Research In Motion vs. Apple: The Smartphone Showdown

Last year I caused a small uproar posting purely about investing in Research in Motion (RIMM) and (AAPL). I am a Blackberry user and continue to be intrigued by the iPhone. My readers know that I do not believe that one man's opinion is statistically significant.

A recent study by Harris Interactive last week indicates that those who plan on reducing spending based on economic conditions will do so by decreasing electronics purchases (71%) and by dining out less (74%). Yet, despite this apprehensiveness, only 41% of those polled said they would "go as far as" reducing mobile phone spending to cut costs. Let's face it, for many, their mobile communications device is an indispensable part, and partly defining facet of life.

All you have to do is look at the legions of professionals addicted to their "crackberry," or the rise of text messaging as a preferred form of communication. Although it's a small segment in overall usage of cell phones, following the progress high-end phones has always been compelling for me because they steer the direction-and features-of the future phones utilized by the masses. Going back a few years, the Motorola (MOT) RAZR enjoyed a run as the "in" phone, and spawned an array of copycats.

Of course, these days it's all about iPhone and Blackberry. It seemed as if RIM, with its ease of communication and overall connectivity offered by Blackberry keyboards, was the way of the future, but that was pre-iPhone. Last summer, Apple's iPhone burst on the scene offering an elegant interface and design, iPod-like music functionality, and a PC-esque web browsing experience. Despite placing pretty big barriers to ownership, its high price tag, exclusive AT&T (T) service provider contract, and incompatibility with corporate email juggernaut Microsoft Exchange/Outlook (MSFT), millions of iPhones were sold - capturing 25% of the U.S. Smartphone market.

Up until this month, Apple and RIM had coexisted, albeit with heavy reconnaissance but not openly attacking each other. Last week, Steve Jobs and company set the blogosphere abuzz with iPhone 2.0 Not only has the entry price of the phone been cut to $200, but Apple has included 3G network compatibility to erode the edge Blackberry held in browsing speed. It has also made the device more corporate-friendly with Microsoft Exchange compatibility, and quashed a differentiator between iPhone and RIMM by incorporating built-in GPS. The new iPhone makes Apple's intentions clear: RIM is in its crosshairs. Meanwhile, the upcoming Blackberry Bold has adapted a sleeker design-and rumors of an iPhone-like touch-screen model abound. After all, what's good for the goose…

It's been roughly a year since iPhone first appeared-and it is clear that the interface is a game-changer that has captured its users through a new type of experience best attributed to Apple and Jobs, and is heavily influencing all phone design. There may be (hopefully) an expiration date on its exclusive contract with AT&T. Yet Apple has been reluctant to release its phone into emerging markets, thus creating a grey-market for exporting the iPhones and giving RIM time to gain further footing in China and India.

However, this stands to change quickly, when later this year,  Bharti Airtel and Vodaphone (VOD) will begin selling the iPhone in India giving Apple the opportunity to build brand and customers from the collective one hundred million (and growing) subscriber base of the two telecom companies.  It's only a matter of time until the Steve Jobs moves into China, where RIM already has a growing base.

Disclosure: Mr. Corn is CEO of Clear Asset Management Inc. Research in Motion (RIMM) is a holding in the Clear Large Cap Growth portfolio. Mr. Corn directly owns shares of RIM through his participation in that portfolio.

Comments

[Robt1947]

One would think AAPL success is very dependent on
Job's health. Anyone got an inside track on that one?

[apb509]

Actually, the Blackberry Bold is not rumored to have a touchscreen. The only real design upgrades, from images and articles I've read, is the leather backing, increased screen resolution, and sleeker keyboard and overall look. images.macworld.com/im...

However, RIM does intend on releasing the Blackberry Thunder sometime in Q3, which has a very iPhone-like look to it. The Thunder is said to have a touch-screen and only having 4 main keys at the bottom of the phone (send, back/clear, menu, end). www.product-reviews.ne...

Perhaps you should do a tad bit more research before writing articles...


Blackberry owner, soon to be iPhone owner; long APPL; short RIMM

[2bitRick]

On Jun 20 09:11 AM Robt1947 wrote:

> One would think AAPL success is very dependent on
> Job's health. Anyone got an inside track on that one?


Can you spell FUD Robt, because that is all your comment is. Your knowledge of AAPL leaves a lot to be desire.

[.crazylegs..]

"Meanwhile, the upcoming Blackberry Bold has adapted a sleeker design-and rumors of an iPhone-like touch-screen model abound."

apb509 - please read the sentence carefully before attacking the author. Of course I could also say, "Perhaps you should learn better reading comprehension skills before reading..." but this would be just as obnoxious as your comment.

I've gotten sick of reading these same iPhone vs BB articles, but i'm such a tech junkie I can't help myself! The bottom line is that the end market is so large that both can prosper over the next few years. Personally, I have an iPhone but I use my BB every day. The core communication experience on my BB is just much better for me.

Does it matter what my choice is? Not really. But the larger point is each user will decide what works best for them, and again, the mkt is large enough for both platforms to have plenty of folks choosing either (or both!).

[TanToday]

Oh, one more thing. ALL my apple products are now free. Howzzat you ask?

Started buying around 73, now hold 2600 shrs. So now I make money by loving the products too, and ain't THAT a sweet one?

[mollytjm]

TanToday...another great read! i've been all Apple since 1983, but since the store in King of Prussia, PA opened, i've managed to drag all my friends there...and converts abound! they all said about the same thing, "the sales people are so nice and patient and they know their stuff and everything is cool". When a good friend, who's been a dedicated pc user for 20 years, showed up at our dinner date with an ipod, i knew what it meant...Apple is here to stay and will continue to innovate and grow...i can't wait for the next innovation from them.

[schutter]

I had a pc laptop for 1 year and it broke on me.
I bought a Imac and 4 weeks ago and LOVE IT. Its just like that commercial. SIMPLE. By the way my PC is still in the shop..........I really believe just from reading into apple and using the products that it is a far better tool than PC. Oh yeah forgot to mention, that new iPhone is looking good.

[Warm_Paw]

I suspect both Apple and RIM will do quite well once this strike day is over.
Oil investors are going to get squeezed big time on Monday.
Like meeting on Sunday for OPEC will provide news which will intensify that squeeze.
I wonder how many honestly bought into a drop in the price of a barrel of oil.
Whoever declared oil would be $150 a barrel by july 4 should be asked how he knew this?
RIM will be out of the tractor beam of options investors and will do quite well with earnings.

[Partners in Grime]

Yep, those Mac products are a slippery slope. :)

[N. Courtney]

To TanToday you can and always have been able to buy mp3 players that play music, video, and podcast I have one and I can copy and move files from any device I want something you can't do with an iPhone and as I've stated before I don't have a RIM but I think most people who stand in line for anything (e.g a communications device or a movie) are IDIOTS, PERIOD. Being and engineer it's very disappointing how companies follow others like lemmings to the edge of a cliff, I haven't seen a touch screen yet that doesn't look like crap after one or two years. If you rub something constantly the friction is going to wear down the surface, but as long as Apple keeps coming out with a new phone or cutting the price after people have spent hundreds of dollars for innovation only to see a newer lower cost model come out they'll have customers. We're a throw away society so toss out that old iPhone and buy the new one.

Apple comes out with a new phone with 3G, a slashed price, offer exclusively on only one carrier yes you can take a GSM phone to over 200 other countries and use it most people aren't going to take a cellular phone with them abroad. I have a mobile phone that opens with a keyboard, 3G, voice dialing, and I've had it over year, I find it interesting that Apple would come out with a subsidized iPhone when they were still selling the original at a higher price, most companies lower the price on older models and price the newer at a higher price, but then again when they first offered the iPhone and all those IDIOTS who stood in line and paid 599.00 for a phone only to see the other IDIOTS pay 399.00 several weeks later, only to see an improved model come along and sale for 199.00 yeah people who buy iPhones are real geniuses.

The same geniuses that are going shop at the App Store for the iPhone for third-party iPhone apps that are coming to market.

Apple earlier this year unveiled plans to launch an iTunes like store, dubbed App Store, to support its iPhone, allowing users to shop for games, navigation tools and other applications the same way they browse for digital music. The outlet could explode into a $1.2 billion business by the end of 2009, Piper Jaffray analyst Gene Munster has predicted, with perhaps 95% of users downloading two applications a year. $1.2 billion with 95% of user downloading "2 APPLICATIONS A YEAR", there are over 6 billion people on the planet I'll go out on a limb here and say I doubt if 1% of the worlds population has an iPhone you may have more people with iPods but not iPhones because in the U.S alone you can only use a GSM phone on a GSM network which is dominated by the same exclusive carrier Apple uses and that would be AT&T most of the mobile phones in North America are CDMA networks. Anyone can download from iTunes for music, but the applications for the iPhone are exclusively for that phone and I haven't heard Apple say anything about open access, like some of the other phone manufacturers like Sony ans Samsung, or companies like Google.

Makes me wonder just how much are these third party applications are going to cost? Most of the applications I have on my phone I downloaded for free, from the many websites out there that offer paid and free applications. Apple doesn't seem to think this way, and just like iTunes which is boasting how many downloads they've had, and that's only because every television show advertises their television programs and the songs played in episodes are available on iTunes, I never downloaded anything from iTunes, all my music came directly from the artist websites themselves or I bought them online from another site. More artist are choosing to do this or the labels themselves, you can download music from Sony's music site directly. I'll pass on taking a bite from the Apple, and we all know how the story ended for Adam and Eve.

As stated Motorola's RAZR was all the rage, and now Motorola has shut down their engineering division, because they had too many engineers designing phones e.g trying to use cutting edge technology to get rid of the antenna as well as seeing how thin they could make a phone. Apple's iPhone is all the rage now and it driven by engineers who see the touch screen as the new standard for human interface how often do you have to wipe off a greasy fingerprint? to see the wide visually stimulating display, the better question is why would you make a phone with such a visually stimulating display have a touch screen display? Would people tolerate this on a big screen high definition television?, because it makes these engineers think their one step closer to having gizmo's like Captain Kirk, or better yet Captain Picard seeing as how Captain Kirk used a tuner knob on his communicator.

[Andrew Corn]

Bottom line, look at the stock chart of these firms for 3, 6, 12 and 18 months. Go 24 or 30 months. This is an investing post, not about which firm makes the best gizmo.
For 15 years (MFST) was “the” investment although no one thought they made the “in” or best software.

Investors seek the best investment period. Professional investors have a fiduciary obligation to do so. Our portfolios have owned and profited from both stocks, but long tern (RIMM) has proven the superior investment. Ultimately, when seeking my daughter’s birthday present, I may purchase, after due diligence, a product not inline with my investments.

That is the rub.

[Robt1947]

if you want to live in fantasy land, just ignore the possibility 2bit, but dont complain if your investment is halved overnight should his health affect his abilities to lead. NO ONE wants the man to fade from the scene, he is an icon, but the reality is
that the man is a high-profile CEO of a major technology company whose success could very well
be dependent upon the continued leadership of this incredibly gifted man. I do not own RIMM (yet) by the way, so it was not a FUD comment.

[bryanz]

RIMMs touchscreen model isn't a "rumor". It's the Blackberry Thunder and it's a CDMA phone that will be available on Verizon in Q3.

The Blackberry Bold is the first 9000 series phone from RIMM and will support HSDPA on AT&Ts network. It will be available sometime this month if I remember right. The Blackberry Javelin is similar in form and function to the Bold but is not 3G and has an upgraded camera. This phone is supposed to for T-Mo. The Bold "may" come to T-Mo considering they're talking about finally rolling out their 3G network to a wider audience.

Also the Blackberry Kickstart (I think that's the name) is the first Blackberry flip phone and will be released sometime in Q3 I believe.

Websites like BGR, BBCool, Crackberry, etc have covered these details for a while now.

[will]

Rimm kicks Apple ass!

[patmyser]

I for one hope neither one completely dominates the smartphone market. Monopolies are a bad thing. (IE: our current oil dependancy, limited suppliers and lack of practical alternatives.)

Competition is good for the soul, especially in the technology field. It forces each player to continually strive to offer it's consumers more options, better quality & the best competitive rate for it's consumers. Without that, we would pay through the nose with no choices at all.

I say let each one continue to do what it does best: iPhone, Macs for Multimedia/Entertainme... driven people & Blackberry for business applications & integration.

[Shorting Should be Banned]

RIMM fanatics, especially the ones who resort to foul language ...are in denial of what is about to descend on Rim, not only from Apple, but from others such as HTC et al.

[Rik]

RIMM is a biz device. iPhone and others are consumer phones. Biz is still in love with RIMM. Consumers will cut back because of gas prices, biz will buy more Blackberrys to increase efficiency.

[bryanz]

@Apple Heavy... if you're referring to the guy that said "ass," grow up. In reverence to George Carlin, I do need to point out that ass isn't one of the 7 words. =)

And using words like "RIMM fanatics" in the same breath when your username is Apple Heavy just goes to show what side you're clearly on. Both AAPL and RIMM have made me a good amount of money so badmouthing either one of them is just pointless to me. Both the iPhone and the BB are great platforms with the potential to expand without cannibalizing each others sales. People with "dumbphones" are going to upgrade to smart phones and they want choice. But why are you even throwing HTC into the mix, honestly? They run WinMo software which I have yet to see very many people like all that much.