The Verizon iPhone: Good for Apple, bad for RIM

January 14, 2011: 11:56 AM ET

Even if iPhone on the Verizon network isn't revolutionary, it is another straw to break the back of IT departments reluctant to move away from BlackBerry, the entrenched but embattled favorite device of big corporations everywhere.

The Verizon iPhone

The Verizon iPhone

iPhone or BlackBerry? It's a question an increasing number of IT departments ask their employees. Come February, when the iPhone launches on Verizon Wireless' CDMA network, it's likely even more corporate users will be able to choose between Apple's touchscreen and the email-centric BlackBerry.

That doesn't bode well for BlackBerry maker Research in Motion (RIMM), which has been losing steam as the iPhone -- and Android devices -- have gained market share. Just look at these recent smartphone numbers from comScore: In the three-month period ending November 2010, Apple (AAPL) added 0.8 percentage point of market share while RIM's share declined by 4.1 percentage points. And RIM's losing streak doesn't stop with smartphones. It's also behind in tablets -- by the time its PlayBook comes out, the iPad will have been on the market for over a year.

Over the last few years, RIM has tried seducing consumers away from the iPhone with new form factors like the Pearl and the Torch, a shiny touchscreen with a slide-out QWERTY keyboard. (On Thursday leaked images of RIM's latest creation, named Dakota, emerged). But despite its best efforts, the new lineup has failed to wow customers the way the iPhone does, even all these years after it first launched.

And things aren't likely to get better for RIM anytime soon.

A recent report from UBS (UBS) analyst Maynard Um predicts that the Verizon (VZ) launch could double iPhone sales in the United States. Most of those sales will be direct to consumers, but Forrester Research analyst Ted Schadler says the move to Verizon also gives IT departments another reason to support iPhones.

"Mobile service provider choice is important on smartphones and tablets, both to provide good network coverage to employees and also to keep competition high hence prices low," Schadler wrote in a recent blog post. "AT&T Mobility's lock on iPhone in the US was one reason some firms have been reluctant to support iPhone."

A lot has changed since the iPhone was unveiled in 2007. Back then, few people believed corporate customers would ever embrace a consumer device. But in 2008, Apple began adding business-friendly features like support for Microsoft Exchange. Then, in 2009, it introduced "Find my iPhone," a feature that locates and remotely wipes or locks a stolen or lost device. Gradually, companies started warming up to the popular touchscreen. Fast forward to 2011, and even security-conscious financial services enterprises like Citigroup (C) now offer employees iPhones, in addition to BlackBerries. And you can expect plenty of companies to add the Verizon iPhone to their list of approved devices – Cisco Systems (CSCO) has already told FORTUNE it plans to.

Of course, there are still many die-hard CrackBerry addicts out there. But so far, RIM hasn't come up with a solution to its decreasing market share. And in addition to wooing customers, it also needs to keep developers interested in its BlackBerry platform (earlier this week the company announced that anyone who downloads its software development kit for tablets by March 15 would get a free PlayBook).

So here's the bottom line: RIM's Full-QWERTY keyboards, security features and corporate email know-how are no longer enough to fight off Apple's entry into the enterprise market, especially now that the iPhone is no longer tied to AT&T. Too bad the BlackBerry can't benefit from a Verizon bounce -- unlike Apple's iPhone, it's been available on the nation's "largest and most reliable network" for years.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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