Research in Motion: Leaping Over Palm For a Slam Dunk

 |  Includes: BBRY, PALM
by: Jim Woods

“The rim is looking bigger and bigger every game.” (Paul Pierce, professional basketball player)

When NBA players are in “the zone,” it seems like their shots can’t miss. As Boston Celtic star Paul Pierce puts it, that’s when the rim keeps looking bigger and bigger.

When it comes to the game of who controls the smart phone market, the two biggest players are Research in Motion, or RIM, (RIMM) – maker of the Blackberry, and Palm (PALM) – maker of the Treo.

These two teams have been running up and down the court for some time now. To learn which team was leading in the first quarter, we conducted two Alliance surveys – one on consumer buying trends and the other on corporate purchasing.

The first survey – completed January 29, 2007 – focused on personal demand for smart phones among 1,938 consumers. The second survey – completed February 20, 2007 – looked at company demand as reported by 1,780 corporate purchasers.

Consumer Personal Preference

Our latest consumer telecom survey, shows a virtual slam dunk in the head-to-head match up between RIM and Palm.

RIM has surged 6-points to an all-time high in a ChangeWave survey of 37%, displacing Palm as the new market share leader among consumers.

Palm now stands at 30%, down 3-points from the previous survey. Other smart phone manufacturers such as Motorola (MOT), Samsung and Nokia (NYSE:NOK) continue to trail the big dogs by huge margins.

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Looking at the next 90 days, RIM again wins in the battle for market share, with 27% of future buyers saying the Blackberry is the smart phone they plan to buy – up 3-points since October.

In contrast, Palm looks like it’s been hit with a technical, as Treo planned sales plummet 9-points to just under 14%.

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It’s clear that RIM has the momentum going forward.

Taking Over The Corporate Court

Measuring consumer smart phone trends is important, but much of the demand for these devices comes from corporate purchasers. And among the three-in-ten respondents whose companies currently provide smart phones, there is one big-time leader.

We asked Alliance members which smart phone manufacturer their company currently provides employees, and which one they plan on purchasing from in 2nd quarter '07. The results are in the table below.

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RIM is the dominant player among current corporate providers (59%), while Palm remains a distant second at 28%. But a closer look shows there is more bad news for Palm. Among companies that plan to buy smart phones in the 2nd quarter, only 22% say they’ll buy Palm.
Compare that to the 61% figure for RIM and it ain't hard to see who’s got control of the game going forward.

But why is the RIM team scoring while the Palm team keeps missing shots? We asked respondents about their company’s satisfaction levels and found 34% of Blackberry users saying they were “very satisfied” with the device (and 55% “somewhat satisfied”).

In comparison, Palm garnered only a 22% “very satisfied” rating for the Treo (with 59% “somewhat satisfied”). Tellingly, 12% of Treo users said their company was dissatisfied with their Palm phones, compared to just 6% of RIM’s corporate customers expressing dissatisfaction with their Blackberries.

Why the disparity in satisfaction rates? We asked Alliance members to share why their company was either satisfied or unsatisfied.

The primary reasons for the Blackberry’s higher rating were the quality of its email and phone services, its reliability and its durability. Downsides for the device were its lack of features and storage expansion capability, and the high cost of server software and technical support.

Palm respondents said they were satisfied with the Treo’s compatibility with Microsoft software and its relatively low server/software costs. But the key downsides for the Treo were relatively serious ones - including poor reception, short battery life and a lack of durability.

The bottom line in the corporate smart phone court is that RIM is in control, just as it has suddenly taken control on the consumer side of the court.

While the game's not over yet as we enter the second quarter of 2007, there’s no doubt as to who’s hitting their shots and who’s throwing up bricks.

Paul Carton co-wrote this article.

This article summarizes the results of a recent ChangeWave Alliance survey. The Alliance is a research network of 10,000 business, technology and medical professionals who spend their everyday lives working on the front line of technological change. For more info on the ChangeWave Alliance, or if you are interested in joining, please click here.