Will BlackBerry kill the iPhone?

Is it time for Apple to panic after the BlackBerry Curve outsold the iPhone for the first time in the last quarter? Here's what Apple should or shouldn't do to get back in the race.
Written by Seb Janacek, Contributor
Just a few short weeks after the Mac trounced competitors in a customer satisfaction survey, the iPhone has repeated the same trick for Apple in the smartphone market.

The iPhone has taken first place in a consumer survey by J D Power published last week, dominating all but one of the categories: physical design, ease of operation, features, operating system, battery aspects and overall satisfaction.

Most iPhone owners won't be surprised to hear it came last in battery performance.

In contrast, RIM's BlackBerry - the competitor against which the iPhone is most often measured - scored highest in battery life but performed poorly in other categories.

According to a recent report by NPD, the BlackBerry has overtaken the iPhone in unit sales for the Q1 2009. RIM has been operating an aggressive buy-one-get-one US campaign and its sales have surged 15 per cent in the first quarter, though presumably at lower than normal hardware margins.

The news will no doubt prompt some doomsayers to predict the death of the iPhone or some other such nonsense and call for Apple to respond immediately with a host of new models.

Assuming it needs to, what could Apple do to drive up iPhone sales? The two obvious answers are to expand the iPhone product portfolio and to end their exclusive deals with carriers. Both ideas have had some coverage in recent weeks in the press and blogosphere.

While rumors of an iPhone 'nano' or 'lite' have been around for some time, the introduction of either looks unlikely in the short to medium term.

Apple is giving out a little at a time with the iPhone. Last year on the hardware front it got 3G connectivity and GPS. One would expect a couple of new features in the near future, possibly a better camera and improved video recording.

Of course the iPhone is really more about software than hardware and the 3.0 update will bring the long-demanded MMS update and, lest we forget, copy-and-paste. Hallelujah!

Battery life on the iPhone remains truly terrible, something I covered in an earlier article. It also appeared at the top of my wish list of 10 missing iPhone features.

It seems likely that Apple will announce new iPhone hardware early this summer. However, I don't think the company will diversify its iPhone product range just yet. Why? Because it doesn't need to. iPhone sales are very strong at the moment (3.8 million in the last quarter) and, according to the old aphorism, if it ain't broke don't fix it.

At the company's last earnings call, Apple's acting CEO Tim Cook said the company "chose from the beginning of the iPhone to focus on one phone for the whole of the world". That strategy is working just fine.

Another option for the company to consider, as a way to sell more iPhones, is to end its exclusive 'one carrier per territory' deals.

I'm not convinced Apple will change this model or if indeed it needs to. With its exclusive deals, Apple can sustain high margins on the iPhone. The company can play carriers off against each other to negotiate the best deal. Breaking from this model will mean losing some bargaining power - and possibly lowering its profit margins.

Lest we not forget that Apple is performing well in the smartphone market. Despite having been a player in less than 25 per cent of the mobile market for under two years, it's already a leading brand and an agenda setter.

iPhone sales remain buoyant despite both a depressed economic climate and the parameters it has set itself with its exclusive partnerships. It can continue to drip feed new products and features rather than rush them to market. New models will undoubtedly come, just not yet.

Personally, I tend to look forward to software releases more than new hardware. With that in mind, the keynote at the Worldwide Developers Conference in a month's time should prove exciting.

Predictions will follow later in the month.

This article was originally posted on silicon.com.

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