Yesterday another Wall Street law firm told its attorneys that the firm would support the iPhone for work email. The announcement added that employees who chose the iPhone would have their data plans paid for by the law firm.
Credit Suisse has a pilot program allowing employees to use iPhones, according to people familiar with the matter. Bank of America has begun phasing in iPhones, according to one person at the bank. JP Morgan Chase is reportedly experimenting with the iPhone. Skadden Arps buys iPhones for attorneys who choose them, and pays for the data plan.
The message from Wall Street is clear: quasi-monopoly Research In Motion has enjoyed over the business mobile phone market has cracked.
The breaking of RIM’s monopoly is not confined to Wall Street.
According to Apple executives, 80 of the Fortune 100 companies are supporting or testing iPhones.
But the process of iPhone adoption on Wall Street illustrates a serious problem for RIM.
The BlackBerry has lost its cachet as a symbol of the serious Wall Streeter. Perhaps in part because of the success BlackBerry has had expanding outside of the enterprise market—meaning, selling devices to consumers—the Blackberry no longer serves the social signaling purpose it once did.
In our experience, the social signaling of the BlackBerry is going in the opposite direction.
Young professionals on Wall Street widely view the BlackBerry as a device of the old guard and a burden they carry with them simply because it was given to them for free by their employer. Many carry both an iPhone and a Blackberry and widely prefer the experience of using the iPhone.
Even older Wall Streeters are slinging iPhones these days, in part because they’ve caught on to the impression that the BlackBerry is a fogey device. At one recent deal meeting in the offices of a high-profile Wall Street firm, a participant estimate that 80% of the investment bankers had iPhones. The corporate clients still had BlackBerrys—which the banker felt was a signal of the relative backwardness of the clients.
One person involved with recruiting from college campuses and business schools for a major Wall Street firm said that it seemed all the students had iPhones. Many were pleased to hear that the firm was testing the iPhone for work use. This was a marked difference from years past, when students would prominently display their Blackberrys in order to show that they would ‘fit in’ with the firm.
“It’s not escaping notice of the firm that we might not even have to pay for analysts phones at all, since so many of them already have the newest handset,” the person said.
Here’s how the transformation will likely proceed. Firms will begin by providing technical support for iPhones, allowing employees to use their own phones for work. Next they will begin paying for the data plans. Finally, they will start actually purchasing iPhones. And that will be big trouble for RIM.
The contrarian BlackBerry bulls complain that the bearish case is overdone. They point to the low earnings multiples of RIM compared to Apple , and say investors are simply missing the boat. But the forward looking earnings estimates may be way too optimistic because they don’t take into account that the enterprise business may be reaching a tipping point.
Make no mistake. BlackBerry still sells lots of phones. Lots of people on Wall Street are big fans of the physical keyboard, the messenger function and the feel of email on a BlackBerry.
Its sales are growing, as is the market for smart-phones.
Non-enterprise consumers represent 80% of BlackBerry’s subscriber growth. But the loss of Wall Street cache could put that growth in doubt.
Will consumers keep snapping up BlackBerrys if they realize they are being abandoned by high-powered businesses and bankers? In many ways, the growth of the consumer market may have been parasitic on BlackBerry’s image as the power-player phone.
Fortunately, for RIM, corporate IT purchasing moves slowly. It will take some time for the shift we’ve already seen to become a dominant trend. So RIM may have some time to fight back against the rise of the iPhone.
Stocks Mentioned in This Post
Bank of America
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