The iPhone continues to attract customers away from BlackBerry devices

The iPhone and the iTunes App Store continue to attract away customers from RIM.

Typically, the conversation surrounding smartphones centers on which new device is best positioned to challenge Apple's growing influence and success in the market.  This point of view presumes that manufacturers will continue to churn out new smartphones that become increasingly feature-equivalent to the iPhone, and that it's only a matter of time before a device will come around and knock Apple off its feet.  This perspective is somewhat misguided, and if anything, recent data suggests that it's not Apple who has to worry about losing momentum, but rather RIM who has to worry about the iPhone poaching away BlackBerry users.

This past weekend, Apple blew past analyst estimates and sold over 1 million iPhone 3G S devices, an even more impressive number when you consider the current state of the economy and the fact that we're already on the third iteration of the iPhone.  Not to be outdone, last week RIM posted solid earnings and reported better than expected sales of 7.8 million BlackBerrys for the quarter.  In typical CEO fashion, RIM CEO Jim Balsillie brushed aside the idea that the Palm Pre or the iPhone would have a noticeable effect on RIM's  business.  Recent data, however, suggests that Balsillie might have a lot more to worry about than he thinks.

First, Apple analyst Gene Munster of Piper Jaffray recently surveyed a number of iPhone 3G S early adopters at Apple retail stores this past weekend and found that 12% of them were abandoning their BlackBerrys in order to purchase a new iPhone.  In previous iPhone launches, only 6% of surveyed customers reported leaving their BlackBerrys behind.  To be fair, Munster's sample size wasn't terribly large, and the large number of surveyed consumers leaving RIM for Apple might simply be a testament as to how successful RIM has been in selling its BlackBerry devices in the first place.  Still, the underlying take away from Munster's survey is that while RIM might have a higher marketshare than Apple for the time being, its devices aren't compelling enough to keep users from jumping ship to the iPhone and its 50,000 strong iTunes App Store.

Second, market research Crowd Science conducted a survey over the past few weeks measuring what percentage of smartphone users would be willing to purchase a device different from the one they currently own.  The survey found that only 14% of non-BlackBerry users would consider ditching their current smartphone for any of RIM's BlackBerry models.  In contrast, the survey found that over 40% of non-iPhone users would consider abandoning their current smartphone for an Apple iPhone.  Crowd Science CEO John Martin opined on the results, "These results reflect the great challenges Blackberry faces in stemming the iPhone stampede."

And with over 1 million devices sold in just 8 countries this weekend, stampede seems to be an appropriate word.

RIM's challenge is that it already has the enterprise market locked down.  It's lineup of BlackBerrys are admittedly great for emailing, and to many corporations, they constitute an integral part of conducting day to day business.  But the iPhone shifted the smartphone playing field away from the enterprise and towards the consumer, and no company is better positioned than Apple to excel in that market.

The advent of the iPhone, and more specifically the iTunes App Store, signaled a shift in how people view their phones.  No longer used solely for making calls, listening to a few songs, and maybe browsing the web, they now have the potential to be full fledged gaming devices, educational tools, and even turn by turn GPS units,  In a way, the iTunes App Store makes the iPhone a device with an almost endless number of potential uses and features.

How can RIM compete with that?

There are a lot of people for whom a BlackBerry device was their first smartphone.  Now, it seems that for many, an iPhone will be their second.

• General discussions
• Apple
• BlackBerry
• iPhone
• iTunes app store
• RIM