Storm aims to calm hysteria over iPhone

Semuels is a Times staff writer.

The BlackBerry, a phone and e-mail device that just a few years ago could be found mostly clipped to the belts of high-powered professionals, isn’t just for workaholics anymore.

Research in Motion Ltd. today is launching its first major counterattack at the iPhone: the BlackBerry Storm, a touch-screen device that enables users to take pictures, play movies and music, and visit their Facebook and MySpace pages with ease. It even tells them where to turn when they’re lost in their cars.

For years, the Waterloo, Canada, company has been the de facto provider of e-mail devices for corporations. But the company has its sights on the consumer market.

It launched its first-ever mainstream TV ad campaign this year and is partnering with Verizon Wireless to expand a marketing blitz that has touted the Storm on TV and in print.

“It’s only in the last year that they’ve made a real concerted effort to branch into consumers,” said Barry Richards, a senior analyst at Paradigm Capital who owns RIM shares.


RIM is trying to gain market share as tech-savvy consumers embrace smartphones, which are hand-held computers that enable users to make calls, surf the Web, check e-mail and maybe even watch TV. Smartphones account for 12.6% of handsets in use in the U.S. market and for 19% of recently acquired phones, according to Nielsen Mobile.

“The smartphone market has plenty of room to grow, and we are well-positioned to benefit from our continued focus on innovation, customer value and partnerships,” said Mark Guibert, RIM’s vice president of corporate marketing.

Like other handset makers, RIM faces competition from Apple Inc.'s iPhone, whose sales have surprised analysts since its June 2007 launch. According to NPD Group, the Apple gadget was the top-selling phone in the third quarter, followed by Motorola’s RAZR and the Blackberry Curve.

That’s not good news for all carriers including Verizon Wireless and Sprint Nextel Corp., which collectively lost 2 million subscribers in one quarter to AT&T;, the exclusive provider of the iPhone, Richards of Paradigm Capital said.

Carriers are especially interested in signing up smartphone customers because although most people in the U.S. have voice plans, much fewer have data plans, which are more lucrative for carriers, said Jim Ricotta, chief executive of Azuki Systems, a mobile media services company.

The Storm isn’t the first competitor to the iPhone, which is credited with piquing consumers’ interests in smartphones. T-Mobile USA Inc.'s G1, Samsung’s Instinct and LG’s Dare all have touch screen capabilities like the iPhone.

But RIM says it goes a step further, with what it calls the “world’s first ‘clickable’ touch screen” -- Storm’s screen compresses when tapped and offers tactile feedback to mimic the feeling of a real keyboard.

And Storm captures video, which the iPhone doesn’t. It does include one popular iPhone feature: an accelerometer, which means the screen shifts depending on which way you hold it.

The Storm is “not an iPhone killer, but it is intended as a retention tool to keep people that have a BlackBerry but might be eyeing the iPhone,” said Charles Golvin, principal analyst at Forrester Research.

RIM is expected to gain some footing in the smartphone market because it offers phones with touch screens, flip screens and keyboards that appeal to a wide range of consumers. A Forrester survey found that 18% of online 12- to 18-year-olds who frequently used the Internet on their phones wanted a BlackBerry -- only 15% said they wanted an iPhone.

Still, few smartphones please consumers and critics like the iPhone, which is lauded for its speedy Web browser and its range of user-friendly applications. RIM will have an especially tough time competing in the fourth quarter because Apple gets so much holiday foot traffic in its stores, said Ross Rubin, director of industry analysis with the NPD Group.

“It’s going to tough to compete with Apple,” he said. “Then again, there could be pent-up demand.”

But analysts say that this quarter is only the beginning of the game between Apple, RIM and the other competitors.

Said Roger Entner, senior vice president of the communications sector at Nielsen IAG: “They’re looking at each other’s devices and trying to figure out how they can keep their edge, and also how they can copy what the other one does better.”