BlackBerry vs. iPhone:The Smart Phone Battle Rages On

Jim Woods co-wrote this article.

Research In Motion (RIMM) and Apple (AAPL) continue their smart phone battle for the hearts and minds of consumers, according to the latest ChangeWave survey. The survey shows Apple enjoying another good quarter in the aftermath of its 3G iPhone release.

But while RIM sales momentum has been sluggish in recent quarters, its new BlackBerry product launches have unleashed a jump in consumer planned buying that suggests a full-scale battle with Apple for market supremacy in 2009.

So are the new BlackBerry products strong enough to capitalize on the increased consumer interest?

The ChangeWave survey of 3,803 cell phone owners takes a close look at smart phone market trends, including consumer reaction to RIM’s launch of the BlackBerry Storm and how it compares to the Apple iPhone. The December 9-15, 2008 survey was conducted just weeks after the Storm’s initial release.

Smart Phone Market Demand

The overall growth rate for the smart phone market has contracted since our previous survey, but it’s still positive despite the recessionary climate. A total of 12.2% of respondents plan on buying a smart phone over the next 90 days, 0.3% more than previously

Current Market Share: Apple vs. RIM vs. Palm (PALM). While RIM (41%) is still the consumer market share leader, it has fallen 1-pt since our previous survey in September to its lowest percentage of the last 12 months.

At the same time, Apple (23%; up 6-pts) has witnessed explosive growth – up 6-pts just since September. Importantly, its overall market share has more than doubled in the past six months – a direct result of the July release of the 3G iPhone.

Taken together, Apple and RIM now control two-thirds of the smart phone market, as smaller/weaker players such as Palm (9%) have proven unable to compete.

Next 90 Days – Winners and Losers. The picture going forward points to changes in the smart phone market. RIM (39%; up 9-pts) shows real momentum due to its slew of new product launches – e.g., the Storm, Bold, Pearl Flip – and appears capable of giving Apple a real run for its money in the first quarter of 2009.

Moreover, after the huge wave of enthusiasm generated by the 3G iPhone launch, Apple consumer planned buying (30%; down 4-pts) appears to have settled down somewhat.

So approaching the first quarter, the ball has shifted back into BlackBerry’s court in the form of a big uptick in consumer interest which it can potentially capitalize on. But is the new RIM lineup of consumer products strong enough to take full advantage of their increased demand?

“Storm”ing the Gates

The current survey took a close-up look at the reaction of 61 owners of the new BlackBerry Storm, and compared the results to a similar survey in July 2007 of new owners of the original iPhone.

The overall satisfaction rating given by new owners of the Blackberry Storm can, at best, be characterized as lukewarm. One in three Storm owners (33%) said they were Very Satisfied with their new model, well below the 52% Very Satisfied rating given by all current owners of BlackBerry smart phones.

Simply put, the Storm satisfaction rating is similar to that of mid-tier smart phone manufacturers like Nokia (NOK) (32%), Motorola (MOT) (32%), HTC (31%) and Samsung (SSDIF.PK) (30%). While far from bad, it’s mediocre – which means it’s a potential concern regarding RIM’s head-to-head battle with Apple.

For comparative purposes, here’s how the BlackBerry Storm’s favorability ratings stack up against those of the original iPhone (taken in a survey of new iPhone owners in July 2007, less than a month after its initial release).

As the chart shows, the original iPhone’s Very Satisfied rating (77%) was more than double that of the new BlackBerry Storm (33%). Importantly, the Storm’s Unsatisfied rating (14%) is three times higher than that of the original iPhone (5%).

BlackBerry Storm: Key Likes and Dislikes

Respondents were asked what they liked best and disliked most about the Storm. The results show that RIM made the right choice in producing a touch screen phone, being that it’s a highly popular option in the smart phone market. One-in-two (49%) say Touch Screen Interface is what they like best about their BlackBerry Storm. Other key likes include Screen Size (46%) and Screen Resolution (43%).

At the same time, the touch screen interface represents one of the BlackBerry Storm model’s biggest Achilles heel. In terms of dislikes, Lack of a QWERTY Keyboard (21%), Touch Screen Interface (20%) and Difficult to Use (20%) were top issues, along with Short Battery Life (21%).

Bottom Line

The smart phone market is now dominated by two companies – Apple and Research In Motion. According to our survey results, the Apple iPhone trails the RIM BlackBerry in terms of current market share – but the iPhone has experienced strong growth since its inception and explosive growth since the release of the 3G model in July 2008.

Going forward, RIM is showing a surge in momentum due to its slew of new product launches – and appears capable of giving Apple a strong challenge in 2009. But the real test in a cutthroat market is how satisfied consumers actually are with their new models.

In this survey, we found the BlackBerry Storm's satisfaction rating to be middle-of-the-road – lagging behind the average rating for other RIM BlackBerry models. It's not that the BlackBerry Storm is a bad phone. It's just that the initial launch has glitches which have resulted in a mediocre satisfaction rating.

Competitive pressures may have caused the Storm to be launched before it was quite ready for primetime. But if RIM can rapidly fix its initial glitches and bugs, the survey shows that this new offering – along with RIM's other recently released models – will provide accelerated momentum for RIM in 2009.

Comments

[Anthony Dad...:]

Blackberry wins hands down on email and instant messenger. Iphone wins on everything else. I think the iphone will continue to innovate. You can just do a whole lot more with it. Its like a mini laptop in your pocket. Unless you have a need for instant email, the iphone overall is a better choice. And yes there are solutions for instant email on the iphone as well.

I am a contributor on thecreatingwealthblog....

Jan 08 08:59 AM

[jmmx:]

It just goes to show, it ain't easy to make an OS.

I have to say, I wish they had a 5 point scale on satisfaction. "Somewhat satisfied is really their neutral point. I would be very revealing ro have seen where people would have rated it there were also options for "Neutral" and "Somewhat Dissatisfied".

It is interesting to note that Storm's total of Very Sat + Somewhat Sat is roughly equal to iPhones Very Sat. If one were to project that, given further options, half the Somewhat Satisfied customers would have opted for that category, and the rest split between Neutral and Somewhat Dissatisfied (I think a fairly reasonable - perhaps even generous - assumption) then we would see that they really come up short in comparison.

The question is, of course: Can they fix it? We should not take it as a given that they will be able to do so. Operating Systems are very difficult things. I am sure there are at least hundreds of thousands of lines of code. It can take years to get the bugs out. Only time will tell here.

Jan 08 10:01 AM

[LongAAPL:]

Fortunately most consumers see the big picture that you have failed to mention.

The iPhone is a platform with the power of thousands of developers writing applications and games easily installed at reasonable prices. An iPhone owner can reasonably expect that there is an application available for just about any need, and there are more and more apps popping up every day.

Rimm just can't compete with that.

Jan 08 10:12 AM

[apeman:]

You can't fart on a blackbery

Jan 08 10:24 AM

[RK:]

Presumably the smart phone market is expanding in absolute numbers as smart phones replace older non-smart phones. As such, both RIMM and Apple will be winners. Focusing too much on the market share % loses sight on the volume gain both vendors will enjoy.

The iPhone has a cousin called iPod touch. From a mobile platform point of view, iPod touch should be counted in market share analysis. I know many Verizon customers bought iPod touch as they are unwilling to part with their Verizon service but still want to enjoy the applications offered via the Apple app store.

Jan 08 10:24 AM

[mjsef:]

I just bought my wife an iPhone over Christmas and have had my own BB Storm for a month now. iPhone is superior on all measures. The keys are that Apple can ulock the power of a full OS X engine to make the interface faster and more intuitive. BB is slow, not as intuitive, and lacks the amazing amount of applications that Apples's app store delivers on demand. I also don't like having to press the screen for actions - its not bad for the typing but seems overkill when I just want to navigate or select options. I can go much faster on teh iPhone UI without feeling like I am exerting energy to do iT!

I agree with the other poster though that both Apple and Rim will do well as the market will grow and both have their own loyal bases. But as an investment, I think Apple will continue to ride the halo they have succeeded in expanding with the iPhone.

Jan 08 11:41 AM

[Zoltan L. K...:]

A market for two. Not a bad one. What if the smart phone market is a trend setter for the mobile phone market, and software is becoming the key competitive advantage? Wouldn't it make Apple well positioned? It has a very steep learning curve, since most of its devices use Mac OS and Apple's applications. It also has an advantage in user friendliness, hardware-software integration and building ecosystems around its products.
Those "competitive pressures" are stemming in fact from Apple. Why don't you just state it explicitly? And why does anyone expect RIM to get better with its time to market (in product development) under current circumstances? Is it hope? Or is it really analysis? Don't expect Apple to get slower, weaker, or less competent, even with the current hostile press comments.

Jan 08 01:26 PM

[bobbobwhite:]

Rimm products are clunky, poorly supported and engineered for business purposes, not so much for personal use. What a problem I had with the Curve to set it up for biz use! Took weeks of(inadequate) support.

Due to Apple's revered heritage with Disney and Pixar, it would be impossible to imagine it ever not being "cool" and not providing a neat looking, fun-to-operate machine in anything it makes. Apple gets it, RIMM does not.

The iPhone will soon be available in more biz-appropriate apps and will take over from RIMM. Even adults appreciate having more fun while working, and the Iphone is constant fun. Apple always is fully aware of that, and RIMM seems not to be. It's the Vision thing!

Jan 08 02:18 PM

[mollytjm:]

i don't know why anyone would thing Apple wouldn't continue to innovate and overcome any other products. they have brilliant people there who already have other stuff in the pipeline. and Apple has always cared about the consumer so it's high satisfaction rating isn't a shocking to those of us who've used Apple products for years.

one thing that was a shock... the ease of reading books on the iPhone!! i think if this gets promoted, it would give Kindle a run for it's money. And playing games is just great on the iPhone, another surprise.

on a funny note...their Georgetown store plans have been turned down twice by the powers that be there...because their 'too modern'. It'll be interesting to see how Apple manages to have a store that isn't!!

Jan 09 12:44 PM

[User 335482:]

When the iPhone came out, it was the first smart phone with a touch screen and very evolutionary at the time compared to the Blackberry Storm which has a touch screen just like previous phones like the instinct and dare.

So saying that more people are satisfied with the iPhone than the dare isnt a fair comparison becuase the initial "WOW!" factor that the iPhone brought has been downgraded over the past year or so.

If the Blackberry Storm were to come out the same day the iPhone launched then you would see an increase in satisfied consumers of the Storm over the iPhone.

Ive had both and I prefer the Storm because it works on 3G, Edge, Evo and CDMA towers compared to just iPhones GSM. i can take Storm anywhere with me and get coverage, and they are launching an app stor of their own in March.

Jan 12 12:17 AM

[jenny:]

I always feel a lot of these satisfactory polls talk to people who are not experienced enough with the phone. Talking to someone who has had the phone for two weeks is hardly a representation of their satisfactory level. Regarding the Storm, it does in fact have a QWERTY keyboard-you just have to turn the phone sideways. In fact, the Storm has three keyboards choices so I don't know how you couldn't find one you preferred. And like some other commenter mentioned, Blackberry is set to release an Application Center in March. While they will be strides behind the iPhone App store, they are at least in the process of develepoing it.

I also noticed today that sentiment for Apple has become extremely bearish while RIMM's (www.predictwallstreet....) sentiment is pretty neutral. This is market is going to continue to grow and both companies will fare well with their loyal customer bases, the question is who will do more? To the people saying RIMM can't compete with Apple, Im pretty sure it's clear they can with 41% of the market share.

Jan 12 03:07 PM

[User 336319:]

I have had an iphone for a while now and I must say I have had nothing but problems with it. I am trying to switch over to a Blackberry at present.
The iphone in my case was purchased to work in sync with my Apple mac lifestyle, but this has not been achieved.
When I take pictures or download music, the phone becomes restricted in operation. Everyone who phones me on a regular basis has a running joke about my iphone and knows exactly when I have taken a picture of added a song to my iphone (because it stops working).
I will be getting a BB very soon and hope this works better.....it can’t be any worse.

Jan 13 08:28 AM

[User 336884:]

Remember, microsoft tried to make an mp3 player & then there was that zen too ... the phone is just simply easier to use & access.. as a Msft / Aapl IT pro .. I can tell you from both sides of the spectrum, OS X server beats ANYTHING microsoft has to offer as Well as RIM. I just shout down the BB enterprise server for the 110 bb's I just shut off & replaced with iPhones.. Exchange syncs PAINLESSLY to an iPhone & even reads ALL Folders in a users PST.. Tasks for the few that use them anymore, taskdata on the app store .. 12.00 .


On Jan 12 12:17 AM User 335482 wrote:

> When the iPhone came out, it was the first smart phone with a touch
> screen and very evolutionary at the time compared to the Blackberry
> Storm which has a touch screen just like previous phones like the
> instinct and dare.
>
> So saying that more people are satisfied with the iPhone than the
> dare isnt a fair comparison becuase the initial "WOW!" factor that
> the iPhone brought has been downgraded over the past year or so.
>
>
> If the Blackberry Storm were to come out the same day the iPhone
> launched then you would see an increase in satisfied consumers of
> the Storm over the iPhone.
>
> Ive had both and I prefer the Storm because it works on 3G, Edge,
> Evo and CDMA towers compared to just iPhones GSM. i can take Storm
> anywhere with me and get coverage, and they are launching an app
> stor of their own in March.

Jan 13 10:37 PM