Does RIM have right tone to stall iPhone?

Chris Sorensen
Business Reporter

Jim Balsillie, co-CEO of BlackBerry maker Research In Motion Ltd., now has evidence to support his contention that Apple Inc.'s much-hyped iPhone is not the threat it was initially made out to be.

However, at least one analyst is warning that Apple's wireless ambitions are not to be underestimated over the long term.

A recent survey conducted by the NPD Group found U.S. buyers of the iPhone – essentially a cellphone, iPod and Web browser rolled into a touch-screen device – were 10 times more likely than other phone buyers to have previously owned a Palm Treo, and three times more likely to have owned a T-mobile-branded device such as the Sidekick, which also offers a full keyboard and large screen.

By contrast, the survey of more than 13,000 mobile-phone customers found that iPhone buyers were no more likely than the average buyer to have previously owned a BlackBerry, suggesting that the iPhone's snazzy interface and "lifestyle"-focused features have so far held less appeal for the business-oriented BlackBerry crowd.

Ross Rubin, the director of industry analysis at NPD, attributed the finding to the fact that many companies emphasize the need for secure wireless email, something that was not initially offered with the iPhone, and are likely to already be running the Microsoft Exchange server that is supported by the BlackBerry wireless email system.

"It may also have something to do with users being accustomed to, or preferring, a physical keyboard, although we saw an unusually large number of Treo users switching to the iPhone," Rubin said.

RIM's business has gone into overdrive in recent months and so far appears to have been unaffected by the June launch of the iPhone, which sold more than one million units in less than three months. Waterloo-based RIM is adding more than a million new subscribers each quarter as it muscles its way into the consumer market.

Nevertheless, some analysts warn that Apple, which has not yet struck a deal with a Canadian wireless carrier to offer the iPhone here, should not be counted as simply a niche player in the cellphone game.

Andrew Neff, an analyst at Bear Stearns, argued in a research note this week that CEO Steve Jobs has become increasingly focused on market leadership and anticipating where Apple is heading as opposed to what it offers today. He cited Apple's decision to partner with only one wireless carrier in each market – a move that was initially criticized for limiting the company's potential sales.

"In our view, it was a breakthrough move that has changed industry economics by shifting power away from the carriers," he wrote, referring to the arrangement Apple struck with AT&T Inc. that forces consumers to activate their phones via Apple's iTunes website and gives Apple a cut of monthly subscription fees.

As for RIM, Neff said his firm's most recent survey showed BlackBerry users were beginning to buy iPhones, which he said is actually better understood as a portable personal computer.
Link