Verizon Gets BlackBerry Tour

Verizon Wireless (VZ - Analyst Report) has finally confirmed that Research In Motion's (RIMM - Analyst Report) BlackBerry Tour 9630, the highly anticipated 3G smartphone device, will hit the stores on July 12. Verizon will sell the Tour for $199.99 after a $70 mail-in rebate with a new two-year customer contract. Currently, customers can pre-order the Tour from Verizon stores. The Tour will enable customers make phone calls and access e-mail and Internet wherever Verizon's data roaming services are available.

Users can easily access voice and data services on networks outside the user's home country, which is preferred by enterprise users. Customers purchasing the BlackBerry through Verizon will be able to use Verizon's CDMA network in the U.S and EDGE/GPRS/GSM networks while in roaming.

The Tour, also known as BlackBerry Niagara, is a sleek and thin smartphone. It features robust functionalities such as push-based mobile solution for e-mail, SMS and MMS capabilities, a HVGA 480 x 360 display, microSD card slot content with up to 16 GB cards, and a full QWERTY keyboard for smooth typing.

The Tour is enabled with Bluetooth 2.0 and GPS, but has no WiFi capabilities. In addition, there is a 3.5mm headphone jack and 3.2-megapixel autofocus camera with geo-tagging and video recording. It supports Verizon's V CAST Music with Rhapsody and VZ Navigator services. The BlackBerry Tour also supports the recently launched BlackBerry App World and is preloaded with Documents to Go for viewing and editing Word, Excel and PowerPoint documents.

Sprint (S - Analyst Report) also plans to launch the Tour for $199.99 with a two-year contract, but did not provide any specific release date. In addition, the smartphone will be sold in Canada through Bell Mobility and Telus (TU - Analyst Report). RIM's BlackBerry is one of the largest selling smartphones in the market. Tour is expected to be a sure-fire hit due to its differentiating and consumer-friendly features, as well as the low price point. RIM is also expected to gain from the rising demand for smartphones.

Research in Motion has developed a loyal business with previous launches including the BlackBerry Storm (featuring a large touchscreen), BlackBerry Curve 8900 and 8300, BlackBerry Bold, BlackBerry Pearl Flip 8230 and BlackBerry 8830 World Edition smartphones on the Verizon network. The Tour is an updated edition to the BlackBerry 8830 World Edition and a combination of the BlackBerry Curve 8900, Pearl and the Bold. RIM's Tour is expected to be the most successful model launched till date.

Although the Tour is an attractive product, we believe that it will have to compete with the launch of Apple's (AAPL - Analyst Report) iPhone 3G S via AT&T (T - Analyst Report), and Palm's (PALM - Analyst Report) Palm Pre with a touch-and-QWERTY keyboard in the U.S. through Sprint. Nokia (NOK - Snapshot Report) has also launched its new E72 and a touchscreen music phone, the 5530 Xpressmusic phone. Thus, aggressive competition awaits RIM's Tour and may hamper its sales.

The mobile communications industry is highly competitive with several large, well-funded, and experienced competitors and characterized by aggressive pricing practices. Although RIM is vulnerable to competition, it leads the smartphone market through innovative product launches. We expect RIM's Tour to further bolster the company's growth prospects going forward.

Research firm The Yankee Group estimates that 41% users will purchase a smartphone as their next mobile device, with smartphones comprising 38% of all handsets by 2013. According to data from comScore Inc., Palm devices accounted for about 15.5% of the U.S. smartphone market, while RIM's BlackBerry portfolio leads with 38.7% and Apple's iPhone has grabbed a 15.8% share of the space in 2008. In light of the above thesis, we maintain our Buy rating on RIM shares with an $80 price target.