Palm Pre, iPhone Take Sales From RIM's BlackBerry
By Mark Long
July 8, 2009 11:57AM
The Palm Pre and Apple, Inc.'s iPhone 3GS slowed BlackBerry sales last month as smartphone competition heats up in the U.S. and Western Europe. An analyst said the majority of smartphone growth will be in Western Europe. The Palm Pre is expected to have a tougher time in Europe. Apple has helped open up the European market.
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Industry analysts say smartphone competition is heating up in the United States and Western Europe as vendors jockey for advantage in a market niche that is still showing signs of major growth.
Piper Jaffray, which has a team that calls hundreds of U.S. retail stores each month, saw a slowdown in the sale of rival products from Research In Motion and other smartphone vendors at AT&T during June due to Apple's introduction of the iPhone 3GS for $199 and the iPhone 3G price cut to $99.
RIM's BlackBerry sales also decreased to a lesser extent at Sprint last month, noted Piper Jaffray Senior Research Analyst Mike Walkley. "The Palm Pre took some share, and some people may be waiting for the arrival of the BlackBerry Tour," which is expected to account for "a big part of RIM's sales numbers for July and August," Walkley said.
A Key Battleground
Competition in Western Europe is also expected to increase once the Palm Pre launches on Telefónica's networks in Ireland, Germany, Spain and the United Kingdom later this year. According to IDC Senior Research Analyst Ryan Reith, Western Europe may very well prove to be the key smartphone battleground in the years ahead.
"As for smartphones sales outside of Japan, we expect to see the majority of the growth within the next five years in the West European market," Reith said. "Even in 2009 our outlook for the overall market is only three percent, whereas in Western Europe we expect 16 percent growth."
RIM has been doing very well lately in Western Europe, but Gartner Research Director Carolina Milanesi thinks the Palm Pre will apply pressure to the BlackBerry maker's sales.
"It will all depend on what kind of volumes Palm will be able to deliver," Milanesi said. "RIM is growing more in the consumer space here in Europe than in enterprise, so it certainly needs a revamp on the Pearl and a follow-up to the Storm to continue to keep its momentum."
An enterprise play is a possibility for the Palm Pre, the U.K.-based Gartner analyst noted. "But the keypad on the Pre is not ideal -- there are better keyboards out there and RIM is also ramping up its volume sales," Milanesi said.
The reality is that Palm is going to have a much tougher time in Europe than in the U.S. because the brand isn't as strong there, Milanesi observed. "If we look at Palm's sales since 2008, 87 percent were sold in the U.S. and only four percent in Europe," she added.
Two good devices with great press coverage will always bring pressure to the other vendors, said Francisco Jeronimo, IDC's research manager for European mobile devices. On the other hand, Jeronimo notes that RIM has already benefited greatly from Apple's market presence.
Before the iPhone's arrival in Europe, smartphones "were complicated devices for professionals only," Jeronimo said. But in Europe's post-iPhone market, "smartphones are bringing mobility into everyone's lives, and they are now very easy to use."
"Since the iPhone was launched in 2007, consumers' interest in smartphones has increased significantly," Jeronimo said. "By demystifying smartphones, Apple has contributed to market growth."
Jeronimo also noted that the iPhone has had no impact on RIM's results in Western Europe. "Indeed, since the iPhone was launched, BlackBerry shipments have increased strongly," growing 107 percent in 2007 and 86 percent in 2008, Jeronimo said. By contrast, BlackBerry sales only grew 27 percent in 2006 -- the year before the iPhone's European debut, he added.
"The conclusion is that the iPhone is impacting the Western Europe market positively and taking customers from small vendors such as HP and Toshiba, but not from the main ones," Jeronimo said. "HTC, Samsung and Nokia, along with Apple, all increased their
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