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Myth 10: RIM’s BlackBerry Will Contain iPhone Expansion

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Daniel Eran Dilger
Research in Motion, the Canadian company behind the BlackBerry, has served as the smartphone industry’s darling ever since the company emerged from years of research to set two-way pagers in motion around the new millennium.

As a proprietary platform, RIM offers the closest parallel to Apple in the smartphone business. But will RIM and Apple remain in isolated independent market niches or battle each other over sales? Will RIM check Apple’s growth or be left shattered in the wake of the iPhone? Here’s a look at what’s involved.

iPhone Myths
Five More iPhone Myths
Myth 6: iPhone Developers will Flock to Android
Myth 7: iPhone Buyers will Flock to Android
Myth 8: iPhone will lose out to Steve Ballmer’s Windows Mobile 7 in 2010
Myth 9: iPhone Unable to Penetrate Europe Due to Symbian Dominance
Myth 10: RIM’s BlackBerry Will Contain iPhone Expansion
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Cousins, Identical Cousins.

Apple and RIM have more in common than just owning a successful proprietary platform. Both have emerged as unlikely success stories in a market once confidently ceded by pundits to Microsoft. The meteoric rise in the stock valuation of each company has also ascended in striking parallel.

Both really began to take off in 2004 and experienced exponential growth through the end of 2007, before being dragged down temporarily by economic worries, then rebounding mid year only to subsequently crash back to nearly identical troughs again this month that yanked both companies down to their market cap valuations of mid 2007.

RIM APPLE

Different as Night and Day.

The two companies achieved their rapid growth along very different paths however. RIM’s success stems from its entry into the enterprise market. The company began selling basic pagers around 2000, which grew in sophistication around the company’s BlackBerry Enterprise Server software, designed to relay corporate email messages through RIM’s Network Operations Center and then securely over the mobile network to BlackBerry devices.

After becoming the de facto mobile messaging device among corporate users, RIM pursued a second major expansion among consumers with a line of popular mobile devices with thumb-driven messaging.

Apple’s corporate turnaround came from the opposite direction, building upon its consumer iPod phenomenon to boost Mac sales, construct a retail store empire, then expand into the smartphone business just last year with the iPhone, followed up with an enterprise-friendly push that began just this summer.

Inside MobileMe: Apple’s Push vs Exchange, BlackBerry, Google

Opposite Product Strategies.

RIM’s success is built upon a slow expansion upon solid simplicity: the company started with two-way pagers that evolved into simple messaging phones running RIM’s basic BlackBerry OS and then slowly expanded into a Java platform. RIM is now making deliberate steps toward a more sophisticated platform and an expansion into mobile software sales.

Apple did just the opposite in its smartphone game plan: the company secretly nurtured the development of a sophisticated platform built upon its desktop OS over a three year period, then dramatically unveiled the iPhone as a fully functional smartphone with industry-leading media playback and web browsing features that left rivals gasping for air.

After hitting the ground running with iPhone 1.0, Apple followed up with a dramatic upgrade in iPhone 2.0 a year later which addressed the platform’s most significant deficiencies and propelled it directly into a new market for commercial and corporate third party software. That similarly left competitors scrambling to copy it with mobile software stores of their own.

That means while RIM is working to make its corporate-friendly BlackBerry devices more palatable to a consumer audience with offerings such as last year’s Nokia-like Pearl and Treo-like Curve and next year’s iPhone-like Storm, Apple is working to make its wildly popular, single iPhone model as broadly attractive to corporate markets as it has been with consumers.

The Smartphone’s Dark Horse.

RIM has achieved impressive sales; the company doubled its quarterly shipments from mid 2006 (over 1 million) to mid 2007 (2.4 million), then sold 3.1 million BlackBerrys in calendar Q3, and continued the same pace of growth in the fourth quarter of 2007, jumping from 1.8 million to 4.4 million year over year. RIM sold 5.4 million units in the second quarter of 2008 ending in June, and has sold around 30 million BlackBerrys over the last eight years.

Apple only started selling the iPhone in mid 2007, but it sold 1.1 million in its first quarter, 2.3 million in its second, and is expected to announce sales of 5 million for the quarter ending in September, for a total of around ten million iPhones in its first five quarters.

Apple has ramped up to nearly match RIM’s worldwide sales volumes in just one year, reaching figures that were considered blockbuster for RIM to achieve across more than eight years of smartphone business development (note that calendar Q208 is Apple’s FQ308 and RIM’s FQ109).

Remember when everyone made excuses for Microsoft’s inability to sell the Zune in volumes comparable to the iPod, and tried to instead compare 2007 Zune sales to the first year of iPod sales in 2001 out of pity? Apple has done to RIM in one year what Microsoft was unable to do to Apple.

Zune Sales Still In the Toilet

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Update: Actual numbers:

Apple iPhone 3G sales surpass RIM’s Blackberry


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TMF: The Smartphone Market in Q1 2008
RIM Shares Plunge On Q2 Miss, Weak Outlook
RIM Financials Q3 | paidContent.org
Research In Motion F1Q09 earnings transcript

Apps and OS Technology

If Apple’s handy outpacing of RIM’s already record setting sales growth seems like a temporary fluke of good fortune, consider where both lie in terms of technical viability and future potential.

RIM is essentially selling a Java platform on a proprietary OS foundation. BlackBerry apps run in a Java VM. The current BlackBerry OS 4.x platform corresponds to the fairly basic MIDP 2.0 specification, which includes only a simple 2D gaming API. That means the BlackBerry can’t support any of the rich 3D games of the iPhone, and can only support typical “cell phone games.”

RIM hasn’t revealed all the details of its upcoming Storm model yet, but its web browser is apparently based on WebKit, making it far better at rendering than the barely usable browser of existing BlackBerrys. Even so, the Storm’s browser will lack the iPhone’s tabbed browsing and overall interface polish in mobile Safari.

Vodafone was sufficiently embarrassed about the Storm’s browser that it replaced it in its marketing materials with a screenshot taken of the iPhone’s mobile Safari, citing Cingular as the carrier and announcing the 2006 New York Times headline “Democrats Take Control of Congress.”

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Vodafone’s BlackBerry Storm art department all soon to be fired – Engadget

The real Storm browser is a bit basic, without the flashy bookmarks and tabs and with a nostalgia for WAP. That leaves the future of BlackBerry’s platform a core messaging product with a simplistic media player and web browser and weak gaming features.

Apple markets the iPhone as a phone, iPod, and Internet device, with corporate messaging support added just in the last several months. Apple has built its user base among consumers, and is now branching out to broaden the iPhone’s popularity. It delivers more sophisticated development APIs for everything from its hardware-accelerated 3D gaming support to its UI Kit for creating a consistent, slick user interface across applications.

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Rival Software Platforms.

Outside of the Storm, the rest of RIM’s product line, which will make up the bulk of its sales, is even simpler, with a button interface, a barely usable browser, and weak media integration. The result is a fractured software development platform that requires users to select between more than three dozen models before viewing the software their specific BlackBerry can run.

While RIM is planning to introduce its own BlackBerry software store in the model of the iPhone’s App Store, there are only a smattering of apps now available for the BlackBerry (RIM reported 650 last summer after years of third party development) in comparison to the thousands of iPhone apps.

The BlackBerry apps that are available are not only weaker than their iPhone equivalents (particularly among games), but typically start at $15 rather than being $5 to $10 like most of those in the App Store.

Developers wanting to create new apps that target the touch screen interface of the Storm will be selling to a small initial audience, not the installed base of BlackBerries (RIM counts 16 million subscribers in addition to individual owners who don’t subscribe to its messaging service). In contrast, Apple has one platform that runs all iPhone titles and currently boasts a ten million installed base, not including millions of iPod touch users.

Just like Symbian, Palm, Windows Mobile, and the other smartphone platforms with receding market share, RIM touts its broad range of BlackBerry devices as offering users a choice in features and form factors that Apple doesn’t. This ‘tyranny of choice’ didn’t help Sony compete against the iPod, and it hasn’t helped Dell and HP match the growth or profits of Apple’s much simpler Mac product line.

Apple’s iPhone vs Smartphone Software Makers
Apple’s iPhone vs. Other Mobile Hardware Makers: 5 Revenue Engines

Divided We Fall.

What choice will do is prevent any model of BlackBerry from gaining the traction of critical mass the iPhone is snowballing for itself, aided in part by the iPod touch. A historical glance at successful platforms points out that what often poses as choice is often really just a scattering distraction.

Consider the DOS PC of the 1980s. While many saw choice among the various DOS PC vendors, all of those models were really just one platform that could all typically run the same software (albeit not without issues caused by certain choices in video cards and related differences).

In contrast, Apple was selling the 8-bit Apple II line, the Macintosh, and the Apple IIGS, each of which was a different development platform. That shattered Apple’s ability to focus on selling the Macintosh, leaving all three to end up as niche products. Commodore similarly sold its 8-bit C-64 alongside the Amiga, and Atari sold its own 8-bit machines alongside the Atari ST. The market worked to reward the largest platform, not the companies offering the most variety for users to choose between.

Apple began to recognize this during the development of the Newton OS, and purposely worked to deliver it as a differentiated product from the Macintosh rather than an overlapping, general purpose computing platform as originally intended. Even so, pushing development of both the Mac and the Newton OS served as a painful distraction for Apple in the early 90s.

Choice regularly loses in the market when a strong platform asserts itself. RIM’s distraction of offering some phones with buttons and some with a touchscreen is not just a choice for consumers but also a choice for RIM in deciding which to invest its efforts. However RIM chooses to appropriate its development resources will incur opportunity costs that Apple doesn’t have to pay.

Third party developers will also incur the same opportunity costs: target the wide, ultra-basic, general BlackBerry installed base and deliver a less compelling product, or target the more sophisticated but far smaller Storm population? Either way involves risk that isn’t there for developers targeting the iPhone and reaching iPod touch users as a free bonus.

Newton Lessons for Apple’s New Platform
SCO, Linux, and Microsoft in the History of OS: 1980s
SCO, Linux, and Microsoft in the History of OS: 1990s

Pundits are Usually Wrong.

The tech media apparently rarely consults its archives. And when it does, it seems to assume that differences in circumstance won’t matter. Critics have insisted that Apple couldn’t possibly succeed in the long term with the iPod because rivals would work together to create a wider platform under Microsoft’s Windows Media PlaysForSure. The problem was that the choice Microsoft offered created a series of problems for users that prevented PFS from becoming a platform that could rival the iPod’s in size.

With the iPhone, pundits are again insisting that Android, Windows Media, and Symbian will somehow succeed in the pattern of PlaysForSure when the real dynamic growth among smartphone manufacturers is coming from RIM and Apple, which are not licensing their platforms.

And specifically between RIM and Apple, pundits are willing to bet that RIM’s high variety of sub-platforms will win out over the single iPod-like platform of the iPhone because choice delivers customers the options they want with no drawbacks… apart from the compatibility, consistency, and simplicity that consumers have always chosen over variety.

Apple vs RIM in the Future.

Going forward, RIM may be able to sell as many BlackBerrys as Apple sells iPhones, but RIM’s phones will be fractured into incompatible segments that will prevent it from experiencing the same critical mass of demand for third party apps. That reality will also hold back developers from investing the same efforts in building BlackBerry apps, both those specific to RIM’s new Storm and those general enough to run across a wider range of BlackBerry models.

It’s also useful to consider that RIM is delivering its answer to last year’s iPhone a year and a half late. While the Storm offers a nicer camera and a unique feedback screen, it still does not deliver the interface polish, simplicity, and iTunes integration that attracted users to the iPhone.

RIM will have to decide if it wants to maintain its existing corporate messaging empire of cheap and simple devices, chase after the iPhone with an imitative high-end product, or split its resources between the two different efforts. Apple will be hitting back with one product that does both.

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39 comments

1 Joel { 10.13.08 at 4:37 am }

The advantage RIM have is their huge corporate lock-in. And I’m not sure about the US, but here in the UK unless you have a Blackberry, you aren’t anyone in the Banking/Finance world.

RIMs main problem is their web-browser. A few friends have realised there is little point upgrading to the Bold if there’s no significant difference.

2 IainW { 10.13.08 at 5:18 am }

@Joel while I agree that the BlackBerry lock in is formiddible, remember MS had that with Office and Windows and now thats looking decidedly shakey.

I also agree that in boardroom pissing contests (of which I’ve attended more than I care to recall into my bruised brain) the Blackberry is no longer king. iPhones are showing up in the Director of Sales hands and the lesser suits are fawning and goo-ing and gaa-ing.

My IT department has yet to have a request for iPhones support directly, but its a certainty in my opinion.

This is Apples genius. Get one iPhone in the hands of a ‘Big Boss’ via his teenage daughters Mac and massive iTunes library, and he’ll be in the Head of IT’s office soon after. The kicker is to support the iPhone the Head of IT probably already has an Exchange server and a firewall, he just needs to tap a network guy on the shoulder to make it work. Once he has 3 or 4 happy users, that $40,000 BES license will look a bit stupid. As will the endless NOC outages that always seem to strike when the Big Boss has stepped of the plane in Singapore…

Even if Blackberry clings on, the price must come down, and that will be good for all…

3 luisd { 10.13.08 at 5:26 am }

“This is Apples genius. Get one iPhone in the hands of a ‘Big Boss’ via his teenage daughters Mac and massive iTunes library, and he’ll be in the Head of IT’s office soon after”

Precisely what I have been saying for years! I’m glad it is finally obvious :)

4 Jon T { 10.13.08 at 6:02 am }

Yes, and which (bankrupt today) banker wouldn’t choose to have 3d gaming?

Which leads me to argue that RIM ought to stay quiet about an app store, because it will likely be risible in comparison with what they copied.

5 John Muir { 10.13.08 at 6:17 am }

How soon until someone here says “the Blackberry is untouchable until Apple give the iPhone a physical keyboard!”? Place your bets!

Bonus points for the good old “even a Bluetooth one would do” kicker.

6 Rich { 10.13.08 at 6:34 am }

RIM has been a remarkable success story. For such a small company to become such an entrenched global brand in the space of a few short years is astounding. Let’s give credit where credit is due.

I disagree that their portfolio of devices will eventually be their downfall. Let’s not forget that the iPod is not a single product but a family of products. It captures such a large audience because it comes in a range of sizes and prices.

RIM wouldn’t be the success story it is today without variety – even if you only consider technical reasons for variety such as GSM vs. CDMA.

7 PXT { 10.13.08 at 7:26 am }

The Apps from SalesForce.com and Oracle demonstrate a major advantage of the iPhone/OSX platform. That Apple has got the user-interaction so right makes these types of Apps really practical.

The back-end systems that actually run the company are rarely linked well to the desktop ( including phone as a desktop ). This is a strength for Apple/iPhone too.

8 ty { 10.13.08 at 7:48 am }

@Rick – The difference between the iPod and BlackBerrys would be how many people own two or more? iPods are portable hard drives, featureless audio machines, small video machines and mobile phones. They have different uses: You wouldn’t want to run with a hard drive model; Some people need space; You can use it as a portable internet tablet.

I’m also sure it’s a lot less effort to maintain two flavours of music players (nanos and classic use the same software?) and OS X based iPod and iPhone than it would be to maintain a zoo of phones on different hardware. Even with the same software: Look at Nokia. They have a Zoo of phones and with a 2 year old phone there haven’t been any recent (6 months to a year) software updates and there wont be.

Many people own two mobiles but chances are they would not be the same brand unless they had been supplied to you at no cost. There are many people out there with a few iPods.

I’ve also worked in Government and know that they are very slow moving. I’m sure RIM will have plenty of customers for at-least the next few years. Even if the some managers child has an iPhone. However, I would be happy to be wrong :-)

9 greendave { 10.13.08 at 10:08 am }

Joel – “you aren’t anyone in the Banking/Finance world”
- is there anyone left in the UK banks? If yes, can you turn out the lights when leaving.

By the way, my wife is a director of one of the UK’s Big 4 accountancy companies. Whilst out “entertaining” the current flash is to get out your iPhone and demonstrate the latest amazing app or show off the 3G/GPS, my wife usually simply reminds them that she had her iPhone first (a present from her husband). Not interesting you would think – except that all these people are provided with BlackBerrys (with full internet access enabled) by the company, yet they have decided to go out and buy their own iPhones!

Anyone like to offer an example of a company giving out iPhones and their employees deciding to go out and buy BlackBerrys?

10 Joel { 10.13.08 at 10:29 am }

“Not interesting you would think – except that all these people are provided with BlackBerrys (with full internet access enabled) by the company, yet they have decided to go out and buy their own iPhones!”

And have you tried using the “Internet” (either 3g or wireless) on a Blackberry…? Compared to the the iPhone the web browser on the Blackberry is incredibly slow and clumsy. Concerning 3rd party applications: Most corporate Blackberries are locked down tight (one friend didn’t realise that it had a built-in mp3 player) so that nothing else can be installed. And people who can install applications often don’t realise that this is possible, or even how to do it.

11 The Mad Hatter { 10.13.08 at 10:34 am }

Good article. The IPhone will end up eating market share from Rim, for now, until Rim gets organized. What will happen then is anyone’s guess.

12 lantinian { 10.13.08 at 10:52 am }

Thank you for the Insight into the world of Blackberry Daniel. I deffinately have a better sence of where the Blackberry stays copared to the iPhone.
I am also glad that there was little talk of Windows mobile. Sometimes, I think you give them too much airtime, when you should be talking about Nokoa, RIM or Android for that matter

13 tundraboy { 10.13.08 at 11:22 am }

I hold no RIMM stock at all because I have yet to be sold on the long term viability of Blackberry. Blackberry is a pioneer and they have been rightly rewarded for being first. But their success came when there were no viable competitors. Now they have the scariest, savviest competitor that any tech company could ever face. Does RIMM have the goods, the competitive know-how to take a punch from Apple and then deliver a strong counterpunch on top of that? They have no track record that indicates to me that they do (or don’t for that matter). They have no track record of successfully marketing to consumers and now they’re in a fight against the company that wrote the book on how to market tech to consumers.

The odds are really against RIMM. Kudos to them if they survive this but they already had to lower their projections.

As dominant as RIMM seems now, remember Atari was the pioneer in the gaming industry and they sure were dominant in the early years until the competition showed up.

14 hodari { 10.13.08 at 11:48 am }

Interesting. I am out of North America right now and let me give you a persepctive from Dubai, where the tallest building in the world, the largest man made island the palm, the metro that would not normally take ten years to build in NA gets done in 2 years, 50 A380 Airbus and so forth – welcome to dubai!. I very rarely see people carry an iphone here, but blackberry it is ever present here! amazing but true. IPOD yes, IMAC and macbook nay not many people care! – Windows is the platform of choice. For those who love good looking gizmos Sony is the prefered vendor here not Apple for that matter the entire Middle East and Africa seems to be so.

If RIM dissapears I would not be surprised for that matter if any smartphone company should dissappear or should have gone by now it would have to be PALM, yet there are still breathing, reminds of Apple a few years ago when it was on a ventilator and Microsoft as a gesture of goodwill bought 800 Million shares – lol.

I have said this before, that 8 Million and 10 Million are small numbers when compared to a 1 billion phones that is what NOKIA sells each year for their regular phones.

Let use see what Sonyericsson does with their new XPERIA… http://www.sonyericsson.com/x1/

and how many units they actually will sell until the release of windows mobile 7.0

When ever I read the articles here I get a sense that Apple products is the panaceia for all our gadgets requirements. This is not true. Choice is good. I decided from the outset that a touch phone with a keyboard is not for me and thus I am eagerly waiting for the XPERIA X1 and possibly X2.

15 John Muir { 10.13.08 at 12:06 pm }

@ hodari

I’m outside of North America as well (we’re far from the only ones) and it is indeed true that Apple continue to do less well in foreign markets. The US is absolutely their home with >50% of all their Macs and iPhones shipping to that single market. (I’m not sure about iPods though.)

It’s frustrating to be an Apple fan overseas, when it comes to the simple fact that EVERYBODY ELSE in tech seems more interested in every other region of the world. You’re right: even BlackBerry. RIM are a small company too, so where’s the excuse? Well … there is at least one.

Apple hate to lose money. They’re a strikingly conservative company when it comes to business, in stark comparison to their typically revolutionary attitude to product development. Apple is growing its stores around the world, but not in the explosive way such chains usually arrive. They do things based on money they’ve already earned.

The same thinking seems to underlie how they handle foreign markets. The US is their well established home, and gets top priority. Western Europe and Japan are at least considered, but as we’ve been so much slower on the uptake of all things Apple over all these years, they’re more cautious in return. As for the developing world: until the iPhone 3G launch it looked like Apple had all but forgotten it was there. (How many Macs are there in all of Asia for instance besides Japan and the factories which make them in China!?) Yet they are at least finally getting around to taking the GLOBAL market seriously, with the iPhone at least.

I can quite imagine that Dubai is 100.0% Windows, most of that XP. It is the way of most of the world. In some ways Apple bring it on themselves, but living in Britain as I do I can understand what strategy they’re playing and can see the scope for change in the future. We’ve more than a dozen Apple Stores on our little island now. Beyond the US, Britain is Apple’s top target it seems for long-term investment. I hope it pays off. (Indeed: I think it will.) As the rest of the world could be in for the same treatment if we can prove it can be done.

But I still write this from a country with a slender fraction as much market share for Macs and iPhones as America, despite Britain being broadly similar in many other ways. It’s oxygen for all of Apple’s competitors. One day though, oh one day!

16 ty { 10.13.08 at 12:31 pm }

I found the apple extended warranty amazing. I’m in Thailand now but bought the computer in Australia. When I accidentally spilled beer on the keyboard it was replaced (free). I would assume that the iPhone would have the same sort of warranty, obviously not beer on the keyboard. It’s something that Daniel hasn’t covered: warranty.

There are no Apple stores in Thailand or Australia, I don’t think. Thailand doesn’ t even have an web store but in Bangkok and Phuket there are shops that sell only Apple products. Most phone shops sell iPhones and offer to unlock them etc. It is true that the trade is mostly to foreigners on holiday but it’s not the only market.

17 PXT { 10.13.08 at 12:39 pm }

I think Apple have hugely untapped potential in the UK/Europe. Apple’s approach of paying more, but for better value and added services, is a good match for countries where taxes are higher and products cost more and, therefore, people would like to see more for their money – such as better designed products and the add-on services such as you get via the Apple Stores.

Apple just haven’t created the awareness of what makes their products different, so people don’t of them. But they should try harder, as I think Europeans would all want Macs rather than cheap second rate PCs.

18 John E { 10.13.08 at 12:52 pm }

very information article. left out, tho, was a discussion of the service plans and their pricing, always an important part of the equation (more so for consumers than enterprise). how do they compare?

the RDM article i’d like to see is a full analysis of how the App Store has revolutionized the entire field, rather than looking at it from the perspective of one platform at a time. and what it means for the future of all computing. obviously the ratio of mobile app quality/price has suddenly been improved by Apple for consumers by a full order of magnitude. what will this lead to?

19 John Muir { 10.13.08 at 1:09 pm }

@PXT

Indeed. It’s the old mindshare thing. In America, Apple have sky high profile. Stevenotes get their own highlights section in the nightly TV news … that just does NOT happen here. In American media, on the web too, writers can discount Apple but they never *ignore* them outright. Over here meanwhile … the BBC especially, the old curmudgeonly buggers!

In part it’s Catch-22. Apple do better in America because Apple invests more in America, because Apple do better there. But there’s more to it than that. Here’s a shocking little fact: ask anyone in the US and they’ll know who Steve Jobs is; but ask any non-geek over here and they’ll not have a clue. Ludicrously enough: Bill Gates has a far, far higher profile on this side of the Atlantic. It’s not all just his charity stuff either (though that helps) as I remember being taught in school as a kid that he was the übergenius who invented the computer and was rightly the richest man in the world. (I’ll blame half that on my crackpot of a teacher.) As for Steve Jobs, Steve who? As far as Britain’s concerned Bill Gates personally spanked Sir Clive Sinclair and that was that.

But I digress! The real problem is indeed just awareness. I was the first person among my peers to get a Mac, only five years ago. Friends and family thought I was nuts. But most of them have indeed switched, of course. However it seems to have to be done by word of mouth. No one seemed to get that the internet pretty much meant my need for Windows was gone, period, until they saw my PowerBook in action up close. It’s not like anyone loves Windows over here either … so much as it’s just such a given that it actually sounds nutty to even think about dropping it.

And that’s because people just don’t think of Apple over here. Not as much as in America. YET.

The stores and the iPod and iPhone halo effects should all change that. But look at the numbers: Apple still sells the overall majority of its products inside the US. Change is taking time. Meanwhile: Britain, and the rest of the world, continue to belong to shoddy competitors and you have to wonder why!

20 gus2000 { 10.13.08 at 1:54 pm }

Wait…John McCain invented the Blackberry, and then sold it to Canada? I’m confused.

21 danieleran { 10.13.08 at 4:43 pm }

@hodari
“If RIM dissapears I would not be surprised for that matter if any smartphone company should dissappear or should have gone by now it would have to be PALM, yet there are still breathing, reminds of Apple a few years ago when it was on a ventilator and Microsoft as a gesture of goodwill bought 800 Million shares – lol.”

I don’t think anyone expects RIM to disappear. In fact, what I presented is that RIM, like Apple, has demonstrated itself to be a more successful business model than the “smartphone DOS” that every pundit seems to think is inevitable. According to them, the only question is whether it will be Symbian, WiMo, or Android.

In reality, Palm has been about as successful as WiMo (despite making some tragic business decisions), and Palm had a model like Apple and RIM. It wasn’t until Palm followed “the split in half and license out your software” advice, followed by the “license Microsoft’s software” advice, that the company failed. Think about that. Now consider that the best Palm has done lately is with its (Palm OS) Centro – the same Apple/RIM model.

I could probably ignore your 800 M share comment if it weren’t so inaccurate; Microsoft only invested $150M (in non-voting shares that were not $0.20 each), which had little financial impact as Apple had $2 billion in the bank at the time. It was a symbolic gesture, not a bailout.

“I have said this before, that 8 Million and 10 Million are small numbers when compared to a 1 billion phones that is what NOKIA sells each year for their regular phones.”

Nokia sells a lot of basic phones, but that market is not the same market as smartphones. It lacks the software market, the margins, the growth, and the importance of a platform. It’s not the same market.

You might as well argue that because Texas Instruments was selling the most calculators in the early 80s, that it was obviously going to sell the most PCs, or even matter in the PC market.

22 tundraboy { 10.13.08 at 6:10 pm }

@hodari

Have you used an iPhone or a Mac or an iPod Touch for an extended period of time? Have people in Dubai been exposed to Apple products? If not, then your judgement is premature. Windows PCs and Nokias indeed dominate there but not because people have judged them to be better than Apple but because people have little knowledge of Apple.

Admittedly it falls upon Apple to distribute their products more widely but that shortcoming can hardly be the reason to proclaim that in the face of Windows and Nokia and whatever else Dubai is using now, Apple’s future is doomed.

And come on, as many skyscrapers and man-made islands and super Jumbo Airbuses Dubai has, these are all built using technologies and skilled manpower that were totally imported from somewhere else. So sorry to burst your bubble but this means that despite all the high tech trappings Dubai isn’t really a country on the technological leading edge and it would be uninformative to discern future trends in high tech based on what’s going on there.

23 daGUY { 10.13.08 at 7:13 pm }

Absolutely fantastic article. You sum up my thoughts on this whole situation perfectly.

What’s amazing to me is seeing the screenshots of the Storm’s UI side-by-side with the iPhone. The Storm’s UI isn’t even CLOSE to the sophistication of the iPhone’s, and this is almost two years after the iPhone was first demoed. They haven’t even been able to *match* it after all that time, let alone surpass it.

I don’t get why pundits compare everything to the PC industry and assume that anything that doesn’t follow that exact model will fail. The “open”/licensing model only worked for the PC industry because that’s what businesses preferred, but businesses have entirely different needs than consumers. In every other major case (iPod, iPhone, etc.), consumers have shown that they prefer “closed”/integrated devices that “just work.”

24 indiana61 { 10.13.08 at 7:40 pm }

@Daniel
I thought the M$ $150M “investment” was part of an out of court settlement (one of the many M$ has paid out since the release of Win 3.0).

25 GQB { 10.13.08 at 7:53 pm }

@PXT and @JohnMuir
Not to put too fine a point on it, but Apple is ‘a’ company… singular… one corporation.
Apple ‘is’… not Apple ‘are’.
You wouldn’t say Great Britain are, would you.

26 patriot { 10.13.08 at 7:54 pm }

@ hodari

Daniel already covered the M$ bailing out Apple inaccuracy (irks me everytime I hear it). I’m sure Apple is ecstatic to hear your description of Dubai. It is probably true in most of the world. Problem for RIM is, that represents a saturated market with little hope of maintaining. For Apple, it is essentially an untapped market. If Apple had only sold 1,000 iPhones so far this would be scary. But they’ve sold ~10,000,000 and haven’t even scratched the surface. Amazing. I don’t mean to put words into Daniel’s mouth, but I think I can summarize his basic message he weaves throughout RDM (except the political stuff :)): Apple is in a unique position based simply on their OS. I don’t think many people (other than those who frequent this site of course) realize what this means. They have an OS that spans mobile devices (touch and phone), appliances (TV and routers) and computers (desktop and notebooks). And most importantly their OS isn’t a piece of crap built on crap like Windows, it is a thoroughly modern OS built on UNIX. This is a juggernaut. And while some may think “oh well, Microsoft or someone else can just throw a bunch of money at the problem and copy them” this isn’t so. Microsoft is in a jam. Either pander to legacy or start from scratch with something newer and better. One is a dead end and the other is a non-starter. Their business plan is simply monopoly and legacy. If the legacy is gone, there is no need for them anymore. So someone else may think “Aha! Linux”. That isn’t going to happen. It has no potential beyond niche. What OS is RIM going to use as a foundation for the future? How bout Nokia? Sony? Apple is Usain Bolt and everyone else is looking for their shoes. So you can wait for XPERIA X1, X2 or X50 but you should realize that their future is limited. This isn’t a competition for which phone has a mobile calculator. If that is all you want, Symbian, Palm, etc. are just fine. But when it comes to rich internet apps and interfaces, Apple’s competitors are going to have an extremely hard time without fractionating their lines (as Daniel emphasized) if they can even stay in the race. I agree that RIM should remain viable for the near future. They have a solid, although simplistic system but their main advantage is being spread across most carriers. Everyone will not switch to ATT or equivalent international carrier just to have an iPhone and some will always be fixated on a physical keyboard.

27 harrywolf { 10.14.08 at 12:33 am }

‘I could probably ignore your 800 M share comment if it weren’t so inaccurate; Microsoft only invested $150M (in non-voting shares that were not $0.20 each), which had little financial impact as Apple had $2 billion in the bank at the time. It was a symbolic gesture, not a bailout.’

Thanks for saying it Dan – its tiresome to hear this nonsense trotted out as if it were a fact.
They received about 15 million shares, a VERY small fraction of Apple indeed.
It was more than symbolic for Microsoft because they were still facing some monopoly issues, I think…..?

As for RIM, they may do OK as the only real competitor to the iPhone – its a big business and RIM, like Apple, will be doing fine with 1% of the global market.

Hard to see anyone beating the OSX and touch patents that Apple have, however.

28 harrywolf { 10.14.08 at 12:55 am }

@Patriot: excellent post – I plagiarised you a bit because I rushed to respond without reading all the posts….!
My apologies.

29 Jaxboro { 10.14.08 at 1:40 am }

One other advantage that Apple has over RIM, Symbian and Android is the ability to leverage my desktop on my mobile device. Even if all other factors were even, that leveraging power wins the day for the iPhone.

30 hodari { 10.14.08 at 4:36 am }

“tundraboy { 10.13.08 at 6:10 pm } @hodari

Have you used an iPhone or a Mac or an iPod Touch for an extended period of time? Have people in Dubai been exposed to Apple products? If not, then your judgement is premature. Windows PCs and Nokias indeed dominate there but not because people have judged them to be better than Apple but because people have little knowledge of Apple.”

Yes tundraboy, I started my software development career in London England on an Apple IIe and went through the entire cycle of moving from Apple, to Dos to OS/2 to Windows and to be come a CTO of an IT company that uses WINCE.NET and other products.

I was using a MACBOOK Pro and recently moved to Sony Viao TZ I did not like the Macbook AIR without a CD/DVD writer.

As for people in Dubai – they have been exposed to MAC. There are several stores that sell MAC products here. MAC products were the defacto in the pre-press and the printing industry. No More!. I have seen windows replacing most (NOT ALL) of the MAC in the pre-press, printing as well as the publishing industry and trust me this industry is huge in UAE and Middle East.

For the record, I have never stated that Apple is doomed now, I would not be holding a huge portfolio of Apple stocks if I thought they will go under – please go back and read again what I stated.

I also never stated that Dubai is a country on the technological lead – neither is the US for the record. And what difference does it make if a country is built using foreign technologies or labour force?. Where exactly are the MACBOOK, IPHONE etc being manufactured? In USA? I doubt it!.

31 hodari { 10.14.08 at 5:12 am }

ty – Most hardware companies provide excellent warranty services. Beside the MAC and Sony VIAO I also have HP and Dell. The hard drive crashed a few months back on the Dell. I called their 800 number in UAE and they sent a techician around to my home. All DELL laptops sold in UAE have a two day business turn around or if you want same day service you drop it in their depot!. They replaced the drive – no quibles here. Good stuff. Same with HP and VIAO. The distingusighing line is getty blurry!.

32 John Muir { 10.14.08 at 6:38 am }

@GQB

It’s a US English v UK English thing. Believe it or not but we can and sometimes do say “Great Britain are” over here! You can detect any Americans nearby: only they turn around to correct you! Collective nouns … nasty stuff indeed.

33 John Muir { 10.14.08 at 6:42 am }

@Hodari

I was about to say something about why an Apple greybeard like yourself would go around saying MAC instead of Mac – a classic sign of PC guys who think it has to do with MAC Addresses – until I saw you say DELL as well.

AAPL = Apple’s stock. Mac = their computer line. MAC = I can haz XP SERIALZ PLZ?

34 hodari { 10.14.08 at 10:51 am }

John is MAC Address related to PC only? Well what can I say to a kid who refuses to grow up ?

35 _iCeb0x_ { 10.16.08 at 7:38 pm }

@harrywolf

” Thanks for saying it Dan – its tiresome to hear this nonsense trotted out as if it were a fact.”

There are a lot of myths about this $150M “investment”… The other day, a friend of mine told me that he thinks “Apple is getting so much better ever since Bill Gates bought it!”

I couldn’t believe it.

36 _iCeb0x_ { 10.16.08 at 7:45 pm }

I forgot to mention, in my last post about the “investment”, that it does have to do with the settlement of an old Apple x Microsoft case, like another commenter said…

You see, Microsoft has and will always try to copy Apple. Even if they have to pay so they don’t gey sued!

37 Apple going BIG, not going home | devins blog { 10.21.08 at 7:09 pm }

[...] “RIM has been selling its popular devices for nearly eight years, and achieved peak sales this year after doubling its sales year over year. Apple’s ability to catch up and surpass RIM’s sales in the course of a single year should strike additional fear in the hearts of boardrooms of companies with smartphone platforms that are doing far worse than RIM, including Nokia’s Symbian and Microsoft’s Windows Mobile. ” [...]

38 Three Disruptions in Technology, and How to Benefit — RoughlyDrafted Magazine { 11.03.08 at 3:39 am }

[...] Myth 8: iPhone will lose out to Steve Ballmer’s Windows Mobile 7 Myth 10: RIM’s BlackBerry Will Contain iPhone Expansion [...]

39 The Future of Mobile Software — RoughlyDrafted Magazine { 11.15.08 at 7:08 am }

[...] Myth 10: RIM’s BlackBerry Will Contain iPhone Expansion Apple iPhone 3G sales surpass RIM’s Blackberry Chasing Apple. Contenders hoping to battle the iPhone have a lot of technology and sales acumen to match. RIM, the rival most like Apple today, is splintering its hardware platform to ensure that no segment of the Blackberry market will be as large as the iPhone currently is, tearing its platform prospects between its current broad and simple installed base, and the sophisticated narrow market for its iPhone-like model. [...]

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