Sponsored By:

Apple iPhone no Threat to RIM, Analysts Say

March 06, 2008


Financial Post.com
By David George-Cosh

If investors are expecting the new iPhone features Apple Inc. (AAPL) will be announcing today to dramatically heat up the smartphone war with BlackBerry maker Research In Motion Ltd. (RIM/TSX), analysts agree they will be sadly mistaken.

It has been widely reported that the enterprise-friendly applications Apple is set to release today will send a clear message to RIM that its not the sole operator in the corporate smartphone market. While that may be true on some level, Apple's rumoured support with Microsoft Exchange and Lotus Domino for e-mail connectivity is not mature enough to compete with RIM's robust and secure end-to-end messaging service.

"Apple will probably unveil some features that we consider to be catalysts to iPhone momentum both on consumer and on the business side, but I don't think those features are a threat to RIM's franchise," said RBC Capital Markets analyst Mike Abramsky.

Although both companies compete within the smartphone industry, Apple's products have generally been geared toward the lucrative yet fickle Main Street market, whereas RIM's BlackBerry is a must-have productivity tool for the business world.

"At this point, the real challenge is that the iPhone essentially offers no support whatsoever for corporate e-mail," said Duncan Stewart, president and CEO of Duncan Stewart Asset Management Inc. "They can't get it great, they can't get it perfect, but they can get it so it is not an absolute horror with corporate e-mail."

A survey released this week by Rockville, Md.-based ChangeWave Research on corporate IT spending indicates RIM continues to maintain its expansive lead over the rest of its rivals in the corporate smartphone market, with 73% of respondents noting they have or will invest in a RIM product within the current quarter. That figure rises to 77% in the next quarter.

As offerings from Palm and Motorola fail to resonate with users, the reports finds Apple is taking advantage of the hole in the market and sees the iPhone's influence growing in the corporate world. The Cupertino, Calif.-based company will experience a sharp boost in IT spending within the next quarter, rising to 11% from 6% and landing it in second place in terms of planned purchases behind RIM.

"There is no question that the $50-per-month Black-Berry fee and more available Wi-Fi hotspots are starting to affect corporations into thinking they can do [business] cheaper with an iPhone," said Tobin Smith, founder and editor of ChangeWave Investing.

The iPhone might make a significant splash within the small-to-medium business market, Mr. Abramsky said.

Financial Post.com