The Blacker the Berry, the Smaller the Market Share?

As if on cue, JPMorgan Said to Test IPhone for E-Mail as More Bankers Bypass BlackBerry the day after I give my nth warning
that Research in Motion’s healthy fundamental snapshot taken at any
given moment belies a serious structural flaw in its business model.
It’s losing business opportunities and market share at a very rapid clip
and a forensic examination
of its reporting makes this fact painfully obvious. Of course, the lazy
investor simply sees increasing revenues, and then declares the stock
to be cheap since the price is going down. Thank goodness
BoomBustBloggers are far from lazy. I’m going to skip the “I told you
so” this time around for all those non-believers.

From Bloomberg:

Sept. 10 (Bloomberg) — JPMorgan Chase & Co. may soon let employees use iPhones for corporate e-mail, making it an alternative to Research in Motion Ltd.’s BlackBerry at the bank for the first time, two people familiar with the situation said.

JPMorgan is testing the Apple Inc. device and smartphones based on Google Inc.’s
Android software, said the people, who didn’t want to be named because
the plans haven’t been made public. The bank is the second-largest in
the U.S. by assets and has about 220,000 employees worldwide.

UBS AG,
Switzerland’s biggest bank, said it is also considering allowing its
staff to use iPhones for company messaging as more of them opt for the
Apple product. UBS has more than 63,000 employees.

Apple and Google are making inroads
in RIM’s traditional stronghold with corporate customers, after their
devices first caught on with consumers. Standard Chartered Bank Plc said in May it’s switching from the BlackBerry to the iPhone for employees and expects to have 15,000 distributed by year-end.

“This phenomenon is very new and we expect it to put increased pressure on RIM’s performance,” said Pierre Ferragu, an analyst at Sanford C. Bernstein Ltd. “BlackBerry isn’t the only alternative to offer employees mobile e-mail.”

RIM rose 35 cents to $45.02 yesterday
in Nasdaq Stock Market trading. The stock had lost a third of its value
this year before today as Apple climbed by a quarter.

… JPMorgan would not buy iPhones or
Android phones for employees, as it now does with BlackBerrys. Rather,
the bank would allow employees to use the devices to send and receive
corporate e-mail if they make the purchase themselves, the other person
said.

Damn! You know its bad when customers would rather pay
for your competitors product rather then get yours free! That means its
not even about price points and margin contraction. In some markets, the
Blackberry is dead in the water!

RIM’s
share of the global smartphone market slid to 18.2 percent in the
second quarter from 19 percent a year earlier as customers opted for
rivals’ phones with larger screens and more applications, according to
researcher IDC. Apple’s share rose to 14.2 percent from 13 percent,
while Android surged to 17.2 percent from 1.8 percent.

Apple
said in July that more than 80 percent of the Fortune 100 companies are
deploying or testing the iPhone… More companies are set to follow suit,
according to an August survey done by Sanford Bernstein. Of 200
companies polled in the U.S. and U.K., 74 percent now let their
employees use devices other than BlackBerrys, the research showed. For
the U.S. alone, the figure was 83 percent.

…Cost savings and employee preference
were the two biggest factors cited by companies for the shift in the
Sanford Bernstein survey. Employees would rather own an iPhone and are
increasingly willing to buy the device themselves, which helps cuts
costs as companies look to rein in spending, said Sanford Bernstein’s Ferragu.

So, how does RIM counter this? There is only one way to do so
and the window of opportunity is just about shut, and that is to come
out with a competitive product. We all want a bigger screen, with a
faster processor, more storage and more features. My personal and
business phone has a 4.3 inch screen with a screaming processor. The
form factor can fit a 5 inch screen with a little intuitive engineering.
Why hasn’t RIM produced such a product already? The answer is that RIM
management has lost the pulse of its constituency, hence it is actually
losing said constituency!

Other research suggests BlackBerry loyalty may be fading among the bankers, lawyers and government workers who drove RIM’s
initial success. About 42 percent of BlackBerry users say they want to
stick with the brand when they buy a new phone, according to an August
survey by Nielsen Co. The rate is 89 percent for iPhone owners and 71
percent for Android devices.

For those who haven’t yet, delve deep into my Research in Motion
research and analysis, as well as my entire series on the Mobile
Computing Wars. This may be just about as big as the Internet, yet many
seem oblivious to it. First, the BoomBustBlog scoop on the Bloomberg
article above, complete with much more supporting data: Despite What May Appear to Be Strong Fundamentals RIMM Is In Trouble, Look Past the Present and Into the Future. This is what the stock and the front month puts look like since the article was published yesterday.

I urge subscribers to dig deep into the valuation and market share
models that I have provided (see subscription content links below). I am
available to discuss this in the subscriber discussion forums (see
links in the user menu in the left hand side of BoomBustBlog) if anyone
wants to kick off a deep dive discussion.

Previous Research in Motion commentary

• BoomBustBlog Research Opinion Hits the Mainstream Media, Sort Of…
• As I Have Anticipated, There is Absolutely No Fire in the Torch, Except for the One That’s Frying RIMM’s Share Price
• After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play
• RIM Smart Phone Market Share, RIP?
• This Quarter Offers a Lot of Challenges for Smart Phone Vendors with Fruit in Their Names!
• Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion
• The BoomBustBlog Multivariate Research in Motion Valuation Model: Ready for Download
• As
  Research in Motion Continues Its Inevitable Downward Descent In
  Both Equity Value and Market Share, Investors Should Tweak Their
  Assumptions Accordingly

Subscription content (click here to subscribe):

• RIMM Forensic Analysis and Valuation – Professional & Institutional
• RIMM Forensic Analysis and Valuation – Retail
• RIMM Multivariate Valuation Model
• Smartphone Market Model – Blog Download Version – all paying subscribers
• Mobile Operating System Market Share Model – all paying subscribers

More on the Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars!

1. There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All
2. The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift
3. An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught
4. Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet
5. This article should drive the point home: An iPhone 4 Recall Will Hurt Apple More By Opening Additional Opportunity for Android Devices Than Increased Expenses
6. A First in the Mainstream Media: Apple’s Flagship Product Loses In a Comparison Review to HTC’s Google-Powered Phone
7. After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play
8. RIM Smart Phone Market Share, RIP?
9. Android is gaining preference as the long-term choice of application developers
10. A Glimpse of the BoomBustBlog Internal Discussion Concerning the Fate of Apple
11. Math and the Pace of Smart Phone Innovation May Take a Byte Out of Apple’s (Short-lived?) Dominance
12. Apple on the Margin
13. RIM Smart Phone Market Share, RIP?
14. Motorola, the Company That INVENTED the Cellphone is Trying to Uninvent the iPad With Android
15. Android Now Outselling iOS? Explaining the Game of Chess That Google Plays in the Smart Phone Space
16. There
    Goes Those Fancy eBook Aspirations from Apple, Barnes and
    Noble, and Amazon: 100,000’s of FREE eBooks from the Public
    Library
17. How
    Google is Looking to Cut Apple’s Margin and How the Sell Side
    of Wall Street Will Enable This Without Sheeple Investor’s
    Having a Clue
18. Empirical Evidence of Android Eating Apple!
19. More of the Android Onslaught: Increasing Handset Revenues and Growth
20. Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion
21. The BoomBustBlog Multivariate Research in Motion Valuation Model: Ready for Download

Comments

[bugs_]

Blackberry can convert - it can embrace open.  It should.  It would be a higher form of death than the one they are on a collision course with now.

[moneymutt]

I'm thinking Android will win by far, with Apple always having its share.

Blackberry got spoiled, and got lapped. Way too much competition on hardware, and Apple and Android software evolving better, way quicker.

There is really no reason why they couldn't have at least kept on on hardware and ineritia would have helped them resist better software/apps markets for Android and Apple. Wasn't it obvious they should have gone for  gorgeous touch screen AND physical key pad just after Iphone hit market? too late now

[Client 9]

But Reggie, what about my sacred BBM?  What will I do without it?

[SheepDog-One]

Hmmmm, so since RIMM is now proven obsolete with that joke Torch phone, I guess its now a prime pump to infinity candidate?

[thegreatsatan]

give me a holler when iphone can encrypt its email traffic, and you can separate out personal and business email accounts and data, oh and when I as a business can develop my own applications for the iphone that i dont have to give apple a cut for or that i dont have to buy through the itunes store.

iphones are unsecure. iphones lock you into apple only. any bank or financial institution using iphones has a security hole the size of the grand canyon. oh yeah, guess how long your iphone will run with any vpn solution active, hint about an hour

[jimijon]

Ever hear of HTML5 / CSS / JavaScript / WebServices? They can all be written by you and you don't have to give apple anything. Just put a link on your website.

[Reggie Middleton]

It does rather amaze me how Steve Jobs is able to suck everybody into this app marketing thing. The big publishers are actually putting substantial resources into iPad app development because of a Steve Jobs snow job (re-pun). They don't even know if the iPad will be the dominant tablet platform in three years, and all they really have to do is put those millions of dollars into a properly GUId website and get the same effect, without the Apple lock in or the Jobs tax.

As it stands now, there is a very strong chance they may have to rewrite apps for Android for that appears to be the more flexible and faster growing platform - or they can do as you and I suggested and simply make strong websites on the open web.

[Reggie Middleton]

If you don't like it then you can use Windows mobile, or write it yourself for Android like several 3rd party vendors have. The fact of the matter still stands that RIM has serious issues that it is not tending to.