UBS Analyst: Survey Shows 3G iPhone Poses Little Threat to BlackBerry

With all the buzz surrounding Apple Inc.'s (AAPL) iPhone 3G device, more than one question has been asked as to how the attention will affect rival smartphone maker Research In Motion Ltd. (RIMM). However, a quick survey by UBS telecom analyst Maynard Um found that the threat of RIM's customer base siphoning off to Apple is fairly small.

Mr. Um conducted a survey during iPhone line-ups in the U.K. and U.S and found less than 5% of new buyers said they were replacing their BlackBerrys with iPhones.  UBS surveyed 222 U.K. buyers and 106 U.S. buyers.

Mr. Um said:

Although our sample size was limited (relative to the global launch), we believe these results give a decent indication for the market share obtained by the iPhone on Day 1 and provide interesting data points with regard to which of the early adopter base is switching.

Given the promising results, Mr. Um believes RIM should be helped by a bigger competitive push by operators around the 3G iPhone launch and maintains his price target on the stock.

Mr. Um said:

Although there are likely few catalysts through August quarter earnings (the key will be operating leverage/upside in the November quarter guidance), we view RIMM as compelling at current levels.

We believe concern regarding competition from iPhone and 3G Bold shipment timing is overstated and expect stronger growth driven by current investments in the back half and into next fiscal year. We reiterate our Buy rating, particularly with valuations at 23.4x our calendar 2009 estimates.

Comments

[poohead]

What matters is not now, but six months from now. RIMM will be dead; slayed by Steve Jobs himself.

[thompr]

< less than 5% of new buyers said they were replacing their BlackBerrys with iPhones>

Hmmm. This is not a sufficient question to use to support the conclusion that RIM needn't worry. Since both RIM and AAPL are doing battle for control of a market that is in its infancy but is poised for rapid growth (smart phones rather than standard cell phones) both are needing to grab the new customers. Your question only "pokes at" what percentage of people that already have Blackberrys intend to buy iPhones, and even then you have failed to get that number. Since less than 10% of all people even own Blackberrys, it is still in the realm of possibility that RIM has just lost half of its customer base. Your method of data gathering fails to determine the proper denominator, because you have no data for how many Blackberry owners didn't show up in line to be sampled. Do you know what "conditional probabilities" are? Do you know how to relate them using "Bayes Theorem"? If the answer to these questions is "no", you should read up on them prior to drawing conclusions from statistics. You are not properly defining the sample space.

So your conclusion has two problems: (1) it fails to determine the fraction of current Blackberry owners that are jumping ship, because it fails to account for the percent of random people that even own Blackberrys, and (2) even if RIM weren't losing many current customers (I doubt it, but if...) they still could be losing out on new customers. And given the expected growth in this segment, new customers are going to dwarf the current customers in fairly short order.

A much better survey was completed by Change Wave Alliance, which actually poses the question "In the next 90 days, do you intend to purchase XXX brand of cell phone?" They have been capturing such statistics for years, and there has been significant correlation between the survey results and the ultimate market share numbers. If the results of the most recent Change Wave survey are to be taken seriously, RIM should be worried. Very worried, in fact.

Considering the questions asked and sample mechanisms used by your survey versus Change Wave's, it seems to me that their conclusion (that RIM should worry) is much better supported than yours (that RIM should not worry).

Thompson

[dragon10]

roma will never die, but rimm has a base

[dragon10]

sorry if you don`t understud the joke (Roma is pretex for Rim)

[kidrazor]

5 percent of blackeberry users won't switch, stupid survey. What about 100 percent of the new users that would would have bought a blackberry, but now have a 199 iphone? Smarten up people.

[tuskagee]

Whistling past the graveyard...

[ET]

LMFAO.

[User 216485]

APPLE IPHONE IS DEFINATE THE WAY TO GO, IF YOU HAVE MAC COMPUTOR SYSTEM. EVERYTHING IS ENCLOSE. IT IS A PORTABLE EXTENSION OF THE MAC SYSTEM AND IT LOOK'S NICE. BUT, IN REALITY BLACKBERRY IS MORE FLEXIBLE WITH ALL COMPUTER SYSTEMS AND USABILITY. YOU CAN REPLACE THE BATTERY, DOWN
LOAD INFO ON YOUR MEMORY CHIP AND REPLACE IT WITH A NEW ONE..(HARDCOPY IN THE FIELD) ETC. APPLE IS MAKING SURE YOU
SPEND MORE ON THE MAC SYSTEM. WITH RIMM NEW EYE CATCHING LINE UP IN THE NEAR FUTURE APPLE WILL HAVE A HARD TIME COMPETEING WITH THE INSTITUTION BUYERS OR DAY TO DAY
WORKERS. YOU HAVE TO CARRY AND EXTERNAL BATTERY OR CHARGER RIGHT NOW TO USE IT ALL DAY. IT'S NICE , BUT NOT PRACTICAL AS IT STAND NOW.

[Murphy]

User216485: Always concise, always coherent, right on the money.

[NigelCheffers-Heard]

As thompr says, this is a really shabby survey... and this man is a telecoms analyst????? We all know how fickle markets CAN be, and this kind of dross explains much of it.
I don't personally think that many enterprise and business buyers are the kind of folk to queue on launch day. Seems to me the essence of being an analyst is "write something... anything..."
Statistics obviously not his strong point.
N

[jdspain]

the corporate world is not going to change from blackberry. IT are not risk folks. nor are corporate executives.. they have a blackberry that handles all their communications and functions . why would they change over to an unknown and at an expense with sales crashing around them. i doubt rimm has much competition from mid to large corporations.

[Toni]

Are we at 200 yet ? 190 ? 180 ?

DORIS! BELOW 175 !

[Jon T]

RIM have an awful lot to worry about. Why else are they rushing (or panicking) to make the Thunder touch screen version?

By letting Apple produce a computer come phone, Blackberry will now forever be playing catch-up, just as the expert MP3 player makers were with iPod.

[mollytjm]

and the Blackberry and other smartphones have been around how long? and the iPhone here only a year and already some Blackberry users are going iPhone...and i know Treo users going iPhone now... so in another year, when so many iPhone users are seen around town and in businesses, being very happy with their iPhones, what do you think will happen? still under 5%. i don't think so. it isn't that there isn't room for different products of the same type in a marketplace. but to ignore the mounting growth of the iPhone and potential buyers, is not understandable. it's here and it's happening. it's one story has a possible upside for the market...unlike financials. by the way, Apple has no debt and tons of $$$.

[Hammertime]

User 216485 - I have 6 Mac computers and I make my living with them. But I will never own an iphone as long it is married to ATT. Period.

[Mac'em X]

User 216485, the two iPhone demerits you mention - no removable battery, no removable media - are actually legitimate flaws for some customers.

But those flaws have nothing to do with Macs or PCs. Your post suggests that Mac owners score some magic means of swapping the iPhone battery and slipping in a memory card. They don't.

The iPhone works exactly the same - flaws and all - for people with Macs, Windows PCs, Linux boxen, abacuses, and/or refrigerators.

Unlike your computer, the iPhone also ships with lower-case letters. Give it a try!

[WindowsGuy]

Have you ever thought that corporate users (98%) of Blackberry owners are not going to wait inline on opening day?

It's going to be evaluated and tetsed to see if it's a LOGICAL choice to upgrade as current BlackBerries need to be replaced.

The KEY Word is LOGICAL unlike your article.

[Brewer]

RIM is doomed. They want more for those than for iPhones. iPhone makes Blackberry look like a relic from the past--which it is.

All you whiners harping about the battery--do you swap your own watch batteries? This is the extent of the difficulty. iPod is like jewelry, not like a transistor radio. The tool to do it yourself comes free with a new battery, unless you are clumbsy and afraid to do this yourself. (But you probably 'built' your own PeeCee, LOL.) Grow up, it keeps a charge all day, charges on your computer, etc... Don't you sleep at night or use a computer at all? You love changing batteries? Perhaps the problem is not with the device?

[User 226830]

Business people will not give up their crackberry for an iphone, lol.


Thats like saying businesses would give up their window based computers for macs.

Just not going to happen

[The YellowRose StreetBeat]

Businesses care about productivity, dependability, and price. Especially in tough economic conditions. Does the Iphone make employees more productive? Perhaps... however the honus is on AAPL to unseat the champ. With such a huge potential market internationally and so much money being spent on RD RIM is still in the drivers seat. The stock haircut was to be expected but at some price RIMM becomes a bargain even if you imagine the worst case scenario.... it getting close at aroung 100 a share in my opinion...

BTW for those interested google the Yellow Rose Street Beat or click on the website to the left. Many have told me the site is informative and it is fun...

[F. J. Taylor]

So many of the folks here and elsewhere on this site just don't seem to get it - listen carefully: iPhone is NOT a "smartphone" - it is the world's first mass-production hand-held mobile wireless computer, capiche?

As for the "survey" - I personally KNOW more people who are going iPhone from Blackberry, or just not buying it because of iPhone (In fact, I am one of the latter) than they even surveyed. So much for that fatally flawed survey...

A few people here made some points that would be valid in other contexts, but which seemingly don't apply to Apple - they appear to be more "Teflon" than Reagan, and as one poster pointed out, even the flaws in iPhone appear to be ignored by its large and growing fan base.
(I consider them fairly minor, but then, I am one of those guys who can change the batteries not only in their computers, but in their watches -
and I am not even the best techie in my crowd...)

As to usage of Mac vs. Windows - User 226830 - wake up and smell the coffee, man. I am a recovering DOS and Windows user, and I cans see Windows is hemorrhaging customer base at a large rate - mainly due to their self-inflicted wound of Vista, which is the best thing they ever put out - from a Mac POV, because it is driving people our way like crazy! I had an engineer buddy, an old-time bread-board days guy (even older than me!) and he told me he was switching the other day. As he said; "I waited six years for THIS????!!!!") Aren't you reading the stories from around the country and around the world about people, governments, and businesses switching from Windows to Mac or Linux? Some entire COUNTRIES in Europe are switching! A major German publisher just gave Mac an order for 12,000 computers - it is scrapping its Windows systems.

Just as iPod and iTunes took over the digital download market, and also led people to Apple and Mac, iPhone is doing the same and bound to do more. I can easily visualize a time when Apple
regains its old place - as big dog in the field. It once held 55% or more of the market.

Windows day is over, as is RIMM's. (At least RIMM produced a quality product, which is more than DOS or Windows ever was...) MS better go back to creating decent software, and forget the OS field - it is DONE!

As to Toni - you seem to be twitting some people here with your odd posts. (?) While Apple's figures are indeed not what they SHOULD be, this is due to several factors external to their worth, including the fact that some investors don't know their arse from left field about electronics, programming, etc.

There is also the fact that as you may have noticed, there has been extreme volatility in the market of late (as well there should be!), and that included tech - even profitable, well-run, and well-capitalized firms such as Apple are getting hammered along with those who deserve it. (I also think there are some people and / or groups out there who are deliberately striving to drive the price down for their own agendas...)

However, you will notice that they were above 202 not so long ago. Unless this present economic situation descends into the maelstrom (all too likely!), Apple should rise again. Of course, if things get so bad they don't - we are all in deep kimchi... except for those of us smart enough to cover our tushes with a gold disaster fund...

For those smart and lucky enough to get in at 76 as I did, and who sold part of their holdings when they were way up there (ditto) - well I made enough to more than cover my original investment, and a modest profit. I am now playing with "house money" - something I advise everyone who is investing (or gambling - same-same) to do. But I am betting that short or long term, Apple will survive and thrive. If they don't - well, I imagine some of you have seen Soylent Green - coming to a neighborhood near you soon...

And BTW, Hammertime - I understand and deeply sympathize with your position re: AT&T - thank Verizon for thumbing their nose at it - they were offered first go. I have been holding out, but am now going to hold my nose instead. (BTW, in preliminary soundings I made recently, AT&T has gotten WAY better at customer service, and extended their holdings and area coverage extensively.)

[The YellowRose StreetBeat]

Just for fun I added a survey on RIMM vs AAPL on my site. It's on the right hand side if you scroll down a bit. I have to believe the results will be at least as informative as those presented in the article...

[Apple Heavy]

"Research In Motion cut to underperform by Needham
By Michelle Donley
Last update: 9:46 a.m. EDT July 16, 2008"

says it all !!

[d.t.]

Just my 2 pennies' worth. I have a Russian background and kinda follow the news from back home.
From what I'm sensing the general sentiment in Russia is that an IPhone is only suitable for dumb blonds, and no selfrespecting male will be caught dead with it.8)
So, do I believe that an IPhone will catch on internationally, like, on a grand scale? Nah..