Chicago (IL) - Apple’s successful iPhopne launch shows its first effects on Blackberry maker Research in Motion (RIM). Analysts claim that the iPhone's enterprise features, support from third-party developers and an increased international presence are now three key weapons in Apple's smartphone arsenal. For the first time, RIM is facing a serious threat that is focused on conquering big businesses using powerful software platform that is years ahead of RIM.

"The days of no competition are over," said Needham & Co analyst Charlie Wolf. The analyst cut RIM’s stock rating from hold to underperform, lowering the company’s 2008 earnings estimate to $3.70 a share, down from previous $4.05 estimate. Wolf also cut RIM's 2009 profit estimate from $6.25 down to $4.80. The analyst believes that RIM's strength is now going to be tested as its enterprise market share "is bound to come under siege because of the iPhone."

Apple is already the world's third smartphone maker and the second largest in the U.S. IDC estimates that RIM held 44.5% (Gartner: 42%) of the U.S. smartphone market share in the first quarter, while Apple came in second with 19.2% (Gartner: 20%). Wolf claims that RIM increased its enterprise subscriber base by 28% in fiscal 2008 and by 31% in the firm’s first fiscal quarter of 2009. RIM actually surprised with consumer subscriber base increase of nearly 300% in fiscal year 2008 and 174% in the first fiscal quarter of 2009. Most analysts agree that consumer market was RIM's key growth driver over the past two years.

RIM's success in the consumer space was supported by a lack of competitors. Wolf said that users love the consumer-oriented Pearl smartphone, stressing that Motorola, Samsung and HTC have been no match for the fancy device - since competing handsets largely rely on the "justifiably maligned Windows Mobile operating system." The analyst noted that the smartphone market increased 50% in 2007 and will continue to grow. But now that the iPhone 3G is on sale, the Pearl faces a strong challenger. "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," Wolf said. RIM and Apple may be able to co-exist in the consumer space for now as there is still room for growth. The enterprise market, however is different.

Wolf believes that RIM's dominance in the enterprise remains strong. However, Apple has done its homework by introducing new enterprise features with the iPhone 2.0 firmware and by opening the handset to third-party programmers. Apple will also benefit from AT&T's expertise and experience in selling the handset and services to big businesses through bulk contracts. Analysts seem to agree that the increased iPhone footprint coming from iPhone introduction in 70 countries by the end of this year will help Apple to work more efficiently with enterprise customers.

Apple's unique advantage over RIM is the software platform and third-party applications distributed through the App Store. There are already 800 applications available on the App Store. Specialized business applications for enterprise users are expected to follow soon, helping the iPhone to adapt to wide variety of specific business scenarios.

Needham's Charlie Wolf claims that the iPhone OS and SDK "make the device one of a kind." He thinks that software could become determining factor that could influence outcome in the future. "RIM has no hope of catching up on the software front, which promises to be the next battleground in the smart phone market," he said.

nakrus

Jul 20, 2008 12:31     

Everything I've seen written by this guy Wolf has been negative on Rim. It's obvious that spprox 30 analysts who follow Rim and are positive on the Company are wrong and that Wolf (and Zibreg) are right.. I have only one thing to say. While you guys do the talking, Rim does the walking - straight ahead.
matt report abuse vote down vote up Votes: +0

RIM sucks anyway...

Jul 21, 2008 09:52     

While the phones from RIM are nice, the need for middle-ware to support business collaboration is down right awful! This adds costs and support needs for collaboration that most other phones, including now the iPhone with Exchange ability, do at virtually zero cost. RIM needs to die off quietly.
Narg report abuse vote down vote up Votes: +0