RIM’s Storm is the First Touchscreen BlackBerry and a Verizon Wireless Exclusive

| Oct 8, 2008 | Mobile Devices | Competitive Intelligence Report

| Analyst: Avi Greengart

Current Perspective: Positive
Vendor Importance: Moderate
Market Impact: Moderate

Event Summary

October 8, 2008 - Verizon Wireless, Vodafone and Research In Motion announced that the BlackBerry Storm will be available exclusively to Verizon Wireless customers in the U.S. and Vodafone customers in Europe, Australia and New Zealand next month. Designed to appeal to both consumers and business customers, the BlackBerry Storm combines the communication features of a global BlackBerry with a tactile touch display that responds like a keyboard and allows for intuitive UI navigation. Pricing was not announced.

Analytical Summary

• Current Perspective: Positive on the BlackBerry Storm, because a touchscreen BlackBerry is bound to cause a stir. The specifications are impressive on paper, and Verizon Wireless needs stronger touchscreen devices to compete with the iPhone 3G, G1 and Touch Diamond at rivals (its touchscreen featurephones from LG and Samsung cannot match up). Verizon Wireless and Vodafone are sure to promote the Storm heavily this holiday season. However, analysts were not given a chance to review the Storm ahead of time, and there are several open questions. Current BlackBerries have a learning curve, and ease of use is a key selling point for Apple’s iPhone. How good is the Storm’s user interface? Is the “ClickThrough” screen a breakthrough or a gimmick? The Storm will not have an “App Store” – how far have Apple and Google raised consumer expectations for applications? Finally, how much will the Storm cost? Current Analysis will report on the Storm once having a chance to get hands-on time with one.

• Vendor Importance: Moderate to RIM, which has been selling BlackBerries almost as fast as it can make them. The touchscreen category is also hot, so a touchscreen BlackBerry should help RIM broaden its appeal to consumers – at least at Verizon Wireless, which has the U.S. exclusive rights to the Storm. The Storm is extremely important to Verizon Wireless, which has had several touchscreen featurephones from LG and Samsung (and the Palm Centro for the budget smartphone set) but nothing comparable to the iPhone 3G at AT&T. Depending on pricing, the Storm could serve simply as a subscriber retention tool or could help Verizon Wireless poach subscribers from rivals. However, it may be harder to pull subscribers from T-Mobile and Sprint now that they each have exciting new touchscreen smartphones from HTC in their lineups.

• Market Impact: Moderate on smartphones, because RIM dominates the U.S. smartphone market with its QWERTY smartphones, so the effect of the Storm will be closely watched. RIM has lots of happy users; its products have been dubbed “crackberries” due to their addictive nature. With the Pearl, RIM successfully moved off its core corporate base and into the consumer space; touchscreens are perceived as being even more consumer friendly. Still, RIM’s IT-centric brand may limit how far it can go into entertainment-centric devices; likewise, Apple’s consumer friendly brand limits how far the iPhone can penetrate the corporate purchase market.

Recommended Competitor Actions

• Sprint needs to do a better job advertising the Touch Diamond and upcoming Touch Diamond Pro as competitors to the BlackBerry Storm, iPhone 3G and T-Mobile G1. The company was heavily pushing the Samsung Instinct, and aside from pushing services, Sprint’s advertising seems to have slowed.

• T-Mobile should say that Verizon Wireless will lock down the BlackBerry Storm, which runs a proprietary RIM OS. In contrast, the T-Mobile G1 is open to new applications and uses, and Google plans to offer the OS itself to the open source community in the future.

• Apple can point out that the Storm lacks iTunes or an App Store, but the company does need a better story on corporate security and device management, so it should highlight third party developers who are working to supplement Exchange ActiveSync on the iPhone. Apple also needs to add the features the iPhone lacks (cut and paste, MMS, etc.) to take away ammunition from the competition.

• LG and Samsung need to offer touchscreen smartphones at Verizon Wireless, not just featurephones. In the meantime, LG can lower the price on Dare and pull subscribers up from featurephones, and both companies should license PIM synchronization software to allow consumers to make full use of the phones’ PIM capabilities in conjunction with a PC.

• Palm will need to adjust the price of its Centro at Verizon Wireless down if the Storm comes in significantly below $200.

• AT&T needs to approve the BlackBerry Bold already. Offering both the iPhone 3G and BlackBerry Bold will be a powerful combination: the iconic touchscreen that everyone is trying to “kill” and what is unquestionably the best non-touchscreen BlackBerry (we have been testing one for months).

Recommended End User / Customer Actions

• BlackBerry users on Verizon Wireless’ network wishing for a touchscreen BlackBerry have had their wish granted - enjoy. BlackBerry users on other networks wishing for a touchscreen BlackBerry will have to switch networks to get the Storm.

• Those simply seeking a multimedia capable BlackBerry with a physical QWERTY keyboard have an array of Curves to choose from at each carrier, or they can wait for the BlackBerry Bold at AT&T, which has almost everything the Storm does (it has a lower resolution camera but adds WiFi).

• Consumers seeking the best entertainment touchscreen device or the easiest to use touchscreen device should head to AT&T for an Apple iPhone 3G.

• T-Mobile subscribers looking for a competitive touchscreen smartphone should still be excited by the G1, but need to know that at least initially, the G1 will not support corporate email at all.

• Sprint subscribers seeking a touchscreen device have several choices. Samsung’s Instinct is not a smartphone, but is nicely integrated with several Sprint services including voice search, navigation and mobile TV. HTC’s Touch Diamond is a bit on the thick side and the user interface isn’t ideal for email, but the animations are gorgeous and the Opera browser on the VGA screen is strong. The Touch Diamond Pro, which adds a slide out QWERTY keyboard to the Diamond without adding much bulk, is worth the wait - it will debut later this year as well.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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