I wrote a post back in December of 2008 hypothesizing that iPhone sales would be somewhat driven by the recession. I should have said consumer smart phone sales would be driven, but I must have been too enamored with my iPhone. In any case, I feel that a large portion of the force behind increased consumer smart phone sales is that businesses are reducing costs.
Prior to the recession my company handed out Blackberrys to anyone with the slightest justification. Now, however, we are pulling those back for anyone without stringent justification. These people have become accustomed to having the capabilities of a smart phone in their pocket, and those who can afford the luxury are purchasing their own. My company is also pulling back regular cell phones, and this is putting more consumers in the market for phones in general. And, naturally, a certain percentage of these consumers will opt for a smart phone.
I think that Blackberry is catching more of this segment than Apple for a couple reasons. First, former business users know Blackberry and are comfortable with them. And secondly, Verizon doesn't carry the iPhone. I have spoken to numerous people who will not get an iPhone simply because they would have to switch to AT&T. If they are concerned about not getting a signal in rural America, then they are on to something. My wife had to go to Coshocton Ohio, and I went with her. Nowhere in the area did I have any sort of signal, not even a WiFi hotspot. She was fine on her Verizon phone. We were even able to get directions on her phone.
You will notice that I did not mention RIM as being a reason for it's own late success. The company had a great innovation that helped change the cellular landscape, but I don't think that they have done anything truly innovate since introducing the BlackBerry. They are now introducing phones that appear to just be re-branded copies of other successful products. They have a flip style phone, and of course the click-screen Storm.
In my eyes the Storm is a terrible knock off of the iPhone, it doesn't even have WiFi. No WiFi is a deal breaker for me. In fact, if a phone lacks WLAN capabilities, then I don't consider it a smart phone. It ties a person into using a cellular network. For anyone who has traveled outside of the United States and knows what international usage fees are should immediately understand this. My iPhone is more than a cell phone, it is a home Internet device that works off of my home wireless network. I am not certain that RIM understands my perspective on this, even though they do have some phones that offer WiFi.
Blackberry seems to be turning what they have into a sort of commodity, or they are at least competing with other commodity phones. As an investor I don't like to invest in companies that have a commodity type product, especially in the technology sector where a lot of a company's profits must go into developing the next product. From my perspective, Blackberry is heading for a long tail. Motorola and Nokia were once great cellular innovators, but they became complacent and others took them over in the market. I see a parallel with Blackbery.
So, as some are cheering the recent successes of Blackberry, I see the beginning of a long downward trend. I could be wrong, and that is alright with me, but you won't see me investing in RIM anytime soon.