BlackBerry vs. iPhone: RIM takes it up a notch

Arik Hesseldahl
15 Sep 2008

Makers of the BlackBerry are stepping up efforts to court consumers. On Sept. 11, Research In Motion (RIMM) is unveiling features that make it easier for users to have access to social network MySpace (NWS). The Canadian smartphone manufacturer also plans to announce tools that let subscribers control their TiVo (TIVO) video recorders and view programming that's been saved via Sling Media's (DISH) Slingbox.

A day after T-Mobile (DT) said it will carry RIM's first flip phone, the BlackBerry Pearl Flip, the announcements indicate RIM is serious about winning new converts to the BlackBerry while defending its turf against Apple's iPhone. Apple (AAPL) introduced the music-playing handset in June 2007 and a year later released a version designed to appeal more to business users, traditionally the core market for BlackBerry. RIM has added music and video to widen the appeal of the BlackBerry beyond traders, executives, and other businesspeople who crave constant access to e-mail.

The brewing rivalry between the two brands was recently called a 'knife-fight' by Canada's weekly news magazine Maclean's and has prompted debate among analysts whether Apple's iPhone will clobber the BlackBerry or expand the larger market, to RIM's benefit.

It's not hard to tell where RIM co-CEO Jim Balsillie stands. 'They've stirred up a settled pond, and we've seen our business respond positively,' Balsillie says in an interview at his office at RIM's 22-building campus in Waterloo, Ont. 'There are some consequences, but resoundingly and overwhelmingly, it's been favorable for our business overall.' His point is that Apple's high-profile entry has drawn a lot of attention to smartphones and their capabilities, helping spur demand for devices, whatever the maker.

Loyal BlackBerry owners

Balsillie has reason for optimism. RIM has sold 40 million BlackBerrys to date. At last count, there were 16 million active BlackBerry subscriptions, so there are many loyal BlackBerry owners on their second, third, or even fourth device. An estimate by Gartner (IT) says RIM sold more than 5 million units in the second quarter of 2008.

As many as four new BlackBerry devices will become available from major U.S. carriers in the coming months. On Sept. 10, Sprint (S) announced a version of the BlackBerry Curve that works with its push-to-talk network. AT&T (T) is poised to announce its version of the BlackBerry Bold, already available in Europe and Canada. And enthusiast sites such as the often-accurate Boy Genius Report suggest that Verizon Wireless, owned by Verizon Communications (VZ) and Vodafone (VOD), will unveil a BlackBerry, dubbed the Storm, with an iPhone-like touchscreen in time for the holidays. A fourth device code-named the Javelin may also appear soon, according to sites. Balsillie wouldn't comment on the reports.

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.

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