Last year I caused a small uproar posting purely about investing in Research in Motion (RIMM) and (AAPL). I am a Blackberry user and continue to be intrigued by the iPhone. My readers know that I do not believe that one man's opinion is statistically significant.
A recent study by Harris Interactive last week indicates that those who plan on reducing spending based on economic conditions will do so by decreasing electronics purchases (71%) and by dining out less (74%). Yet despite this apprehensiveness, only 41% of those polled said they would "go as far as" reducing mobile phone spending to cut costs. Let's face it, for many, their mobile communications device is an indispensable part, and partly defining facet of life. Just look at the legions of professionals addicted to their "crackberry", or the rise of text messaging as a preferred form of communication. Although it's a small segment in overall usage of cell phones, following the progress high-end phones has always been compelling for me because they steer the direction-and features-of the future phones utilized by the masses. Going back a few years, the Motorola (MOT) RAZR enjoyed a run as the "in" phone, and spawned an array of copy-cats.
Of course, these days it's all about iPhone and Blackberry. It seemed as if (RIMM), with its ease of communication and overall connectivity offered by Blackberry keyboards, was the way of the future, but that was pre-iPhone. Last summer, Apple's (AAPL) iPhone burst on the scene offering an elegant interface and design, ipod-like music functionality, and a PC-esque web browsing experience. Despite placing pretty big barriers to ownership, its high price tag, exclusive AT &T (T) service provider contract, incompatibility with corporate email juggernaut Microsoft Exchange/Outlook (MSFT), millions of iPhones were sold an capturing 25% of the US Smart Phone market.
Up until this month, Apple (AAPL) and (RIMM) have coexisted, with heavy reconnaissance but not openly attacking each other. Last week, Steve Jobs and co. got the blogosphere abuzz with iPhone 2.0 Not only has the entry price of the phone been cut to $200, Apple has included 3G network compatibility to erode the edge Blackberry held in browsing speed, made the device more corporate-friendly with Microsoft Exchange compatibility, and quashed a differentiator between iPhone and RIMM by incorporating built-in GPS. The new iPhone makes Apple's intentions clear: RIMM is in its cross-hairs. Meanwhile, the upcoming Blackberry Bold has adapted a sleeker design-and rumors of an iPhone-like touch-screen model abound. After all, what is good for the goose…
It's been roughly a year since iPhone first appeared-and it is clear that the interface is a game-changer that has captured its users through a new type of experience best attributed to Apple and Jobs, and is heavily influencing all phone design. There may be(hopefully) an expiration date on its exclusive contract with AT&T. Yet Apple has been reluctant to release its phone into emerging markets, thus creating a grey-market for exporting the iPhones and giving RIMM time to gain further footing in China and India. However, this stands to change quickly. Later this year, Bharti Airtel and Vodaphone (VOD) will begin selling the iPhone in India giving Apple the opportunity to build brand and customers from the collective one hundred million (and growing) subscriber base of the two telecom companies . It's only a matter of time until the Steve Jobs moves into China where (RIMM) already has a growing base.
Mr. Corn is CEO of Clear Asset Management Inc. Research in Motion (RIMM) is a holding in the Clear Large Cap Growth portfolio. Mr. Corn directly owns shares of (RIMM) through his participation in that portfolio.