Apple’s (AAPL) new iPhone 3G is hot — and Wall Street is starting to wake up and realise that’s not good news for its main rival, BlackBerry maker Research In Motion (RIMM).
Needham analyst Charlie Wolf slapped RIM with a downgrade this morning — from “hold” to “underperform” — and cut his estimates.
Why? “Sales of Apple’s iPhone 3G appear poised to blow through everyone’s forecasts,” Wolf wrote in a research note summarized by Barron’s. “While RIM’s dominance of the enterprise market appears secure, at least for now, the company’s great growth driver — the consumer market — is bound to come under siege because of the iPhone.”
We agree. The smartphone market is growing fast, and there will be enough room for both RIM and Apple. But Apple’s threat to RIM is very serious:
- It’s making inroads with RIM’s most important customers — big corporations — with new phones and software that connects to Microsoft’s (MSFT) Exchange email/calendar servers. Enterprise customers will be hard for Steve Jobs to win, but any Apple gains are RIM losses.
- RIM increasingly relies on consumers for growth. “Non-enterprise” customers accounted for 40% of RIM’s customer base during Q1 and 60% of its growth. And now that the iPhone is as cheap as $199, Apple is going to play a huge role in the consumer smartphone market this year.
RIM’s likely response: iPhone lookalikes like the touchscreen “Thunder,” coming later this year to Verizon. But Wolf says these gadgets “have no hope of matching the secret sauce of the iPhone — the tight integration of hardware and software that creates a unique user experience. Nor do they have any chance of evolving into an application development platform like the iPhone.”
Wolf cut his 2008 EPS estimate to $3.70 from $4.05. He also sliced his 2009 EPS estimate to $4.80 from $6.25. So far, the market is shrugging Wolf off. RIM opened down 1.7% this morning but is now trading up 2.6% at $108.60.
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