Apple 2.0

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Apple, Palm seen cutting into BlackBerry sales

July 8, 2009: 2:33 PM ET

rim-blackberry-tour-sprintGrowing competition from new smartphones carved into Research in Motion's (RIMM) June sales, according to a report to clients issued Wednesday by Piper Jaffray's T. Michael Walkley.

RIM's BlackBerry still has a huge market share -- nearly 20% of the worldwide smartphone market, second only to Nokia (NOK), according to Gartner -- but Walkley's retail checks found some erosion in BlackBerry position last month.

The problem, according to Walkley, is that carriers like Verizon (VZ), Sprint (S) and T-Mobile (DT) have been soft-peddling the BlackBerries and promoting new devices from Apple (AAPL) and Palm (PALM).

In particular, Walkley's checks found that:

  • BlackBerry Curve sales declined slightly at Sprint due to "solid sales" of the Palm Pre.
  • Apple's new iPhone 3GS and the $99 price point for the old iPhone 3G "impacted" BlackBerry sales at AT&T (T), with June's numbers coming in below May's.
  • Verizon ended its buy-one-get-one-free offer for BlackBerries last weekend and Walkley's checks indicate slightly slower BlackBerry sales and more action in the LG department, where Verizon started a similar promotion for their devices.

Walkley doesn't see consumer interest in the iPhone or Palm Pre going away any time soon, and he sees more competition coming down the road. In August, T-Mobile is scheduled to roll out the G2 -- the latest phone based on Google's (GOOG) Android platform -- and there are more smartphones due in the second half of '09 from LG, Nokia, Motorola (MOT) and Samsung.

The one bright spot in RIM's near future, says Walkley, is the launch of the BlackBerry Tour, due out later this month. He thinks it will do quite well.

"In fact," he writes, "we expect the Tour will sell very well to Verizon's installed BlackBerry subscriber base, as this is Verizon's first product that is competitive with the Bold at AT&T. Sales of the Tour are key in our opinion, as our checks indicated RIM may need strong July and August sales to meet its guidance."

If so, RIM cannot be pleased with the early review of the Tour that appeared Wednesday morning in Silicon Alley Insider.

"It's a solid gadget that any plastic-keyboard-addicted BlackBerry devotee should consider upgrading to. The screen and browser are especially nice compared to older BlackBerry models like the Curve," writes SAI's Dan Frommer. "But after a year on the iPhone, setting up a new BlackBerry was like figuring out a puzzle. It shouldn't have to be.

"Setting up email, for instance, was a 20-minute pain -- versus a 2-minute breeze on the iPhone. If I weren't a relentless nerd, I would have had to contact customer service to figure it out, wasting Verizon's time and money."

It gets worse. To read Frommer's full review, click here.

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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