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The Wall Street Break-Up with The Blackberry Rolls on As UBS Begins iPhone Program

Wednesday, 1 Dec 2010 | 11:25 AM ET

UBS has launched a pilot program that will allow its employees to use iPhones and iPads to receive work email, according to a person inside of the Swiss bank.

Two women compare the new iPhone 4 (right) and an iPhone 3 in front of Manhattan's 5th Avenue Apple Store.
Emmanuel Dunand | AFP | Getty Images
Two women compare the new iPhone 4 (right) and an iPhone 3 in front of Manhattan's 5th Avenue Apple Store.

It’s yet another blow to Blackberry maker Research In Motion’s quasi-monopoly over the Wall Street smart phone market.

A host of other Wall Street firms have already taken the plunge into Apple’s smart phones. 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, the powerhouse Wall Street law firm, buys iPhones for attorneys who choose them, and pays for the data plan.

The ongoing infiltration of the iPhone into Wall Street could create a serious problem for RIM.

As I said back in September:

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 my 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 percent 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.

Let me add a little anecdote that a Wall Street dealmaker recently related to me. He said that in a meeting earlier this year, all the investment bankers had iPhones while the corporate clients had Blackberry’s. Several months later, when the deal team met again with the corporate clients, the clients all had iPhones as well.

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Companies mentioned in this post

UBS

Reasearch in Motion

Apple

Credit Suisse

Bank of America

JPMorgan Chase

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