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Even the Security-Conscious US Federal Government is Dumping BlackBerries for iPhones


The US Immigration and Customs Enforcement agency joins Yahoo and Halliburton in turning away from Research In Motion.

MINYANVILLE ORIGINAL The enterprise market is often seen as the last stronghold for Research In Motion's (NASDAQ:RIMM) BlackBerrry.

Because of its perceived superiority in security, the BlackBerry, with its messaging and email encryption technology, has long been the smartphone of choice for businesses and government agencies. However, it seems like even government employees can no longer resist the siren call of Apple's (NASDAQ:AAPL) iPhone.

A New York Times report on the stodgy image of the BlackBerry from last week pointed out that White House staffers had recently switched from the BlackBerry to the iPhone:
Even the White House, which used the BlackBerry for security reasons, recently started supporting the iPhone. (Some staff members suspect that decision was influenced by President Obama, who now prefers his iPad for national security briefings. A spokesman for the White House declined to comment.)

At Slate, Matthew Yglesias argues that federal agencies still remained tied to RIM for the foreseeable future. He points out, "[T]he Executive Office of the president is only a small sliver of federal employment, and these kind of decisions are done on an agency-by-agency basis" so "while 'CEO so-and-so tells her IT department to start supporting cutting edge phones' sounds like good sense, 'Secretary so-and-so wastes taxpayer money upgrading her smartphone' is a potential subject of congressional hearings."

However, Yglesias' thesis might be incorrect because a slew of other government agencies have discarded their BlackBerries for iPhones. Earlier in the year, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the National Oceanic and Atmospheric Administration announced they were making the BlackBerry-to-iPhone transition.

A third agency announced similar intentions this week. According to Reuters, the US Immigration and Customs Enforcement agency, or ICE, revealed in a document that it will spend some $2.1 million to buy iPhones for its 17,676 employees after eight years of BlackBerry use.

ICE said that it had "evolving mobile law enforcement business requirements that require the use of more capable and dynamic mobile technology" and that the BlackBerry "can no longer meet the mobile technology needs of the agency."

One key yardstick that the ICE used in deciding between the various smartphones available in the market was commercial viability. As such, though RIM and Nokia (NYSE:NOK) "help to define the smartphone market," they "failed to innovate and consumers have rejected them. The net effect is that both firms have been relegated to laggards in the consumer market which has made them too risky for adoption as a 'go-to' choice for enterprise use."

Microsoft's (NASDAQ:MSFT) Windows Phone was also eliminated from consideration because of its weak market penetration, leaving Apple and Google's (NASDAQ:GOOG) Android phones as the sole viable options.

The iPhone eventually got the edge because the ICE had worries about the security of the open-source Android system. On the other hand, "Apple's strict control of the hardware platform and operating system, independent of telecommunication vendor, provides ICE with the greatest degree of control and management to ensure the most reliable delivery of services to ICE's mission users," the agency said.

The trend of even government agencies turning away from BlackBerries is surely worrying for RIM. "You're going to see this happen more and more," Ed Snyder, an analyst at Charter Equity Research, told Reuters. "They still have excellent security ... but if your handsets are a brick that no one wants to use, it's going to drag down your business."

Indeed, in the corporate enterprise market, RIM has also seen high-profile companies such as Halliburton (NYSE:HAL) and Yahoo (NASDAQ:YHOO) dump the BlackBerry for their employees. Yahoo's change came from new CEO Marissa Mayer, who wanted her staff to project a less stuffy image, notes the Times.

On its part, RIM believes that its reputation of having an difficult-to-crack security system will ensure it always has supporters.

"RIM has a longstanding history of providing secure end-to-end mobile solutions for its customers. Security is built into every BlackBerry from the ground up. It is how we think, develop, engineer, and deploy our products and services," Jeff Holleran, director of Enterprise Product Management at RIM, told Minyanville in August. "RIM's customers have come to regard the BlackBerry solution as the gold standard for Enterprise mobility."

Even accounting for ICE's departure, RIM highlights that it still has one million government customers in North America. The company is, of course, counting on its much-delayed BlackBerry 10 to revive its fortunes.

"Of course, we are disappointed by this decision," RIM vice president of government solutions Paul Lucier said in an emailed statement, notes Reuters. "We are working hard to make our new mobile computing platform, BlackBerry 10, meets the future needs of government customers."

(See also: Can Research In Motion Stop the Apple and Google Onslaught in the Enterprise Arena?)

Twitter: @sterlingwong
No positions in stocks mentioned.
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