Apple's New iPhone Applications No Threat to RIM's BlackBerry

Apple iPhone's latest and greatest applications may attract new business users but anaylysts say that Research in Motion Ltd. (RIMM) investors needn't worry. There's still a lot to like about the ongoing BlackBerry growth story.

Apple Inc. (AAPL) created big headlines at a media event Friday morning when it announced that iPhone will now support connections to Microsoft (MSFT) Exchange servers using ActiveSync, allowing users access to push email, calendars and contacts.

Apple also released a Software Development Kit [SDK] that allows third parties to create applications for iPhone and iPod Touch. Among the advantages of SDK, is the potential of turning iPhone's and iPod Touch's unique touch controls and accelerometer into compelling mobile gaming platforms.

Analysts viewed the announcement as positive for Apple, boosting their confidence that the company will achieve its 10 million unit target for iPhone sales in calendar year 2008.

RBC Capital analyst Mike Abramsky said in a note to clients that the MS Exchange integration will help the company gain traction with business users but added it should not threaten RIM's leading position in the segment.

He wrote:

While offering a superior interface, browsing, design and media capabilities, iPhone lags BlackBerry when it comes to typing messages, for message-centric businesspeople.

He added that RIM is likely to remain a favorite of IT departments, who are "notoriously fickle on manageability, control, support and security."

Mr. Abramsky continues to rate RIM shares an "outperform" with a $140 price target. For Apple, he maintained his "outperform" rating and left his C$175 price target unchanged.

TD Newcrest analyst Chris Umiastowski, meanwhile, reiterated his "buy" rating and $140 price target on RIM shares.

While Apple's SDK and video game demonstrations may give customers reason to choose iPhone, he stands by his original argument regarding RIM vs. Apple.

Mr. Umiastowski said:

We see RIM as fundamentally a product of messaging. People whose priorities are email, SMS and IM are more likely to purchase a BlackBerry, and people whose priorities revolve around music, pictures and mobile web browsing (reading, not interacting) are probably going to prefer an iPhone.

Comments

[Jon T]

A prize goes to this for greatest denial of progress...

RIM is going to suffer, its impossible to believe otherwise.

[tom1234]

Blah-Blah-Blah

[uncle]

Not every RIMM customer is a teenager text messaging all day long. The iPhone is a NEW technology. It won't kill the Blackberry, but it has to lure some away from it (like me). Sure you can belittle the iPhone as a 'music and video player' but it is also a powerful connected tool will soon gain third party software. It may not beat RIMM at it's own game, but it will syphon off some of it's growth. To think otherwise is naive...

[norm]

What this guy doesn't get is that the iPhone IS a device for "email, SMS and IM" AS WELL AS a device for "music, pictures and mobile web browsing.

[Blad_Rnr]

Agree with comments above. This guy must be protecting his RIMM shares. The iPhone, come June, will be a completely new device. There are no more reasons, from a corporate standpoint, to not use an iPhone. Complete Exchange compatibility was the last piece of the puzzle. The game will be over in June.

[User 162009]

They are both good. I have both. But just to make some money, make sure you guys have some by April 2. It will shoot up. Remember companies are still buying blackberries, Apple's plans not yet in implemented, remember it is a plan/roadmap. It is not like companies will replace their system that is compatible and efficent (both hardware/software) with the RIMM system. It is not that easy to replace corporate systems, individual consumer yes but not a whole corporate system with many employees.

[Infiniteloop]

An obvious case of denial. To ignore (from the word ignorant) the potential of the iPhone to take control of this market is simply self imposed naivete.

Continue to disregard the potential at your own peril.

[mike sanders]

Where is Mr. Umiastowski living out in space somewhere was he not listening to Jobs and all the other presenters? I have a Blackberry but come June mine will be on ebay and i will be doing all the things i couldn't do on it on my new iphone.
The presentation was awesome and as for the gaming well the landscape just changed for ever. Wake up Mr. Umiastowski it is happening.

[Sebhelyesfarku]

LOL dumbass Maczealots have found their way here from macsurfer.com

[richs]

I agree that for most folks the physical keyboard will continue to be a draw to the Blackberry and, clearly, corporate support isn't going to change overnight. The one big item that's wrong above is the lack of acknowledgment of robust web-browsing capabilities. That's a big deal for users, corporate and otherwise, and unless RIMM addresses that shortcoming on the Blackberry, it'll have problems vs the iPhone.

[dolfen]

Like all technological advances it usually takes time for their benefit and evolutionary advantages to be recognized. With Apple's iPhone/Touch iPod though, the advancement is a giant leap from the desktop/laptop to a mobile computing telecommunications device that will be be ubiquitous within 5-10
years. Apple's foresight and imagination are propelling them and us into a worldwide acceptance and communication that will connect us all in ways that will help dissolve the differences that are presently holding us apart. A marvelous evolution clearly happening before our very eyes. Enjoy it...

[REB]

RIMM's security will primarily based on many IT members having a strong, and some might say irrational, prejudice against Apple. The iPhone will not replace RIMM overnight; but, just as happened with the iPod, the iPhone will dominate the smart phone market. There's no competition with the same assets in the fight. As corporate programmers become familiar with it and the SDK's power, they will find it's much easier to write more powerful software for it. Business software Developers will find it very easy to launch the much the same software code on Apple's desktops using the same free tools.

[Thoughtful]

I agree with Reb. The key here is that the corporate programmers now want an IPhone.

[GunMan]

RIM's infrastructure costs alone, when compared to setting up a compatible MS Exchange/Smartphone (and now iPhone) setups, are too high. That will stall any new investment.

Existing setups will take a long, long time to show ROI, and then by that time you can start a process that puts RIM and it's cacaphony of BES-systems-galore as well as more licensing than you can shake a a stick at; all behind you.

As unique as RIM's BES setup is, it can't beat the simplicy of the MS Exchange push process, as well as the wide compatibility of devices.

[AdamC]

The IT manager head will roll once the management notice the costs of using RIM is higher if not much higher than Exchange.

To those <who are "notoriously fickle on manageability, control, support and security> good luck and hope you will find another good IT job in these lean times.

[User 162009]

I have both rimm and appl but I wonder why they are both way down from their all time highs just last november/december specially apple. Apple didn't go up much after this latest great news about competing with rimm for corporate business. I think people realize that there is room for both, both can have a big piece of the pie.

[michael1]

Rimm is a tool for getting email. An iPhone is having a full computer in your pocket, one that handles email at least as well as a Rimm. To deny that iPhone 2.0 is going to have an effect on Rimm is simply denial. No, Rimm won't go away overnight. But their time of dominance is over.

[NtroP]

Wow. I think this guy is intentionally missing the boat. The following morning, after Steve's presentation my boss and the CIO (at separate times) came into my office and said "I watched that video about the iPhone. Should we maybe look at Exchange to replace our current Email, MeetingMaker and Address Book software?"

Now, neither of them have an iPhone and neither of them have ever used a Mac (or Exchange for that matter), and we have a "corporate culture" of keeping our infrastructure "standards based" and open. So this is quite a comment to make. (having used Exchange years ago, I'm going to have a hard time giving it a fair/objective test :-( Maybe it's better now.

Our new CEO has an iPhone and she is in love with it. She had a Blackberry where she was before. We don't have a RIM contract here - but we looked into it when she arrived at her request. The price was too high and it was "too closed" so we approached her with the idea of an iPhone (on an interim basis).

It currently doesn't do everything her Blackberry did, but she says what it does do, it does so much better it's worth it. In July, it looks like we can give her the rest. I've already been tasked with learning Objective-C... This is going to be a wild ride.

[Sleuth]

RIM will maintain and continue to grow its market share for at least the next 3 to 5 years. iPhone is sleek, great for kids and moms to carry it around in schools and shopping malls, but RIM is the king in the corporate world. It would take a decade or longer for iPhone to match RIM's reliability, ease of use, security, owner loyalty and, of course, the envious global subscriber-base.

[seattlemariner]

It's the "in thing" to be critical of Apple, but I agree the iPhone is going to gain a ton of business users not to mention world wide market share. A lot of people seem to thing Apple is still a relatively small company, but the fact is they are one of the largest companies in the world and have the demonstrated ability to out innovate all others. Look for more and more great iPhone abilities/models.

[seattlemariner]

It won't take Apple ten yrs to match RIM, it won't take 5 yrs. Apple's pace of development and ambition is too strong for RIM. Blackberry won't be able to compete effectively >2 yrs. Look for decent growth in RIMM for a few yrs. and then the downturn.

[marcos]

If anything at all, the RIM story goes much slower on growth with the slack picked up by Apple

[Danthemason]

If Apple is no threat to Blackberry then it is perfectly acceptable to seek shelter under a large oak tree in a lightning storm. Both are equally logical.

[User 162103]

I agree with seattlemariner. I believe the iPhone will find parity with the Blackberry North American market share by the end of 2008. Beyond 2008, Blackberry will be following a new leader in the smartphone marketplace.

I don't own either a Blackberry or an iPhone. But by the end of this year I'll probably buy an iPhone because it fits better into my personal and business lifestyle. When the software products of the new SDK find there way into the iPhone, the package will make the iPhone even more relevant to me. I convey my most sincere best wishes toward RIM and their Blackberry users. But, without drastic architectural changes in both hardware and softwae to make it competitive, the Blackberry is yesterday. The iPhone is tomorrow.

[CurlyDave]

My wife travels *a lot* for business.

Two weeks ago she got an email about a new consulting job, and because she didn't get it for 6 hours, she missed out on a promotional air fare to the destination (website only). $200 gone.

This was impetus to get an iPhone.

This week she got finished early, used the iPhone to go to her airline's web site and moved her flight up by two hours.

Can't do that kind of websurfing with a Blackberry. This is where the iPhone is going to kill RIM.

[User 162129]

Whew! Glad there was no threat to the Blackberry. I am not the least bit upset by the fact that the iPhone does everything a Blackberry does, is cheaper to operate, easier to program, and is far more user-friendly. I don't see any threat whatsoever. NO THREAT??? Are you nuts?

[lrd]

I know a handful of people already owning a Blackberry & an IPhone. The only reason why they own both is that the corporate e-mail. Come June or early July the IT guys will no longer have a case to stand on and that means 4 to 5 people that I know dumping their CrackBerrys. Now, I'm not alone. There are probably thousands of people throughout the US alone that know a handful of people in this same situation. Come June/July this scenario will be felt by RIM-no doubt about it.

[Brewer]

If the iPhone is no threat to your 80's style blackberry, then why are you having to reassure yourself?

Call the Apple fans and company all the juvenile names you want, if that makes you feel better, but I would sell those RIM shares if I were you.

Apple has already buried the pathetic Microsoft WIndows Media devices, and the iPhone has been out less than a year. RIM is next.

[Brewer]

Also, iPhone, in only 6 months, has 71% of mobile browser share. There is no competition. And, none can match it for years, as no other company has OS X. If you think the internet is only a fad, and no one needs it in their pocket, then just keep using your blackberry...

To top this all off, APPL is growing by leaps and bounds in the desktop and laptop market. This is going to accelerate development on Mac applications.

My prediction is that Apple is going to be well over $200 by year's end.

[Heart_Man]

This sounds just like the naysayers that initially said the iPhone would not/could not make any dent in the mobile phone market.

[Road Warrior]

I use both the iPhone and Blackberry, but not by choice. Up until now my IT department, like most, supports only Blackberry. The criticism that the iPhone is for moms and kids playing games and listening to music is absurd. Another criticism voiced is that typing messages for e-mail, etc., on the Blackberry is superior is also absurd. I can write messages much faster on my iPhone than on my Blackberry. As a frequently traveling VP of a major corporation, I'll be very happy to see the Blackberry go away in favor of the iPhone. I agree that corporations' IT departments are slow to change, but demand will push that envelope.

[Road Warrior]

I use both the iPhone and Blackberry, but not by choice. Up until now my IT department, like most, supports only Blackberry. The criticism that the iPhone is for moms and kids playing games and listening to music is absurd. Another criticism voiced is that typing messages for e-mail, etc., on the Blackberry is superior is also absurd. I can write messages much faster on my iPhone than on my Blackberry. As a frequently traveling VP of a major corporation, I'll be very happy to see the Blackberry go away in favor of the iPhone. I agree that corporations' IT departments are slow to change, but demand will push that envelope.

[habebe]

It seems to me that the iPhone has great potential for enterprise customers who want their email securely leaving their highly protected servers to the client without a middleman. That is in addition to all the great iPhone features.

[viking]

iPhone will work really well with all those corporate Macs.

[rattyuk]

@ viking

If you did your research instead of sarky comments you'd realize that with exchange support it will do pretty well with all those corporate PCs too.

[Buster]

What nobody here mentions is the fact that Microsoft has bet the company on the fact the best way for them to make money in "smartphones"... is licensing the software to Apple.

If Microsoft is hedging their bets, what possible reason could RIM have for *NOT* doing so? Only a fool would not see Apple as a threat to RIM, even if that threat is neither immediate nor mortal.

[User 162505]

I just bought an IPhone - Not an early adopter - I may be an Apple "fan-boy" since I still have an original 1984 Mac ( actually still works ). I dumped my Blackberry and Motorola Razor phone - the interfaces just suck - What I like about the IPhone is that I can easily figure out the interface - nasty little keyboards on the Blackberry are okay for people who can type with sharpened pencil fingers - I'm a little bit older - and sorry, I actually need to get some work done -
I made the right decision - 80% of my IT staff have IPhones and use Macs - The tide is slowly turning -

[Realtosh]

RIM unit growth will continue for a while. But the rate of growth will slow over time. Most large corporations that are going to get Blackberry systems already have them. The cost of the BES systems make them accessible only to the largest of corporations. Any other business, that must watch the bottom line, installing a BlackBerry server is just out of the question. Those other individuals and companies that have gotten their BlackBerry service from cellular providers are easier targets for the iPhone.

On the consumer and small business fronts, the iPhone is just a better solution and will continue to make inroads in those markets faster and sooner. The iPhone will choke off much of RIM's growth in the consumer space, that the Pearl was designed for.

With the support of ActiveSync, the iPhone will consolidate the smartphone/email space in a way that Mobile Windows devices have been unable to do. Further the iPhone will prevent RIM from consolidating the push email space. RIM will now have to battle Apple in that space. That is a threat in anyone's book; so what is the author of this blog smoking anyway?

Notice that this article was unsigned. At best it was just link-bait, and at worst troll-bait, which is less than I would have expected from Seeing Alpha. I guess they're just after the clicks like every other site out there. Oh well. So much for thinking that SA was any better than any other site. Very very weak analysis.

[jef]

I'm surprised that nobody talk about the first advantage of the iphone over RiM: It's not picture, ergonomy or whatever: It's Mac OS X inside... And you will see after 3 months on SDK working

[whocares]

OH... and did anyone see the patents that came out from Rim earlier this year for a blackberry with a full slide out qwerty keyboard with touch screen capabilities and a screen almost double the size of ones already existing... it seems many see RIM as slow to innovate... how long has the blackberry been dominant? Does RIM make any other products? They are a pure play mobile device company... As if they have not been planning an iPhone competitor. Just like Apple sat back and looked at problems with the Blackberry and created the iphone RIM will sit back and look at "issues" with the iPhone and better their own product to compete... so will MSFT & HTC with their windows mobile based touch screen devices... (just for reference, I own neither a blackberry or an iphone - both have work to do in my mind...)