BlackBerry's corporate dominance seen eroding

Alastair Sharp

TORONTO, CANADA: Shares in Research In Motion slipped more than 3 percent on Friday morning as investors fretted the BlackBerry smartphone's stranglehold on corporate communications was being eroded by rival devices.

Bank of America and Citigroup have joined a growing throng of financial institutions eyeing alternatives to the BlackBerry for corporate email.

Also read: Dell switching off BlackBerry

The banks are testing software designed to make Apple's iPhone secure enough for company messages, Bloomberg said, citing three people familiar with the plan.

Visit CIOL Security TOPIC CENTER

A source at Bank of America confirmed the details of the report. A Citi spokeswoman declined to comment.

BlackBerry smartphones have long been the device of choice for bankers, politicians and executives who need secure access to email and the Internet when outside the office.

But the surging popularity of consumer-oriented smartphones such as the iPhone and devices running on Google's Android software, coupled with their makers' moves to boost security credentials, are pressuring RIM's dominance in the corporate sector.

Allowing the rank and file to access corporate email on personal devices also saves companies the cost of supplying a BlackBerry.

Also read: Security most needed for smartphones

"If the IT department's security concerns can be addressed it seems to be a win-win" for employers and employees, said James Cordwell, a London-based analyst at Atlantic Equities.

In a September survey, Bernstein Research found 83 percent of U.S. businesses allow employees to use non-BlackBerry alternatives to access corporate email.

On Thursday, PC maker Dell said it was moving 25,000 BlackBerry-wielding employees over to its own line of smartphones as it eyes gains in the mobile device market.

Dell said the move will save money, but RIM disputed that, noting the cost of buying, deploying and supporting new devices.

"We find it highly unlikely that they will actually save any money with this move and far more likely they were looking for a little free publicity," Mark Guibert, RIM's senior vice-president of corporate marketing, said in an emailed statement.

"Plus, consider the fact that BlackBerry smartphones are far more efficient with respect to data usage, which means that their monthly service charges will also likely increase," he said.

EYEING A SWITCH

The move by Bank of America and Citigroup follows the lead of JPMorgan Chase & Co and UBS, which said in September they were considering allowing employees to use iPhones or other alternatives to the standard-issue BlackBerry.

British bank Standard Chartered already gives employees the choice to use iPhones.

Bank of America has around 290,000 employees, while Citi employs some 258,000.

RIM shares were down 3.4 percent at $55.17 on Nasdaq late Friday morning and were off 3.2 percent in Toronto at C$55.28.

A RIM executive said the Waterloo, Ontario-based company was still adding corporate subscribers and it continues to lead a growing market.

"We believe the opportunities for both corporate-issued and employee-purchased smartphones are growing and that RIM provides the best overall platform for CIOs (chief information officers) to address both scenarios without compromising security or manageability," RIM's senior vice-president for enterprise and platform marketing, Jeff McDowell, said.

RIM responded sharply in October when Apple CEO Steve Jobs boasted iPhone sales had overtaken BlackBerry sales in the quarter, saying that the Cupertino-based tech giant was surrounded by a "distortion field".

In the third quarter, RIM's global smartphone market share slipped more than 4 percentage points from a year earlier, according to industry tracker IDC.

(Additional reporting by Gabriel Madway in San Francisco, Joe Rauch in Charlotte, Maria Aspan in New York and Sakthi Prasad in Bangalore; editing by Rob Wilson)