Monday ushered in some intriguing news for smart phone makers, with blaring headlines about Research in Motion and Palm, and more subtle pronouncements about Apple and Google .
The research note from Citi's Jim Suva torpedoed RIM, slapping a "sell" on the shares because of stiffening competition in the marketplace, notably from phones running the Android mobile operating system from Google. The report cited the same reason for downgrading Palm as well. Yet Apple and Google didn't suffer the same fate.
Which intrigues me.
Let's talk about Google first: we know there will be a couple of dozen phones from major manufacturers released before year end running Android. The OS is now available across every carrier -- or soon will be when Dell releases its phone on AT&T early next year. Motorola's Droid is interesting. Just this morning, Sony-Ericsson released unveiled its Android unit.
But I'm concerned that so many manufacturers releasing Android phones may not create the panacea some might expect. Some experts have compared the explosion of Android handsets to the PC equivalent of Microsoft offering its Windows to every computer maker. Box makers have a tough time distinguishing themselves from each other, while Microsoft laughs all the way to the bank.
The difference in the smart phone arena, of course, is that there's real competition on the software front, thanks to Google, Microsoft, Apple, Palm, Symbian and others. The problem for Google, aside from that competition is how diffused the market is for Android handsets. So many phones, and so much confusion as to what makes the Droid different from what's coming from Dell , versus what's available from HTC, etc.
To me, it's kind of like when an actor is nominated twice in the same category for an Oscar: everyone thinks he's a lock for the trophy, until voters split their support for him across the two nominations, and someone else in the category wins.
That's what's happening to Palm , it seems. It's got the Pre, and it's got the Pixie. But rather than expand its market, it seems the products are cannibalizing each other. Palm's got big issues, and seeing the shares at $10 this morning is a wake-up call to whipsawed investors.
Meantime, Research in Motion is hardly staying still. The new Storm is out, new Bolds are on the way, and the company still seems entrenched in the enterprise, successfully fending off most rivals. I think a "sell" on these shares now is premature, especially with the entire sector still growing at a remarkable clip.
And just a word on Apple : as I have written before, Apple is a major player in the smart phone revolution. The App Store is its secret weapon and continues to distinguish this platform from all others. But unlike all others, Apple has various and compelling revenue streams outside smart phones (Mac, iPod, software, retail. You know the drill.) And that's why when smart phone makers get downgraded, Apple's rarely part of the group. Because it's in its own category. Apple's a digital, vertical conglomerate that really compares to no other.
There will be clear winners and clear losers in the smart phone sector, but with white-hot growth still in its early stages, there will be many more winners than losers, at least for the foreseeable future.
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