RIMs Latest Apple Apps Won't Catch on Well: Here's Why

RIM’s much (?) anticipated answer to Apple’s iTunes App Store finally came online today — the Blackberry App World. It provides Blackberry users with a central location from which they can find, purchase and download 3rd party applications for their handhelds. The slick interface directs users to games, travel utilities and productivity applications among others along with reviews and screenshots. One wonders if the project was rushed just a little too much though. The store seems to function fine… that is until it’s time to pay!

While Apple has had the benefit of nearly a year’s head start, from day one they have made ease of use a priority for the customer, and with one or two clicks, an application can be downloaded and billed directly to your credit card. Not so with RIM’s (RIMM) App World! For some strange reason, they have decided that the only method of payment will be PayPal… yes, the payment service synonymous with (and eventually purchased by) EBay (EBAY). Want to buy an application? Sign-up with PayPal first… and give this service — one rife with consumer complaints over locked accounts, fraudulent charges and other malfeasance — your financial information!

It’s little wonder that the price of programs in the App World are significantly higher than in Apple’s App Store ($2.99 vs. $0.99 or even free!) with so many mouths to feed — developers, RIM, credit card processing fees and now PayPal!

One would have thought that given the tight relationship between RIM and carriers that offer its service, they could have developed a system that would have charged items directly to a user’s monthly cell phone bill or bought / developed their own in-house transaction processor. In the meantime, I wouldn’t expect user acceptance to even remotely approach the levels Apple has been able to generate to date.

Comments

[BJMC:]

"Unless Apple is also a bank, they have to pay somebody a fee to process the credit/debit card purchases from their site. An equally feasible theory is that Blackberry negotiated a lower fee relationship with PayPal than Apple has with its processor."

Apple has an efficient and low cost method for collecting small payments. Part of this stems from its licensing use of patents from Amazon.com Furthermore, the method has been tested more than a few times.

I agree that Paypal will present RIMM with a lower cost than available from "standard" card processors. Most of the sites that I use and offer Paypal services appear to offer alternative means of payment. I seems that many folks, I for one, just do not wish to register their details with Paypal or alternative payment aggregators.

Thank goodness that RIMM choose not to emulate Microsoft with its "Points"

Apr 02 09:24 AM

[mollytjm:]

i think Apple made the decision to take less profit on apps because it gets a huge profit from ATT that makes it all worth it to them...so they do pay some % to credit card companies but they charge less for the apps anyway. Also, they wanted to sell a lot of apps, quickly..to inspire developers. It worked. The make a good profit on the iPods, iPhones and Macs...products that RIMM doesn't have.

Apr 02 09:27 AM

[iJah420:]

One more thing.......

What device does RIMM offer to compete with the iPod Touch? DOH!

RIMM is no longer in it's happy place.

Apr 02 09:32 AM

[waf76:]

Trying to reach out to the consumer base rather than cater to the corporate user looks like even a bigger strategic blunder day by day.

Apr 02 10:00 AM

[.crazylegs..:]

apple fanatics out in full force as usual. this article is a bad joke that tells me nothing. the double standard that iphanatics apply is hilarious. it's ok for apple to start slow and then evolve their products/platform, but not their competitors. you really think rim has no plans to offer credit card payments or carrier channel payments? let it evolve. in the end the appstore thing will not be THE differentiator anyway for the masses - it's just on epiece of a larger puzzle you have to have to compete as a smartphone platform.

Apr 02 10:16 AM

[winindthedust:]

I think investors are finally coming around to the fact that Apple is very undervalued right now. The $200 they were at was not overpriced. Their fundamentals now, are actually stronger then they were then.

Many hedge funds have completely sold their positions on Apple, mainly to take profits and cover losses in other areas. This is a good time to buy for the individual investor, the large swings are now over with the heavies sold out on their positions. Proof:

We've seen a steady uptick on Apple stock for the last two weeks.

Many large funds are known to have sold out on their Apple positions. The steady rise means individual investors are back in control.

We know Apple is going to have a "killer" summer.

People are tired of being depressed.... it's summer time folks! We will see economic fundamentals improve just because it's the season for it!

Hedgies will buy in with a vengeance at some point... possibly end of May, beginning of June. When this happens, the steady rise will become a rocket.

Yes, there will be attempts at "pump and dump" by the big boys... but the SEC is much more wary of this now, and Steve Job's health is no longer something that can be manipulated.

We just saw RBC try to manipulate the stock with fabricated "rumor news" with a ridiculous $70 target, and the stock continues to rise despite the attempt. Because these analysts have been SO wrong on Apple during this recession, they are no longer relevant with their "research notes".

The App Store is a Billion, that is BILLION dollar business, now. Adding peripherals to the 3.0 SDK is huge, though Apple won't make money directly on this, it will certainly sell a lot of iPhones & iPods creating a "specialized device" ecosystem. Specialized attachments for touch devices coupled with software, is going to be a huge market. We already use Apple's touch devices as our clients whole home remote control system. I know one developer making a adapter to go from CANbus on a vehicle to the iPod touch. They will then sell this cable along with the App, to the racing enthusiasts with custom tunes, diagnostics, virtual gauge readouts, histories, etc. This is only ONE of thousands of custom applications being developed for this device.

Once people finally "get" where Apple is going with their mobile platform, the stock will go much, much higher then the $200 previously seen.. we're talking about applications where EVERY family will have at least one Apple device in their home.

Buy on the dips, and hold your positions!

Apr 02 10:18 AM

[winindthedust:]

I agree that the article has little substance... but it doesn't diminish the real fact, that Rim & others WILL be compared against Apple's own App store, good or bad. The bar has been set. This is nothing against Rim, they simply will have to work harder to get attention.

Further, this site is "supposed" to be for investors to not just get information, but the "mood" of other fellow investors. As everyone knows, stocks are 10% fundamentals and 90% mood, as the herd & mob mentality often prevails. So if their are "fanatics" out their, we need to know that too!

I could care less who has the best App store... this is about investing & making money! Right now, Rim is a hard one to call.... Why gamble on money on unknowns, when low hanging fruit is easy to pluck!


On Apr 02 10:16 AM .crazylegs.. wrote:

> apple fanatics out in full force as usual. this article is a bad
> joke that tells me nothing. the double standard that iphanatics
> apply is hilarious. it's ok for apple to start slow and then evolve
> their products/platform, but not their competitors. you really think
> rim has no plans to offer credit card payments or carrier channel
> payments? let it evolve. in the end the appstore thing will not
> be THE differentiator anyway for the masses - it's just on epiece
> of a larger puzzle you have to have to compete as a smartphone platform.

Apr 02 10:29 AM

[was_fred:]

Whether you like the idea or not, RIM is providing its customers with a single point from which to buy apps. That's a good thing for them and for their users. Their service may not be as good as Apple's, but at least they have one. Blackberry users certainly can't use apps from the iTunes app store, so they have to go somewhere. Rather than a number of disparate sites, they now have the convenience of a single place with a good repository of applications which they can use on their Blackberries.

As far as I'm concerned, it's not about which phone will win. Each person has their own likes, dislikes and preferences. Those who prefer Blackberries should be accorded an opportunity to buy apps. They now have one.

disclosure: ex-Blackberry user, current iPhone user, long on Apple no position in RIM

Apr 02 10:38 AM

[Frank Castle:]

The problem with all the iPhone users is they assume everyone else wants to use an iPhone.

This is another piece to the RIMM platform and for what it's needed for (central place to get applications from) it fits a need. It doesn't have to be as large or connected to a desktop applications.

I can't STAND iTunes. At least with App World you have a choice as you can still offer your app OTA download. Appstore it's Apple's rules or nothing. What will be interesting is when the jailbreak store goes live and how much traffic it pull from Apple. Apple is and will be about feeding their ecosystem - period.

RIMM at least provides users choice and having a front that is available to multiple devices, from any carrier you choose to use makes more sense to the average consumer. Add the fact that almost all the major apps are on BOTH platforms I fail to see how Apple is "winning".

Shazam, Pandora are just the latest and if you fail to see this is about global mobility land grab that your blinded by Apple's marketing. The iTouch has nothing to do with this and while it's selling fantastic (likely better then iPhone) it's not part of this veritical.

Isn't Paypal still the del facto standard for Ebay billing? Funny it works there. What difference does it make it you pay with Paypal or direct to your CC or carrier bill. Unsure how carrier billing would work as this is outside of their control. If straight through billing is a major stoppage you will see CC processing by summer.

Apr 02 11:20 AM

[peter02l:]

@was_fred,

One way to look at it is that having an app store is better than not having one, as you say.

But after iPhone 3.0, Blackberries will have no advantage over the iPhone. So those who stay with the platform are the ones who do not want to give up the physical keyboard, or have the blackberry servers at work, or simply just don't like change. So to these people the apps, the paypal account, the extra storage required, etc. are not appealing in the least. And unless the experience is better than the iPhone, very few people will use it, developers will ignore it, and it will turn out to have been a waste of money which will drag down RIM even more.

Apr 02 11:29 AM

[winindthedust:]

@was_fred:

Very reasonable. Yes, this is a nice improvement by Rim.

@ Frank Castle

Yes, I agree. Thank Apple, however. Research In Motion would never have done this, otherwise. Neither would Microsoft. Neither would have any of the other players. Like it or not, they ALL will be compared to Apple, and measured accordingly. On their own merits, it's all a great thing for consumers, and a huge improvement. But again, even if you have strong feelings, you have to thank Apple.

Last, what does your feelings have to do with investing in RIMM? You're one person... stocks rise and fall depending on what a majority do. Like it or not, that's just the way it is. I think Rim is a solid company, that makes solid products. I just don't think RIMM is a solid investment play, at the moment.... but things do change.


On Apr 02 11:20 AM Frank Castle wrote:

> The problem with all the iPhone users is they assume everyone else
> wants to use an iPhone.
>
> This is another piece to the RIMM platform and for what it's needed
> for (central place to get applications from) it fits a need. It
> doesn't have to be as large or connected to a desktop applications.
>
>
> I can't STAND iTunes. At least with App World you have a choice
> as you can still offer your app OTA download. Appstore it's Apple's
> rules or nothing. What will be interesting is when the jailbreak
> store goes live and how much traffic it pull from Apple. Apple is
> and will be about feeding their ecosystem - period.
>
> RIMM at least provides users choice and having a front that is available
> to multiple devices, from any carrier you choose to use makes more
> sense to the average consumer. Add the fact that almost all the major
> apps are on BOTH platforms I fail to see how Apple is "winning".
>
>
> Shazam, Pandora are just the latest and if you fail to see this is
> about global mobility land grab that your blinded by Apple's marketing.
> The iTouch has nothing to do with this and while it's selling fantastic
> (likely better then iPhone) it's not part of this veritical.
>
> Isn't Paypal still the del facto standard for Ebay billing? Funny
> it works there. What difference does it make it you pay with Paypal
> or direct to your CC or carrier bill. Unsure how carrier billing
> would work as this is outside of their control. If straight through
> billing is a major stoppage you will see CC processing by summer.

Apr 02 11:34 AM

[mark46:]

It's great that RIMM has a store; they need to. But the key to the store is its ease of use. By bringing together all available apps in one place, that's step one in ease of use. But step 2 is the "one-click" purchase ease of use. The advantage iPhone has is that every phone was linked to an iTunes account the first time it was turned on and connected to a computer, so this need not ever be done again.

All cell phones (including iPhone) also have a payment connection via the carrier. For now, RIMM has chosen to not work through the carrier (i.e. pay the carrier some nominal fee for executing the billing process), but instead, force a new PayPal method on the user at the cost of making it harder to buy. This is surprising since RIMM already has a billing relationship with all the carriers via the email/data plan subscription.

Apr 02 11:38 AM

[winindthedust:]

That's precisely the point I was trying to make. Thank You.


On Apr 02 11:29 AM peter02l wrote:

> @was_fred,
>
> One way to look at it is that having an app store is better than
> not having one, as you say.
>
> But after iPhone 3.0, Blackberries will have no advantage over the
> iPhone. So those who stay with the platform are the ones who do not
> want to give up the physical keyboard, or have the blackberry servers
> at work, or simply just don't like change. So to these people the
> apps, the paypal account, the extra storage required, etc. are not
> appealing in the least. And unless the experience is better than
> the iPhone, very few people will use it, developers will ignore it,
> and it will turn out to have been a waste of money which will drag
> down RIM even more.

Apr 02 11:39 AM

[SiliconVall...:]

This article lacks meaningful research. The author made claims but provided no supporting evidence. The cell business is extremely competitive before Apple jumped in and it has remained so since. The one thing that all cell competitors do well is responding and reacting to each other's new offering. The one that fails to keep up, like Motorola, will quickly be squeezed out.

Now everyone is opening an AppStore like Apple. The competition in the cell world is very much alive and well. As for RIMM's store, let's not judge until at least one or two quarters down the road. RIMM will surely attempt to update and upgrade. To underestimate a competitor can be dangerous and RIMM is a worthy competitor to Apple. So is Nokia. These are larger companies that will not go away quietly like Motorola and soon, Sony-Ericsson.

From a business's view, in addition to 3.0, I will want to start to ramp up on Android and then keep tabs on Symbian, WebOS and RIMM. Whichever can offer a decent way for my biz to expand will be worth pursuing.

Apr 02 11:54 AM

[Eric Novikoff:]

I think the bigger issue is that RIM doesn't know what it's doing when it comes to selling phones. Increasingly, people are being seduced by the BlackBerry's cool hardware, but RIM insists on restricting their big advantage - enterprise-grade email - to their corporate users. BIS, with it's lack of history and direct server connections, is a joke. And to get real corporate email, you have to either pay huge monthly sums to a BES server company, or you have to install an obscene combination of BES and Exchange software into your own data center, together with hiring a certified expert to run it. Where does the small business or mail-savvy consumer fit in here?
All the while, Microsoft Windows Mobile has reproduced every BES feature, and better - and it's easily available to small business using a variety of mail servers, including the inexpensive and capable Kerio, which requires no administrator.
I can't believe I'm recommending a Microsoft Product, but in this case, RIM has lost to Microsoft.

Apr 02 01:04 PM

[Et tu, Brute!:]

Paypal is an ebay company, and ebay shares all your personal information with ALL its entities, most of which are outlying from the U.S. and therefore, you personal info is NOT protected by protections LAWS in this country!

Added to this, you sign up with Paypal, and they take carte blanche and, it's in the rules, read for yourself, entitlles them to pretty much do what they want. Including freeze your account, and even BETTER, dip into your checking account if THAT's plugged in.

Paypal 101: Do NOT plug your checking account into Paypal.

Their protection claims are all onesided. Theirs.

You decide.

Apr 02 01:09 PM

[.crazylegs..:]

They can do whatever they want? You mean for no reason transfer money from your checking account to their own account? That is total BS and you know it. They can't just steal money from you if you sign up with them. I have had a paypal account for years and never had one problem. Are you sure you didn't sign up with Paypull? The knock off, scam service? Sometimes I wonder about folks on this site.


On Apr 02 01:09 PM Et tu, Brute! wrote:

> Paypal is an ebay company, and ebay shares all your personal information
> with ALL its entities, most of which are outlying from the U.S. and
> therefore, you personal info is NOT protected by protections LAWS
> in this country!
>
> Added to this, you sign up with Paypal, and they take carte blanche
> and, it's in the rules, read for yourself, entitlles them to pretty
> much do what they want. Including freeze your account, and even
> BETTER, dip into your checking account if THAT's plugged in.
>
> Paypal 101: Do NOT plug your checking account into Paypal.
>
> Their protection claims are all onesided. Theirs.
>
> You decide.

Apr 02 01:30 PM

[.crazylegs..:]

Wow! This is one of the funniest posts I have ever read. RIM has lost to microsoft is a hilarious statement. The actual numbers just don't bear this out. Obviously you have no idea what you are talking about. There are a number of cheap hosted blackberry services that require zero investment upfront. To actually believe that activesync protocol is better than BES is telling. And the statement about BIS and "lack of history" is laughable. They've been at it for a number of years on BIS and it has been very reliable over time. I think you might want to substitute "novi" with "jer". please tell me you don't actually believe what you wrote below.


On Apr 02 01:04 PM Eric Novikoff wrote:

> I think the bigger issue is that RIM doesn't know what it's doing
> when it comes to selling phones. Increasingly, people are being
> seduced by the BlackBerry's cool hardware, but RIM insists on restricting
> their big advantage - enterprise-grade email - to their corporate
> users. BIS, with it's lack of history and direct server connections,
> is a joke. And to get real corporate email, you have to either pay
> huge monthly sums to a BES server company, or you have to install
> an obscene combination of BES and Exchange software into your own
> data center, together with hiring a certified expert to run it.
> Where does the small business or mail-savvy consumer fit in here?
>
> All the while, Microsoft Windows Mobile has reproduced every BES
> feature, and better - and it's easily available to small business
> using a variety of mail servers, including the inexpensive and capable
> Kerio, which requires no administrator.
> I can't believe I'm recommending a Microsoft Product, but in this
> case, RIM has lost to Microsoft.

Apr 02 01:38 PM

[Zoltan L. K...:]

Rimm is still mainly selling to business customers. Apple has a very long and fruitful experience with serving consumers, which is a huge advantage building smartphone ecosystems. The digital lifestyle concept may cause serious conflicts of interest among business customers. It was productive to offer email services for them, but they might not be strongly interested in digital content, browsing for private usage, and gaming etc.

Apr 03 02:23 AM

[Frank Castle:]

@Zoltan

Sorry but you are wrong. The just announced quarter showed sales were 70% consumers and CTIA the CEO stated their market is now 50 / 50 between enterprise and consumers. Having multiple devices that appeal to consumers is what is driving that. Add the fact Pearl and Curve are availabel on every carrier only helps RIM get market share.

And your right Enterprise does have issues with company provided devices being used for lifestyle usage. The beauty of Blackberry via BES is you have total control over those functions and if you choose you can disable them. Apple offers nothing on that level and that is why it has zero pentration in enterprise.

Add the fact that many companies are starting to extend usage beyond email to mobile devices you can see how Blackberry is the standard due to all the security and inbedded VPN access they provide.

All that said - Apple's market is purely consumer focused and they don't deny that. RIM at least can leverage both sides of the market and make devices that appeal to BOTH and have cross over.

Apr 03 08:53 PM