Sunday, November 30, 2008

New BlackBerry Storm challenges the iPhone

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.

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To its fiercest devotees, one of the best things about the BlackBerry is its carefully designed physical keyboard, which the skilled addict can play like a violin. These folks scorn Apple's popular iPhone, whose keyboard is virtual and must be operated by tapping on the screen.

Now Verizon Wireless and Research in Motion, BlackBerry's maker, have done the unthinkable: On Nov. 21, they introduced a BlackBerry model without a physical keyboard, one where typing and navigating require tapping on glass, just as on the iPhone. This new model is the Storm, which sells for $250 with a two-year contract, though a $50 mail-in rebate can bring the price close to the $199 that Apple charges for the base iPhone.

Despite having a keyboard, the Storm is a real BlackBerry, with push e-mail, corporate features and the familiar menus. In many respects, it is a touch-based, large-screen version of the recently released BlackBerry Bold, which is the most polished version of a traditional BlackBerry. It is also the latest member of the new class of hand-held computers, the super-smartphone category kicked off by the iPhone last year and joined by the Google G1 earlier this year.

The Storm sports a large, high-resolution touch screen that fills most of its surface and automatically switches from portrait to landscape mode when the phone is turned. There's also a forthcoming souped-up download store for third-party software, meant to be similar to the ones on the iPhone and the Google phone. The Storm can even be used in European and other countries where most Verizon phones don't work.

This is a nice touch

Its biggest innovation is a clever feature RIM hopes will give the Storm an advantage over the iPhone. When you strike a key or icon on the Storm's screen, you feel a physical sensation, as if you were pressing a real key or button. That's because you are pressing a real button. The entire glass display is one large button, mounted on a mechanical substructure that allows it to move upon pressure.

The idea behind this feature is to make typing on glass feel much more like typing on a real keyboard, and thus to make the virtual keyboard, and the touch interface, more acceptable to people used to physical keyboards and buttons. This push-down screen also replaces the side-mounted scroll wheel or track ball on other BlackBerrys for activating menu choices and icons.

For years, Waterloo, Ontario-based RIM 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 mainstream TV advertising campaign this year and is partnering with Verizon to expand a marketing blitz that has touted the Storm on TV and in newspapers.

"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 shares in RIM.

RIM is trying to gain market share as tech-savvy consumers embrace smartphones, which account for 12.6 percent of U.S. handsets but 19 percent 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's iPhone, whose sales have surprised analysts since its launch in June 2007. According to the 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 carriers such as Verizon Wireless and Sprint Nextel, which collectively lost 2 million subscribers in one quarter to AT&T, the exclusive provider of the iPhone, Paradigm's Richards said.

Carriers are especially interested in signing up smartphone customers because they need 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 iPhone's first competitor. T-Mobile's G1, Samsung's Instinct and LG's Dare all have touch-screen capabilities.

But RIM said it goes a step further, with what it is calling the "world's first 'clickable' touch screen." And it 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, analyst at Forrester Research.

The introduction of the touch-screen Storm, business-savvy Bold 9000 and consumer-geared Pearl Flip 8220 may not have come a moment too soon for RIM, which has dominated the market for high-end cell phones that double as e-mail devices. Apple reported selling 6.9 million iPhone 3Gs during its last quarter, while RIM sold 6.1 million BlackBerrys in roughly the same period.

But while RIM's latest offerings are packed with features like stereo Bluetooth, standard headphone jacks, video recording, multiple e-mail options, the multifront attack may not be enough to unseat the mighty iPhone.

One neat feature is the Storm's ability to take videos in two resolutions; the lower one is meant for sending clips in messages. You can also take still photos with the Storm's 3.2 megapixel camera. It also includes GPS. But its lack of Wi-Fi capabilities means you can't get online in the absence of Verizon's data network.

The BlackBerry Bold 9000, with its full QWERTY keyboard, crystal-clear 2.75-inch screen and bevy of wireless options, is well-suited for business and extracurricular pursuits. It's $300 after rebate, with a two-year contract.

The device runs on AT&T's 3G network and can use Wi-Fi, which made it easy to check e-mail and stream videos. Calls came in nice and clear, and the phone is rated for 4.5 hours of talking time.

Like the Storm, the Bold has GPS capabilities and can give driving directions.

The BlackBerry Pearl Flip 8220 has a Razr-like design that looks somewhat quaint. The Flip ($150 after rebate, with a new two-year contract), available from T-Mobile, is easy to use and might appeal if you're making the switch from a traditional handset.

Like other Pearl devices, the Flip's condensed QWERTY keyboard puts two letters on most keys -- a setup that makes it easier to slip the phone into your back pocket but can take some getting used to during messaging.

The Flip's 2.5-inch main screen is clear and bright. Its 1.75-inch outer screen can give you information like message previews. Given the main screen's small size, it may take you a little more time to navigate the Web, but it can be useful for looking up news and will let you stream video from some sites.

The Flip doesn't include GPS, but you can enter your location in the included BlackBerry Maps application to find nearby businesses or obtain driving directions.

Gaining smartphone share

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 percent of 12- to 18-year-olds who frequently used the Internet on their phones wanted a BlackBerry; only 15 percent said they wanted an iPhone.

Still, few smartphones please consumers and critics like the iPhone, which is praised for its speedy Web browser and 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.

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

"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," said Roger Entner, senior vice president, communications sector at Nielsen IAG.

The Associated Press, Dow Jones Newswires and Los Angeles Times-Washington Post News Service contributed to this story.