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Recently, there has been increasing chatter and worry over the future of Research in Motion (RIMM), the maker of the BlackBerry. As the iPhone has taken the U.S. market by storm, the BlackBerry has become notable for its lack of cultural cachet. It seems like everybody wants an iPhone. As a result of its execution missteps and shrinking market share, Research in Motion stock has plummeted by more than 75% this year, so that it trades significantly below book value and at a very low P/E ratio.

While analysts have been quick to claim that the iPhone is killing demand for even state-of-the-art BlackBerry models, the threat to the BlackBerry (if there is any) comes primarily from phone vendors other than Apple (AAPL). This is not to discount the fact that many users have switched from BlackBerry smartphones to the iPhone in the past year or two. But many observers have read too much into Apple's claims that 60% of Fortune 500 companies are testing or deploying the iPhone (and over 90% for the iPad).

The simple fact is that the iPhone can only target a particular segment of the enterprise market. If iPhone apps can boost worker productivity in a particular industry, then it makes good sense to switch from BlackBerry, which is far behind in terms of the number of apps available. On the other hand, the iPhone has two major liabilities versus the BlackBerry. First of all, as this amusing article pointed out, the iPhone is not a very good tool for e-mail. This cannot be underestimated for the many businesses where being able to send quick and accurate communications from any location is the primary rationale for using smartphones. A physical keyboard is an absolute necessity. (Earlier this month, I attempted to type my e-mail address into a contact's iPhone; the process took nearly two minutes. Granted, I am not an iPhone user, but my "typing" accurary on the iPhone was perhaps 60%, which is deplorable.)

The iPhone's second liability is security (though this is a secondary issue). Apple has made good progress in catching up to RIM on the security front, but the BlackBerry is still the smartphone of choice if you need top of the line security. For many government agencies and companies that deal with sensitive or privileged materials, the iPhone is still not a viable option.

Apple has already picked the low-hanging fruit in terms of converting BlackBerry users to the iPhone. BlackBerry had been the default choice, and users who have more of a need for the iPhone's features have already switched (particularly since AT&T (T) exclusivity ended). Going forward, RIM should actually be more concerned about competition from phones running Google's (GOOG) Android OS, and phones running Microsoft's (MSFT) Windows Phone OS, such as the new models from Nokia (NOK). These devices are more direct competitors, if for no other reason than because they offer physical keyboards.

Viewed from this angle, RIM seems to be in much better shape. Android phones have to overcome massive security flaws (even compared with the iPhone) to compete effectively in the enterprise space. Meanwhile, the Windows Phone will need to generate traction from a standing start. This will likely take a long time; as Windows 8 (which will likely provide a more homogenous experience across devices/form factors) is adopted over the next few years, the Windows Phone could present a more significant challenge to RIM in the corporate/government segment.

Bottom line: rumors of the BlackBerry's death are greatly exaggerated. The product still has a significant niche, which will be sufficient to keep RIM profitable for years to come.

Source: The iPhone Is Good But It Won't Kill The BlackBerry