Apple And RIM: Wireless Room For Both
Research in Motion certainly got tongues wagging, and the sweat dripping, and the Apple fanboys wondering what it all means for iPhone. They got a little nervous there when RIM's numbers came out and the stock began to deflate. Nervous again when the rally in RIM shares failed to take off despite a more than optimistic conference call by company execs.
But shares are up a respectable 14% right now which is exactly how I thought they'd perform, despite several angry emailers telling me that RIM's success was overblown; that the real winner here is Apple and its iPhone, and that the point would be made strongly when the company reports its own earnings later this month.
By the way, I can now tell you that Apple will report its fourth quarter earnings October 22.
But looking at this burgeoning battle between RIM and Apple in the wacky world of smart phones, I'd offer that there can easily be two winners in this category. And investors apparently agree as both RIM and Apple shares continue to climb today. Apple's over $160 a share even as we learned that its top rival in the smart phone business sold a million BlackBerrys a month last quarter, and its outlook portends even stronger sales ahead. Normally that would give investors pause that one company was stealing market share from the other.
Not the case here. That's because, as I've written before, the smart phone market is so new and growing so fast with so much opportunities ahead. Roughly 5% of the 157 million handsets sold are so-called smart phones. That means RIM can easily sell 1 million BlackBerrys a month. And it also means that Apple can easily sell more than its fair share of iPhones. In other words, the market is more than big enough to support to major winners both doing serious business in smart phones.
This isn't to say that the two companies won't continue to compete against each other. But I don't believe success for either is a mutually exclusive, winner-take-all proposition. If I'm Motorola, I'm sweating. If I'm Palm, I'm impatient. If I'm Nokia, I'm trying my damndest to get the Navteq deal closed and the company integrated so I can start realizing a big-time return on my $8 billion investment.
Wireless is where it's at right now. Wireless is the Wild West of tech with vast opportunities for the most nimble of competitors. BlackBerry's a blockbuster. IPhone appears to be coming on strong. But RIM doesn't seem to be suffering any slowdown because of it. Both these companies, even at these levels, still appear attractive to so many Street experts. And they're worth close scrutiny by investors looking to hitch their wagon to the wireless gravy train.
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