Analyst: BlackBerry is “primitive” compared with iPhone 2.0
That’s the take-home message of a research note sent to clients Wednesday by Needham & Co.’s Charlie Wolf, who initiated coverage of Research in Motion (RIMM) with an unenthusiastic “hold.”
While Wolf sees little risk to RIM’s grip on power users in corporations, he warns that the company’s recent growth spurt, driven largely by a successful run at the consumer market, may soon run into a roadblock.
“RIM quickly captured the pole position in the consumer market with the sleek Pearl,” he writes. By contrast, RIM’s major competitors, Motorola (MOT), Samsung, HTC and Palm (PALM), all stumbled, according to Wolf, “because they attempted to invade the consumer market using the Windows Mobile operating system, at best a difficult-to-use platform.”
All that could change, he says, when Apple’s (AAPL) iPhone software developers kit (with enterprise support) comes out of beta in June and Google’s (GOOG) Android system arrives later in the year.
“In contrast with BlackBerry’s comparatively primitive development platform, applications on the iPhone will be able to exploit the much more powerful Mac OS 10 operating system as well as the next-generation multimedia capabilities built into the phone that no competitor has come close to matching.”
Android could also pose a threat to RIM, but Wolf is less sanguine about Google’s software. “It’s way too early,” he says, “to declare the Android platform a success.”
Wolf’s 2009 forecast has RIM earning $4.05 per share on revenue of $10.2 billion, compared with earnings of $2.26 on revenues of $6.0 billion in 2008. In other circumstances that might sound like a solid “buy.” But RIM’s shares have been trading over $120 lately, which implies growth at a rate that Wolf fears the company might have trouble sustaining once it faces competition from iPhone 2.0 and the Android smartphones.
I have both the iphone on ATT and a BB 8830 on Verizon. About 20% of the places I travel in New England the ATT iphone has unacceptable-to-no coverage while the BB on Verizon never NEVER fails. If 3g helps matters I’ll be first in line for the new iphone, but the BB is unfortunately a must because of it’s tactile keyboard and as a wireless modem for both my Dell laptop AND my new Mackbook Air.
Hmm… where to start?
iPhone is for surfing the net.
BB is for e-mail and text messaging.
That’s the compromise. I don’t see how iPhone can be a great messaging tool without a keypad. If people just want an all in one device, the market would be filled with 7 inch laptops a long time ago. Most business models are 10 – 12 inch, why? That’s because any smaller size screen makes the computer less useable. All the devices out there are about compromises. BB can add new software features to match apple but the design is what going to keep them apart. iPhone cannot replace laptop computers nor can it replace BB. If iPhone is so great, why is EEE selling so well? All these devices have their purposes. People buy bb for messaging and iPhone for web and media.
sir, my hips don’t lie. My left hip has carried a BB for almost 10 years. No other device had such an honor until the iPhone came out. Unfortunately, after a week of using the iPhone it wasn’t able to displace my BB so now i carry it on my right hip.
the limitations of the iPhone usage are too many to list yet its the darn sexiest design you would expected.
I cannot believe apple, the creators of copy/paste, would ship any software without such feature.
I do though think web browsing has finally been made possible on handheld devices through the iPhone. It beats the BB by miles.
Btw, I recall the end of the BB was predicted by analysts back in the late 90s when Microsoft announced Windows CE. Then analysts predicted the same when Palm announced the Treo.
last I checked niether was the case. Lets see if apple proves to be a good student of others failures.
Thanks
Bassel Ojjeh
The “future” is already here, you can connect your blackberry to a projector and do a presentation sans laptop. the setup is fairly cheap outside of the projector. And unless I’m mistaken TOUCH PDA has been around since the early Palm through Windows Mobile .. Iphone brings a new GUI that is responsive and can be manipulated, Cool stuff indeed.
The point is the majority of business will continue to deploy Blackberry as it meets the need and is cheaper. Having a better web experience isn’t a business driver, your likely looking at 2Q 2009 to guage what kind of presence Apple with have in the corporate world.
I do know that policies have already been added that cover ALL types of personal data devices and that they are not allowed, so users can buy all the shiny new toys they want, unless it’s company provided - leave it at home.
Blackberry isn’t going to die anytime soon anymore than mainframes or Cobol did. They’re too engulfed to just easily remove.
They will, though, begin losing market share. The touch interface is the future. An important feature of the iPhone that’s missed is the easy ability to zoom in and zoom out. It’s a main reason why iPhone users actually use their iPhones to browse the web 10 times more than other “smart phone” users. While now just a cute feature for the consumer, imagine being a business user in the middle of a meeting and able to do that with an Excel file that your boss just e-mailed you. Imagine not needing to take your laptop to a presentation, because you can use plug in your iPhone instead. That’s the future.
I’d love an iPhone but I won’t use AT&T’s service. I will wait 4 more years and stick with my Black Berry on Verizon.
“So if consumers are the purpose why does apple have such interest in corporate pentration?”
There wasn’t a blanket statement that ‘consumers are the purpose’. It’s a statement that RIMM’s recent growth spurt was driven by some success in the consumer segment. The unspoken assumption was that if said growth spurt is going to continue, then it will be driven by continued success in the consumer market since RIMM owns the business market. The iPhone is a threat to that continued success in the consumer segment.
Even if that threat materializes, RIMM still could make a great pile of money in the business segment. But that would not sustain the growth spurt and consequently the high multiple that the stock shows currently.
Why is Apple interested in the business segment? Duh. It’s additional money that could be within reach as the iPhone matures beyond its first generation.
The dynamic of people using things provided by work or compatible with what they use at work is well-known. But the number of people who have smart phones ‘provided for free’ by their work is a very small chunk of the total consumer market.
RIMM has new phones too and the wifeless service providers push them because they are more efficient for data and use 1/100 of the data capacity of the network operators capacity something the writer has no clue of…This is key to massive future growth no other Handset maker has there own data network (a secure one)
I’d love to throw my primitive phone away if the ipod could be used with verizon. can’t wait
Move over Rim, you are about to have your lunch handed to you.
having a phone like that is an amazing thing to get in contact with everyone around the world.
Blogitforu
So if consumers are the purpose why does apple have such interest in corporate pentration? The bottom line is users will need to realize personal owned mobile devices will not be allowed in a vast amount of companies so your stuck with a personal LIFESTYLE device and the one work provides (be it Blackberry, Windows Mobile, Apple etc). That’s just a fact people fail to grasp. How many of you bring your home laptop to work?
Seeing I’ve done with for 10 years I know
1. people are cheap
2. if work provides it for free, they conform.
Time will tell.
The thing that I find so humorous about all you anti-apple, iPhone, pro Rimm and Blackberry folks is that you all are just like the M$ crowd.
Apple this, Apple that. They can’t, they won’t…
Blah, Blah, Blah.
Let me give you a little clue here.
Just like Apple did with M$, the took their time, they waited.
Like drug dealers wait for the junkies to grow tired of the same old crap and,
BAM…
A new greater, better high, but without all the frustration, hangover, you get what I mean.
Why do they have to come out guns blazing. You analysists will destroy Rimm an Crackberry and Apple will stroll in and take over just like with M$.
What is it now 21% marketshare.
HA HA!
People, please read the article. The *point* was that RIM’s recent growth (i.e. stock price increase) has been due to their recent spurt in the CONSUMER space:
“While Wolf sees little risk to RIM’s grip on power users in corporations, he warns that the company’s recent growth spurt, driven largely by a successful run at the consumer market, may soon run into a roadblock.”
He wasn’t saying that one phone is better than another, for all purposes. Just that over time, and when the SDK gets fully exploited (and the store is online), the iPhone will become more and more popular in the consumer space, thereby stunting RIMM in *that* space. Not enterprises, so forget Exchange, and talk about IT admins, and all that crap.
Analysts care about potential for growth (or lack of), as that’s what dictates future growth in the stock.
The article isn’t saying your precious Blackberry is crap, just that CONSUMERS (not enterprise users/admins) won’t be into it as much as they’ll be into the iPhone. If you think that’s not true, you’re crazy.
WHO IS CHARLIE WOLF? wHAT ARE HIS CREDENTIALS? h SHORT?
the analyst is behind the curve. Rimm has new models coming out as well, and were was the analyst the last five years. Probably selling something else.
Charlie Wolf’s an obvious Apple shareholder and an idiot.
The consumer market has already spoken.
Blackberry’s king, at least for a couple of years!
The major advantage of the iPhone is the user interface.
You’re basically physically typing on software, which can be upgraded once 2.0 arrives. There’s nothing that competes.
Blackberries are STUCK with outmoded keypads.
Want your iPhone to be business orientated or for personal fun (iPod), its all software.
Blackberrys days are numbered.
This article is a crock and the iphone will conquer mobility drivel is getting old very quick. There are many factors at play here and likely into the next year Blackberry is the mobility leader. More carriers, large world wide presence, and a pretty broad development platform (java, MS Studio)
I am part of Iphone 2.0 beta and yes it has basic exchange functionality but no where near as robust as what Blackberry can do against exchange.
In case most people are unaware, MS exchange is the domiant email platform across just about every business. BES SP5 and OS 4.5 will include a slew of new features ActiveSync just cannot provide. From an admin side there is a vastly more control with Blackberry’s server compared to ActiveSync limited policies.
Apple needs a lower cost model as I can get a pearl for around $50 with a much cheaper voice/data plan. The Blackberry can do a good amount when you compare feature to feature, something mac users never want to bring up. Apple is very good at marketing and hype.
Had a Treo 600, sick when I lost it. Went through numerous other phones. Bought 1st Blackberry (8700c), then The Pearl, wanted full keyboard again so I bought the Curve loved it, broke it, pulled out the old Pearl, thought about the iPhone. I have an iPod Touch love it. Maybe I’ll get an iPhone after all. Went to AT&T yesterday checked em out it feels cheap compared to the iPod Touch. I think I’ll buy either a new Curve or the Blackberry 8820, and wait for the iPhone XXX
The problem for RIMM is that most of the smartphone growth is coming from the consumer sector. And from the consumers veiwpoint, RIMM software is “primitive”. It’s hardly any different from what the average consumer was using 2 years ago on a regular cell phone. RIMM may had made advances in their software for the business sectors. But most comsumers could care less about those advances. RIMMs’ growth is going to slow quite a bit if they can not capture a good portion of the consumer market. It doesn’t matter if the Blackberry is the better smartphone for the average business. Or that many businesses won’t go through the trouble of switching to the iPhone (or any other phones). What matter is that the iPhone is the better smartphone for the average consumer. Where switching is just a matter of signing a carrier contract or a hack away. Apple has already capture a lion share of the consumers that are switching over to smartphones. And now Apple is starting to nibble at RIMMs’ lunch in the business sector. RIMM can not grow their business fast enough even if they take away all of Apples’ iPhone business shares. But Apple can grow their business by just taking away some of RIMMs’ business shares. Right now, those “Blackberries” are there for the pickings. And if RIMM is not careful, their “Blackberry” crops will soon get plowed under and replaced with Apple orchards. Apple has always had this nasty habit of making their competitors products look “primitive”.
Pay attention people. The whole thrust of the article was that Blackberry corporate power user share was *not* threatened, but that the gains RIMM has made in the *consumer* space very well could be. So the comments about organizations and ‘investment and infrastructure changes’ or ‘business tools’ are missing completely the point of the article.
I own a blakcberry and an iPhone. I love them both and unfortunately one cannot replace the other. Even with Iphone 2.0 I do not see myself typing long messages using iPhone. My blackberry has been drooped a dozen times on concrete floors, dropped into water and as endured all forms fo stress without any failures. As for iPhone, I just wish that I will never drop it. My friend already shattered his iPhone.
lastly the analyst ignores the organizational intertia in switching platforms. Moving from RIM based devices to iPhone will involve large investment and infrastructure changes. I see no compelling reason for any organization to do just that.
My point: Declaring blackberry primitive is “primitive” and a gross exaggeration. I pity the investors who listen to such analysts.
But Kazimierz … doesn’t it seem somewhat biased to say that a phone’s main strength is supposed to be … editing and authoring? Most people I know want to use a phone to call people, not author a novel. And what’s RIMM’s share of the PC market? Certainly far less than 9%-ish. What’s *your* point?
To JimS - Not a good business tool? You’ve got to be kidding… nothing could be better! You’re problem is probably not that the iphone isn’t a good business tool, but that you are trapped in MS / Exchange hell… It looks like help is on the way with V2.0.
As a business tool, try running video business presentations, show beautiful crisp photos of your products, use visual voice mail, overall ease of use, and serving as your full-on web browser and ipod, etc. - there is no comparison.
This analysis is so naive it is amazing it was allowed to be posted it to clients.
There have been a number of people at our company who rushed to get iPhones and then gave them up because they were not good ‘business tools’, including our CEO who is a huge Apple fan. I don’t doubt that the iPhone will start to make some inroads once it matures, but Wolf’s analysis is extremely premature. RIMM will have plenty of time to enhance the Blackberry before iPhone2.0 gains momentum.
JimS
disclosure: i use a blackberry and own apple stock
You bet Iphone wins. At the least the 50 million who own the Ipod are going to get one. I told my middle schooler today that I will break his one for applications. He said: “great, now I can have as many applications as my friend (just a girl hacker) who has four pages of launch icons on hers”. Holy cow, who needs an Apple SDK. They will not let hackers experiment with it anyway.
Granted, the iPhone will not be drinking the whole milkshake anytime soon, but Apple is going to dip that straw in there. The software is intuitive and sleek and expandable. I know more that a few blackbery users that are itching to get out from under RIM.
Using Google Docs you can open and edit Word, Excel, and Powerpoint files on the iPhone. The iPhone has an ALWAYS on network connection so net apps are more or less indistinguishable from locally installed apps.
Once the sdk arrives, you WILL BE ABLE TO EDIT on the iPhone itself. This is going to be a game changer. Palm will be dead in the water. Only competition will be Android, because of its open source nature, it can change on a dime. May not be the best solution for corporations, hence Apple wins again.
Mike C.
But Jim…doesn’t it seem somewhat biased to say that the iPhone will win over more consumers? Sure the software is better with all the multimedia perks but look at it, you can’t do a whole lot of editing or authoring from within the interface of the iPhone itself…but through application like iCal and iTunes on the Mac. Last time I checked Apple computer market share was somewhere near 9%-ish? It’ll have to take a much, much better iPhone 2.0 to win over the masses.
It’s not just OS X or even ’software’ that differentiates the iPhone from BlackBerry or any other smartphone competitor. It’s the powerful combination/integration of hardware, software and service capabilities Apple brings to the table in multiple domains that make the difference.
I examined 10 factors that put Apple in an unassailable position in the mobile platform wars and reviewed the weaknesses of iPhone competitors in:
Who can beat iPhone 2.0?
http://counternotions.com/2008/03/10/iphone2-competitors/
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You guys need to read the actual report that Wolf wrote. The author of this article only takes all the negative aspects of the report and ignores the positives that Wolf recognizes in respect to RIM.