Add to del.icio.us     Digg this

August 31, 2010

A new Sanford Bernstein study reveals that Research In Motion, maker of the BlackBerry smartphone, dropped the most in six weeks in the overall popularity index of all the various smartphones surveyed in the report.

The report also found that more and more companies are opting for rival devices such as Apple’s very popular iPhone 3GS and its newer iPhone 4, and, to a lesser extent, Motorola's Droid that runs on Google's Android OS.

Of the approximately 200 companies in the U.S. and the U.K. that were surveyed, a little less than 74.1 percent now let their employees use devices other than BlackBerrys, Sanford Bernstein analyst Pierre Ferragu said in the report.

For the U.S. alone, the number was quoted 83 percent.

Apple's iPhone and MIDs (mobile Internet devices) that are based on Google’s Android operating system are making inroads into RIM’s previous dominance in corporate mobile e-mail devices.

The European Commission, the executive arm of the 27-country European Union, earlier in August opted for the iPhone and Android handsets made by HTC Corp. over the BlackBerry, after a similar move by Standard Chartered Bank PLC.

Ferragu reiterated his underperform rating on Waterloo, Ontario-based RIM’s stock and reduced his price target to $40 instead of his previous $48 to $50 price traget.

“This phenomenon is fairly new and we expect it to put increased pressure on RIM’s performance for the next two to three quarters,” Ferragu wrote.

Some other reports also suggest that, overall, BlackBerry loyalty may be fading among bankers, lawyers and many government workers, who actually drove RIM’s initial success in the past two to three years.

Overall, about 42 percent of BlackBerry corporate users say they want to stick with the brand when they buy a new smartphone, according to an August survey by Nielsen & Co.

This makes a sharp contrast with the 89 percent of iPhone owners and 71 percent for those with Android devices that say they would buy a second iPhone or Android device if they needed one.

“The idea that BlackBerry isn’t the only alternative anymore to offer employees mobile e-mail has gone a long way,” Ferragu added. And he says he expects this current trend to continue until at least March or April 2011.

Overall, Research In Motion (RIM) stock fell $2.07, or 4.5 percent, to $43.52 at 1:29 p.m. New York time in Nasdaq Stock Market trading.

Earlier in the morning, the shares dropped as much as 5.5 percent, the steepest intraday price drop since July 16.

RIM's shares have declined some 33.2 percent this year before today, as Apple gained a little over 14.8 percent.

Two weeks ago, rumors already started flying that RIM's new Torch smartphone has had only some modest sales success so far, and the phone doesn't even come close to some of the sales projections that have been made in July.

Wireless industry analysts have estimated sales of the smart phone, which launched exclusively in the U.S. at AT&T Mobility last week, at around 150,000 units through its opening weekend. Those results paled in comparison to the 1.7 million Apple's iPhone 4 devices moved through its first three days, though some analysts think that comparison is unfair.

“So far, neither RIM nor AT&T has touted the Torch as a competitor to the iPhone,” noted Brad Akyuz, senior analyst of mobile devices at Current Analysis Inc.

He continued with “For the market it's targeting it has been successful. I don't think the device would have sold twice the numbers being mentioned had it launched at another wireless carrier. It's not a device that will make people want to leave their current mobile carrier as most people know that RIM is a "carrier agnostic" company and the device will eventually come to their wireless provider.”

RIM's stock price was trending upward last week ahead of the launch, but took a hit yesterday following the sales projections. The company's stock continued its downward trajectory today trading down more than 1.5 percent at around $50 a share.

AT&T Mobility, which has announced great success in smartphone sales, though most devices at the carrier have been overshadowed by its exclusive offering of the iPhone.

AT&T did note however that at the end of the second quarter more than half of its postpaid customer base was using what it termed “integrated devices,” or wireless handsets with a Qwerty or virtual keyboard in addition to voice functionality.

The wireless carrier also said it activated 3.2 million iPhones during the second quarter.

While the Torch's sales figures are being debated left, right and center, online retailer Amazon.com continues to price the new unit at $100 with a service contract, half the price that AT&T Mobility is asking for the phone.

Akyuz noted that the more important aspect of the Torch's launch was the unveiling of RIM's new BlackBerry 6 operating system that he said puts the company on par with competing operating systems on the market.

“The Torch isn't a revolutionary product, but an evolutionary product,” Akyuz said. “RIM has acknowledged that its user interface has lagged behind its competition, especially in the consumer space. Had the Torch and the new OS launched a couple of years ago when the Storm was released, it would have been seen as a knockout combination. Instead it's now seen as putting RIM at least on a level playing field with the other operating systems out there, which is still a good place to be.”

Regional wireless operator U.S. Cellular said it would begin offering RIM's BlackBerry Bold 9650 this week, providing the wireless carrier with a world phone that can connect with its domestic CDMA-based network as well as GSM/GPRS/EDGE/UMTS/HSPA networks internationally.

The wireless device is similar to ones offered by both Verizon Wireless and Sprint Nextel, but includes a handful of U.S. Cellular-specific applications like its contact backup offering, ringtone maker and navigation service.

U.S. Cellular did note that the device will ship with RIM's BlackBerry 5 operating system, but that it would be compatible with its BlackBerry 6 OS.

Akyuz added that the Torch is important to RIM as it keeps the BlackBerry faithful happy, especially those that might have been tempted to move to another OS.

Akyuz also said that even if sales of the Torch was considered modest by some, RIM still has a strong hold on the No. 1 position in smartphone sales in the U.S. and its approach and strong customer base will enable the Blackberry maker to continue to command a significant portion of shelf space at nearly every wireless carrier in the U.S.

In other smartphone news, Consumer Reports confirmed in June that the iPhone 4’s antenna is flawed less than two weeks after Apple said the device’s wireless performance was the best it had ever shipped, prompting the leading consumer goods rating firm to decide against recommending the device for its readers.

Consumer Reports confirms that its own internal testing reveals that if contact with a user’s finger or hand on the iPhone 4’s lower left side will cause the signal to degrade enough to lose the connection altogether in an area with a weak AT&T signal.

Add to del.icio.us     Digg this

Source: Sanford Bernstein Ltd.