When Apple launched its touch screen iPhone 3G at its flagship London store, there was the predictable queue of people, eager to own a device which is equal parts phone, MP3 player and wireless web browser. Among the Apple aficionados and tech geeks, three besuited men stood together, all thumbing their BlackBerrys. When asked why they were lining up for an iPhone before 8am, one held up his BlackBerry and said: “Because this is damn ugly.”

His friend, a consultant, from PA Consulting, called his BlackBerry “clunky”, while another said the iPhone would make it easier for him to communicate with clients. All disliked the BlackBerry’s “Qwerty” keyboard and web browser.

Apple has launched its new iPhone decisively into BlackBerry’s business market, by improving security, e-mail and allowing third-party software to run on its platform. But this is not a challenge Research in Motion (Rim), maker of BlackBerry, is going to take lightly. Its most consumer-friendly phone yet, the Bold, could launch next week, while a multimillion dollar marketing campaign, “Life on BlackBerry”, sees it make a more determined push beyond its corporate core.

Both are chasing the scale required for making the competitive smartphone business pay, with the stakes raised after recent results disappointed investors. BlackBerry is dominant in the larger end of the corporate market, but is facing tough competition among smaller companies that use Microsoft’s mobile operating system, which can be cheaper. Apple has set a target of selling 10m iPhone 3G devices worldwide, which could be tough in a weakening consumer environment.

Richard Windsor, analyst at Nomura, said BlackBerry’s attempt to crack the consumer market has “not been particularly competitive”. Unassailable in its e-mail handling, other BlackBerry functions such as media playing have even lagged behind many Nokia or Sony Ericsson devices. “The Apple experience on their device is second to none,” said Mr Windsor. “Rim has a lot of work to do to catch up” in scaling up its manufacturing and distribution capability as well as design, he added

Nokia’s senior vice-president of devices, Søren Petersen, has been scathing about BlackBerry’s consumer push. “Selling to women is about more than making it pink,” he told the FT in June, referring to a colourful edition of the BlackBerry Pearl, its device that’s most like a regular phone. But he also dismissed the iPhone’s security and business features as “not worthy of discussion”.

New models could help BlackBerry’s consumer push. BlackBerry Bold has a high-resolution screen, improved camera and slicker design. Like the iPhone, it boasts both 3G and wi-fi connectivity, making it better for watching video and surfing the web.

That could leave software as the battlefront between the two smartphone behemoths, an area where Andrew Brown, analyst at Strategy Analytics, thinks Nokia has failed to capitalise. “Apple is in a good position to slaughter the lot of them because they’ve kept it pretty simple and accessible.”

BlackBerry users have thousands of downloadable applications to choose from – if they can find them. BlackBerry relies on third parties to distribute compatible software and its consumer offering extends little beyond a Facebook application. Developers are put off by its strict security requirements – critical for corporates.

After only a few months, more than 1,700 iPhone applications – around a quarter of them free – can be downloaded direct to the handset or iTunes. Importantly for developers, Apple customers have shown themselves willing to pay for digital downloads. Steve Jobs, Apple chief executive, has claimed Apple made $30m (£15m) from 60m downloads in the first month that the iPhone was available.

Enterprise software companies, such as Salesforce.com and Oracle, are making some applications iPhone-ready. But reliability problems with Apple’s MobileMe service – an online e-mail, calendar and file-sharing service – hit its credibility, especially compared with BlackBerry’s service.

A survey of nearly 600 office workers by Dave, a London-based creative business consultancy, found two- thirds trusted the BlackBerry over the iPhone, while more chose BlackBerry as a consumer tool than iPhone for business use.

Nomura’s Mr Windsor concludes: “It would be easier for BlackBerry to go consumer than it will be for Apple to go corporate.”

Source:Financial Times