While Apple (AAPL) is the smartphone technology leader, it is not the sales leader. Importantly, it’s still trailing BlackBerry maker Research In Motion (RIMM). This is a platform land grab, so sales and market share count.
During the three-month period ending in February, RIM shipped 7.8 million devices, or an average 2.6 million per month. During the three-month quarter ending in December, Apple shipped 4.4 million iPhones, or an average 1.5 million per month. The periods don’t overlap beyond the crucial month of December, but it seems RIM could be outselling Apple by about 1 million devices per month.
This isn’t because RIM is selling to corporations while Apple is selling to consumers: RIM says 70% of its new subscribers were “non-enterprise” last quarter, and consumers are now half of its total subscriber base. RIM and Apple are largely going after the same customers, meaning many BlackBerry buyers are choosing RIM over Apple.
How can Apple improve its position?
Sell the iPhone with more carriers, especially in the U.S. AT&T (T) has been a decent launch partner for Apple, but it’s time to unwind that exclusive deal. The iPhone sells well despite AT&T and its unreliable 3G network, not because of it. (Especially pokey in New York and San Francisco, where there are a lot of iPhones.)
The fact is that millions of people have chosen other carriers since the iPhone went on sale, so if Apple wants to maximise sales, it needs to sell its phones with as many carriers as possible. Preferably sooner than later as good competitors like Palm’s (PALM) Pre come to market.
Negotiate cheaper service packages with carriers so more people can afford iPhones. AT&T loves the iPhone because it means that subscribers have to spend $70 minimum per month on service — plus text messages — 50% or more above the average. But there’s only so many people who can afford that. Ideally, carriers could offer a “lite” package that’s less expensive, or more affordable family plans. But they probably won’t be in a hurry to do so.
Apple is helping itself here already: Its “push” real-time alerts system, coming this summer, will make it easier for iPhone owners to send instant messages. That could help many avoid getting ripped off as badly on SMS text messages. (And could encourage people to peer-pressure their friends into buying iPhones so everyone has the same messaging apps.)
Potentially offer an iPhone with a slide-out keyboard. We shot this idea down when we first heard about it, and the iPhone 3.0 software update will make virtual typing easier for email and text messages. But it might actually make sense. There are still many people out there who want a physical keyboard, and will buy a BlackBerry instead of an iPhone to get one. It’s possible that the iPhone 3.0 accessories kit will allow someone to make a great third-party keyboard so Apple doesn’t have to. (Steve Jobs notoriously dislikes buttons.) But this concept illustration of an iPhone with a slide-out keyboard looks enticing.
Make iPhone email better. This is starting to happen with the iPhone 3.0 software, including email search. (Bonus: iPhone calendar is getting better, too.) But email is where RIM is still much stronger than Apple. There’s still plenty to be desired, including a unified inbox, more “push” compatibility, etc.
That’s a good start. Other improvements like background app processing could help down the road, but we don’t think many people are snubbing Apple for RIM just to run the Pandora app in the background.
To be sure, Apple is definitely kicking RIM’s butt in terms of profitability, user experience, customer satisfaction, app platform, and hardware and software design. And RIM had the benefit of a buy-one, get-one-free promotion to juice its February quarter shipments. But this is a game Apple can and should win — and right now, it’s not.
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