in the way" of his ability to be successful I bet a few other industry leaders wished that had some of it!

Thank you for writing this! Seriously; don't hate the player, hate the game.

[digitalclips]

Originally Posted by csimmons

Here's a thought:

user friendly = more productive

There's no RATIONAL reason why the iPhone can't upset BB dominance in the enterprise.

You are totally correct. It may take a few revisions but the iPhone can be anything anybody wishes with just a little development, it is a full blown computer with multi-touch. The BB is a previous generation piece of hardware that filled a niche very well that is now faced with trying to do things beyond its abilities if they want to catch up. It is similar to Windows trying to emulate OS X.