Analyst's Smart Phone Outlook: Apple vs. RIM

Apple's third-generation iPhone launches on Friday, but better-than-expected pre-orders could mean a bump in earnings as early as this quarter. Daniel Ernst, principal analyst of Hudson Square Research, shared his insight for the future of the smart phone market.

“The [iPhone] 3Gs is shaping up to be another strong launch for Apple ,” Ernst told CNBC. “The device itself isn’t all that different but AT&T and Best Buy have already sold out of their initial allotments.”

Ernst said the new iPhone’s price cut to $99 should not only benefit Apple, but AT&T as it receives new subscribers.

“We think there’s a lot more room for growth in Apple,” he said.

In the meantime, Ernst said Verizon has been aggressively advertising its Blackberry Storm, but Research in Motion has yet to see the impact of the competitive market.

Overall, Ernst said Rimm’s Blackberry has done a better job at taking the consumer market than Apple’s iPhone at taking the corporate market.

“The smart phone market will grow 15 percent this year,” said Ernst. “Both Apple and Rimm are growing 50 percent this year and continue to outshine the market in terms of smart phones."


Ernst does not own any shares of Rimm or Apple.