Research In Motion's 3G Counteroffensive
Apple and RIM's Smart Phone Arms Race Escalates
August 4, 2008
Two weeks before the new Apple 3G iPhone was released, a ChangeWave consumer survey showed it was likely to have a tsunami-like impact on the smart phone market. We all know what happened next - an extraordinarily successful 1 million units sold in the first weekend.
But what does that mean for current market share leader Research In Motion (RIMM)?
First, our survey showed the 3G iPhone had catapulted Apple (AAPL) into the lead in terms of planned consumer smart phone purchases for the next 90 days. But remember that RIM and its BlackBerry have a gigantic lead in the corporate smart phone market. Plus, RIM (42%; unchanged) is also the leader among current owners in the consumer market.
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Yet despite its current lead in both markets, RIM isn't taking the Apple 3G challenge lying down. The Canadian manufacturer has multiple plans in motion to counter Apple's momentum among consumers, including an already announced new product release (the Bold) and two likely additional product releases (the Thunder and Kickstart).
To get a sense of the market potential for RIM's new smart phone arsenal, we surveyed 3,567 consumers on their reaction to the new RIM counteroffensive. The survey was conducted in the aftermath of the Apple 3G announcement (June 17-23), but before the new iPhone model was released.
Preparing For Multiple Battles
Consumer respondents were presented a brief description containing key features of RIM's new smart phone models, along with a follow-up question asking them how likely they were to buy each model if and when it becomes available.
As the following chart shows, the new RIM releases each show considerable potential among consumers once they actually get into the marketplace.
The Victors and The Vanquished
Our recent surveys show Apple and RIM on a clear collision course in the consumer smart phone market, as the three new RIM phones get set to counterattack the market assault from the Apple 3G iPhone.
And while the current survey shows the new RIM releases have considerable potential, the real test is how satisfied consumers will be with their new BlackBerries once they hit the market.
We will, of course, closely measure the initial reaction once consumers have their new BlackBerries - and if it turns out that the initial reviews on RIM's new releases aren't great and consumer satisfaction goes down, then RIM will almost certainly receive rough treatment from the Street.
But to date, the strength of our early survey results on the demand for RIM's new products points to a powerful counteroffensive in the making by the Canadian manufacturer.
The real losers here will most likely be the second-tier players, who could find themselves increasingly pushed to the sidelines as the two Goliaths battle for market dominance.
To find out which manufacturers are most at risk because of the RIM counteroffensive, we took a close look at the impact of the new RIM releases on the rest of the industry.
Not surprisingly, current RIM customers are two-to-three times more likely to buy the new RIM models than the customers of other manufacturers. But we found the new releases also have significant potential to lure away customers from other manufacturers - with Palm (PALM), Motorola (MOT) and Samsung coming in as the top victims.
Apple customers, on the other hand, appear least likely to buy any of the new RIM phones.
As the old adage goes, to the victor goes the spoils - and by the looks of things, Apple and RIM are both victors. The Apple iPhone has captured the hearts and minds of its user base, and so has the RIM BlackBerry. Fortunately for both, the global consumer and enterprise smart phone markets are big enough to support both Apple and RIM - it's the other cell phone manufacturers that look like the real losers.
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Jim Woods co-wrote this article.
Related ChangeWave Smart Phone Articles
--Research in Motion vs. Palm - A Comparison...(July 29, 2008)
--Apple Ups The Ante With 3G iPhone...(June 9, 2008)
--Research In Motion Blows Away the Competition...(June 3, 2008)
--iPhone vs. BlackBerry: Which Do Consumers Love Most? (April 29, 2008)
--Smart Phone Wars: Apple vs. RIM vs. ...the Android Operating System? (April 1, 2008)
--RIM Dominates the Corporate Smart Phone Market (February 26, 2008)
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Posted by Paul Carton on August 4, 2008 1:04 PM
Comments (5)
I feel that this is an excellent article and very good data and analysis. I have invested in both RIM and AAPL. What do you think about the Credit Suisse report on a down grade of RIM? I do not understand the thinking of some analysts, but I do believe there is more than meets the eye and there is an ulterior motive. I believe that analysts should be accountable for their prediction! By that I mean, they should report the facts and leave the decision to the investor to decide. No one should be allowed to predict the value of a stock, because no one can possibly be right. I find it ridiculous to see the majority of analysis shows what you have proven, yet one negative comment sends a stock reeling. Both Apple and RIM are well managed companies making money and these stocks go down. Some financials are losing less than "expected" so their share price go up. Jeesh, gimme a break. With this type of "desperate speculation" in investing, no wonder the American System falls apart so frequently...the guys (large investment organizations) behind the scenes should be making billions! Thanks for the opportunity to comment.
Posted by Saied M | August 5, 2008 11:43 PM
Posted on August 5, 2008 23:43
I have owned Blackberries for 3 years now and I do not get the ease of operation shown by the iPhone in its commercials. They look fast, sleek, sexy, and quickly transfer from one web site to another, one pic to another, one tune to another. You get the point. Few people talk about their Crackberries.
One of these days we will see commercials pitting the IPhone against the Curve, Thunder, whatever. I hope Blackberry comes up with a product that has more appeal than the Windows guy and his associated products. If they do not, I will change camps.
Posted by John | August 11, 2008 8:09 PM
Posted on August 11, 2008 20:09
I have two Blackberry curves and one developed a problem with the plug-in port, after only two months. RIM said they would not cover it under warranty because it was mishandled. I've had phones and cameras with similar plug-ins for well over 10 years without any faults. It must be happening a lot because my service provider knew right away what the problem was and it was not covered. Poor quality and not standing behind their product will get RIM as time goes on.
Posted by Rick | August 12, 2008 6:48 AM
Posted on August 12, 2008 06:48
Good article that addresses the U.S. market for smartphones and how RIM's new 3G offerings may perform.
Towards the end of the article "global" consumers and enterprise customers are mentioned; consequently, the article neglects to mention the largest global player in 3G smartphones - Nokia.
Nokia shipped 15.3M smartphones in 2Q08 - alone, which represented approximately 40% worldwide smartphone unit market share.
Posted by Martin | August 12, 2008 10:45 AM
Posted on August 12, 2008 10:45
The excitement over the 3G Apple iPhone is tempered by the unacceptable battery life of this phone. With all the technology available to Apple it is unbelievable that they did not pay enough attention to this most important function of the phone. "Battery Power". It goes beyond disappointment. It triggers regrets about having made the investment in this instrument. All the desirable features of the phone are rendered useless without power.
Posted by Mario R | August 14, 2008 8:19 AM
Posted on August 14, 2008 08:19