updated 10:45 am EDT, Fri June 3, 2011
Sterne Agee believes iCloud could hurt RIM
Apple's iCloud launch could compound RIM's troubles competing with the BlackBerry, Sterne Agee analyst Shaw Wu said in a research note Friday. The cloud music element of the service could make "collateral damage" by giving iPhone owners access to an always-available music service the BlackBerry didn't necessarily have. As some of the service might be free, it would mimic some of the push mail functionality of a BlackBerry but wouldn't carry the revenue burdens with what RIM offers to carriers, reducing networks' incentives to promote the BlackBerry over an iPhone.
Amazon, Google, and Microsoft were already having problems offering equivalents, Wu said, and it might get "even tougher" with iCloud on the stage, Wu said. Amazon's Cloud Drive and Player, and Google's Music Beta, already give users cloud music access but need users to upload their collections, putting a load on at least wired networks. Amazon's system also carries a cost for any music outside of its own store beyond 5GB, while Google has hinted it might charge for its Music service once it leaves testing.
BlackBerry owners have access to third-party services like Slacker that allow for on-demand streaming music but haven't had a major, ready-made service tailored to a user's own library. The company has typically shied away from personal media in the past, instead focusing its efforts on messaging, but it has been pushed to get more into media services with the advent of devices like the BlackBerry PlayBook. Its current solution has been to preload Slacker, 7digital's music store, and other services rather than offer something of its own.
Wu was still neutral on RIM's stock but lowered his estimates slightly for revenues down to $24 billion for all of RIM's fiscal year. A consensus on profits might also have to go down further than it already has, he said.