BlackBerry vs. iPhone: RIM Takes It Up a Notch

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Will the new devices be enough to fend off Apple? In the workplace, RIM's BlackBerry persists in being one of the most capable devices on the market. And it's no longer just about helping people have access to e-mail. Sure it connects to Microsoft Exchange and Lotus (IBM) for e-mail, contacts, and calendars, but RIM is working on a BlackBerry-friendly customer-relationship management application with SAP (SAP). Its BlackBerry Enterprise Server now includes a voice component that connects to corporate phone systems: When the boss dials your office phone extension and you're away from your desk, you can take the call on your BlackBerry.

Still, Apple could cause RIM a headache in the enterprise. Last month reports emerged that financial and banking giant HSBC (HBC) was looking to replace its fleet of BlackBerry devices with the iPhone. HSBC later denied the reports. "Corporations are under pressure to cut their costs, and Apple and [its U.S. partner] AT&T are looking to cut deals," says Richard Doherty, head of the Envisioneering Group. "All the pieces are in place, but Apple is moving slowly." Indeed, Apple plans to build 45 million iPhone 3Gs by August 2009 (BusinessWeek.com, 8/22/08). The company sold 1 million iPhone 3Gs in the three days after its release, and some analysts say it will have sold 45 million iPhones by the end of next year.

"High-End Consumer" Appeal

And while RIM is striving to beef up the nonbusiness side of the BlackBerry—the most popular BlackBerry application is Facebook, which has been downloaded more than a million times—some analysts question its ability to grab consumers. "The BlackBerry always has and will remain primarily an enterprise play," says Richard Windsor, analyst at Nomura Securities in London. "When I hear RIM talk about consumers, I always think of prosumers, or high-end consumers. I don't expect my mother to get a BlackBerry." Even so, RIM has lately started a "Life on BlackBerry" print and TV advertising campaign, touting the device as the must-have accessory for anyone with a busy work and personal life.

Rather than a battle pitting RIM against Apple directly, Nomura's Windsor sees a more interesting fight brewing between RIM and Microsoft (MSFT). While Microsoft has lately been touting lifetime sales of more than 18 million licenses of its Windows Mobile operating system, phones running the software lagged behind BlackBerry sales in the second quarter, Gartner says. "This is primarily a clash over the enterprise," Windsor says. "As yet, Apple and RIM are two largely nonoverlapping circles that are just beginning to overlap at their edges."

The moment of the smartphone has clearly arrived. Wireless users are ditching their conventional voice-oriented cell phones from Motorola (MOT), LG, and the like for devices that can handle e-mail, music, Web browsing, and can run custom business and consumer-grade applications. Gartner says worldwide sales of smartphones hit 32 million in the second quarter and represented about 11% of all wireless phones sold. But smartphone sales in North America grew at a red-hot 78% during the period, and North Americans bought roughly a quarter of all smartphones sold in the world.

That presents a huge growth opportunity that RIM and Apple can exploit, says Rob Sanderson, analyst at American Technology Research in San Francisco. "RIM vs. Apple is interesting in terms of investor psychology," he says. "But they'll both grow. The market is gigantic and there's nothing but room for both of them to take share from the other players. The knife-fighting days between Apple and RIM are down the road."

Business Exchange related topics:
Blackberry Vs iPhone
Apple
Research in Motion
Smartphones
Wireless Communications
Tech Gadgets

Hesseldahl is a reporter for BusinessWeek.com.