Cool reception

Unlike last year, Research In Motion (RIM) investors kept their cool last week as smartphone rival Apple held court to deliver the much-hyped new version of its iPhone.

Their measured response to Apple's introduction reflects the perception that iPhone's threat is too easy to exaggerate.

Even though the 3G iPhone is better-equipped than the original version to appeal to corporate users, Apple is unlikely to present an inexorable challenge for the customer base RIM's BlackBerry has held so firmly since its introduction, analysts say.

On price, RIM should be able to compete with iPhone when it launches its own third-generation device, the BlackBerry Bold, later this year. At $199, the new entry-level iPhone has established what one analyst called "the new price point" for smartphones that every serious competitor will match.

The iPhone will probably broaden Apple's user base. But even so, the Bold should surpass two of the iPhone's most coveted features: faster wireless Internet and new business software.

With RIM shares rolling along virtually unaffected the last few days, and Apple bouncing back from a drop on Monday, the real question now is how much market share the smartphone leaders can take from their larger cellphone rivals.

"The trend is not so much RIM against Apple - I think there's enough room for both of them to prosper," says Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

"It's more the smartphone market increasing at a greater rate than the traditional cell phone manufacturers."

Citigroup Global Markets analyst Jim Suva calls the $199 price tag on the 8-gigabyte iPhone "very competitive versus RIM offerings". RIM currently has a few models that are cheaper and others, like BlackBerry's 8800 series, that are more expensive in the so-called 'smartphone' market of advanced phones with computer-like features. RIM's Bold is yet to be priced.

Smartphone marketers will likely follow the business model Apple presented last Monday in San Francisco: Instead of paying Apple part of the subscription fee, wireless network companies will subsidize the devices up front to make them cheaper.

"Smartphone pricing in general will never be the same," says Peter Misek, global technology strategist at Canaccord Adams. "Going forward, you're going to see (wireless) carriers price BlackBerrys much lower."

IPhone's aggressive pricing could put more pressure on other competitors such as Palm's Treo, analysts say.

In the midst of all the fanfare, RIM shares rose about 2 percent last Monday and were up again the next day as investors judged BlackBerrys to be well-entrenched in the corporate cultures of large companies.

One important reason: business users rely heavily on their smartphones for e-mailing - and iPhones do not have a keypad, instead featuring touch-screen technology. That may turn off some heavy e-mail users.

A second reason is the download speed. Canaccord's Misek says RIM's new Bold will download websites in about a quarter of the time needed by the iPhone.

Nick Agostino, analyst at Research Capital, says it is far from inevitable that the BlackBerry will lose business market share to the iPhone.

"The 3G aspect will be no different than what RIM will be doing with the Bold," Agostino says. "Does it make a difference for the business user? I would say no."

Indeed, the iPhone threat largely fizzled after the original version was introduced early last year, when Apple CEO Steve Jobs said it would eventually surpass the BlackBerry, and RIM shares took a dive.

A recent report from IDC showed BlackBerry increased its share of the US smartphone market in 2008, while iPhone lost ground.

RIM's share rose from 35.1 percent in the fourth quarter of last year to 44.5 percent in the first quarter of this year, while Apple fell from 26.7 percent to 19.2 percent.

Palm had 13.4 percent, Samsung held 8.6 percent, while top US phone-maker Motorola had just 2.6 percent of the market.

"It's RIM's game to lose in the business area," says Nakamoto.

Agencies

(China Daily 06/16/2008 page11)