TD Newcrest on iPhone threat
Here’s what our friend, Chris Umiastowski (hardware analyst at TD Newcrest), had to say today about RIM/Apple:
“Apple has confirmed a long-rumoured attempt to extend the success of the iPod into the mobile phone arena. The iPhone certainly appears to be a very unique and very slick device that we believe a lot of people will want. It is clearly a consumer-targeted offering, and we’ve learned not to underestimate Apple’s prowess in the consumer market. RIM, on the other hand, does the vast majority of its business in the enterprise market. So does Apple’s latest device threaten RIM? In our December 12 report entitled “Could an iPhone Hurt BlackBerry Demand?”, we concluded that the iPhone would only reduce BlackBerry device demand from what we believe to be a minority of Pearl customers who do not care about messaging, and who only
purchased the Pearl because it was the “latest hot phone”. We see no reason to reach a different conclusion, even after absorbing all of the new information presented yesterday. Our view of there being relatively little risk to BlackBerry demand remains intact, with the obvious attractiveness and rich feature set of the iPhone offset by what we view as notably high-end pricing.
iPhone Email: With support for IMAP and POP3 email (Yahoo! Mail, Gmail, etc.), Apple is, in our view, offering what amounts to tablestakes when it comes to consumer email solutions. The Pearl offers these options and more and we believe that the Pearl wins out over the iPhone on the messaging front, hands down. This shouldn’t come as a surprise given the Pearl’s BlackBerry pedigree. And despite Steve Jobs’ claim that the iPhone’s software-andtouchscreen-based QWERTY keyboard is superior to conventional fixed (plastic) QWERTY keyboards, we’re going to reserve judgement until we have a chance to try it out for ourselves.
iPhone Pricing: Apple has priced the iPhone at $500 for the 4GB model and $600 for the 8GB model, each with a two-year contract at Cingular. These price points are higher than we had expected. With a 4GB iPod Nano and a 30GB iPod with video playback currently selling for approximately $200 and $250, respectively, Apple would appear to be assigning a $250 to $300 market value to the smart phone aspects of the device (cellular radio, added software, etc.), with no discount for a combined form factor. For comparison, as the smart phone device market has become more crowded, prices have fallen from the $300 level down to $200 (on average) and even $100. Despite Apple’s noted ability to command a premium for its products, with the smart phone market as competitive as it is, we’re skeptical that Apple will be able to sustain the iPhone pricing as indicated yesterday.
iPhone Availability: Apple indicated that the iPhone would be available in Jun/07 in the U.S., in Q4 in Europe, and in 2008 in Asia. Apple has a reputation for immediate availability of a product once announced but chose to unveil the iPhone early in order to, paraphrasing Apple’s CEO, “avoid the FCC announcing it” for them. The question is, how big a shadow will the iPhone cast over the mobile phone industry in the run up to its summer debut? In our mind, there’s no doubt a considerable number of consumers will delay purchase of an otherwise available (and cheaper) phone in favour of waiting it out (and saving up) for the iPhone. How will this affect RIM? Read on.
The iPhone is not an enterprise device. We can’t emphasize this enough. RIM does the majority of its business in the enterprise market, and we expect the iPhone to have an extremely difficult time finding traction here. BlackBerry as an enterprise solution is unrivaled, and we expect the near-term introduction of another enterprise-friendly full-QWERTY BlackBerry device (based on the Pearl platform) to continue driving growth.
(You may have seen the pictures of this device that were leaked into the blogosphere last week much as we did.) In the consumer market, we believe that Pearl will continue selling well to customers concerned primarily with messaging capabilities. Although we believe there will be potential Pearl buyers instead turned on to the iPhone as the “latest hot device”, we believe this is to be a minority of buyers, minimizing any impact to RIM.”
Hats off to Chris. He called this one right on the money.