Jan. 10, 2007 — -- Apple is determined to shake up the world of mobile phones and PDAs. And if the knee-jerk market reaction is any indication, the introduction of the iPhone cell phone is already impacting its new competitors.
While the new iPhone won't hit the streets until early summer, there was some immediate, significant fallout from Steve Jobs' Macworld keynote address: Research in Motion, which makes the BlackBerry, saw investors shave more than $10 off its share price yesterday.
That's a one-day 7 percent drop in the the company's stock price, and much -- if not all -- of that can be attributed to the Apple announcement. Many people believe the BlackBerry's popular e-mail/phone devices might take a big hit in sales once the new Apple cell becomes available for sale.
"There are a lot of people out there who think the wireless handset market is due for a shake-up," said Kaan Yigit, president of Solutions Research Group, a Toronto-based technology consulting firm.
The RIM BlackBerry has about 5 percent of the overall cell phone market in the Americas, thanks to corporate America's dedication to giving workers access to corporate e-mail anywhere.
Yigit says he believes the Apple iPhone will eclipse the BlackBerry device in cell phone market share within the year, grabbing up 6 to 8 percent of the handset market by summer 2008.
That's between 10 to 15 million iPhones on the street within a year -- an impressive feat by any measure.
Priced at $499 to $599, why would people jump at the Apple iPhone -- a pricey mobile device by current standards? At first glance, the iPhone appears to be a revolutionary product, and don't discount the "cool" factor.
"The brand Apple or iPod is now becoming a shorthand for easy-to-use, well-designed and sleek-and-sexy," said Yigit. "Apple is one of those companies that has a halo in the market."
The phone boasts impressive new features like "visual voicemail" that allows users to pick and choose the voicemails they listen to, and mobile Web browsing that is more like desktop browsing. Analysts believe the iPhone is different enough from the current offerings to attract a lot of buying intention, despite the price.
Yigit's firm released a survey before the announcement that found 16 percent of Americans over the age of 12 say that an "iPod phone" is a great idea for them personally.
RIM shares were not the only ones to take a beating after the Apple announcement. PDA maker Palm saw shares retreat more than 5 percent. Palm makes the popular Treo handheld.
Some analysts say the iPhone poses very little threat to BlackBerry's core customer base -- its business customers.
"The BlackBerry is still very much a business product, and I don't know of any business-oriented software planned for the iPhone," said Gartner analyst Todd Kort. "It's very unlikely to be purchased by businesses."
The iPhone may pose strong competition for multimedia cell phone products like Nokia's N90 and Sony Ericsson's line of Walkman phones, whose users tend to be high-end consumers who enjoy multiple features with their phones, according to Kort.
But BlackBerry's strong market share in government and corporate America, including a reported 90 percent of Fortune 500 CEOs, is unlikely to be challenged by the iPhone. Analysts estimate that BlackBerry dominates more than 50 percent of the U.S. wireless e-mail market, largely based on its entrenchment in the business community.
Because of this, Kort believes RIM's stock drop on Tuesday will be only temporary.
"All that proves is that there are some investors who are irrational and uninformed," he said. "The iPhone is much more of a multimedia product, so if you want to impress your friends or your girlfriend, that's what you want. But it's unlikely to have a huge effect on RIM's business."