Will Apple Force Sony or RIM Out of the Smartphone Market?

The iPhone maker continues to make its competitors pay for trying to clone its devices. But is this the end for Sony and Research in Motion? According to TechCrunch, IT research and advisory company Gartner IT is reporting that Apple AAPL “stole the smartphone show” in the fourth quarter of last year. This is the umpteenth company to report this fact, which has become common knowledge these days. What's new is that Sony SNE Ericsson, Research in Motion RIMM, Motorola MMI, and LG have now stepped into the spotlight as the big losers of the bunch. While it's no secret that these companies are in trouble (especially the BlackBerry maker), this is the first time that they are getting acknowledged for doing such a poor job. “LG, Sony Ericsson, Motorola and Research In Motion (RIM) again recorded disappointing results as they struggled to improve volumes and profits significantly,” Gartner stated in its press release. “These vendors were also exposed to a much stronger threat from the midrange and low end of the smartphone market as ZTE and Huawei continued to gain share during the quarter.” This begs the question: how long can these smartphone manufacturers go on before they will be forced to leave the market? Nokia NOK is frequently regarded as one of the losers of the industry – not just in smartphone development but in the creation of older, more traditional-style phones as well. But according to Gartner, the company still managed to sell more than 110 million units worldwide last quarter. That's an 8.7% decline from the previous year, but it's more than enough to ensure that the company is here to stay. If Nokia ever figures out how to design a phone that American consumers actually want, it could actually pose a threat to Apple and Samsung's dominance. The same cannot be said for RIM, the infamous PlayBook manufacturer that ran its business into the ground by failing to keep up with Apple's numerous innovations. While Apple fought against buttons and pushed for a beautiful, innovative and highly intuitive touch screen, RIM stuck with buttons and didn't know what to do with its user interface. RIM also failed to capitalize on the growing market for apps, which could be another reason why the company has failed to intrigue the masses. It also lacks the capacity to sell phones to the everyman. If Bob is a corporate exec, he might buy a BlackBerry. But if Bob works in any other profession (or is a child, teenager, or college student, or doesn't work at all because he won the lottery and is filthy rich), he is more likely to buy an iPhone or Android phone. That's where Sony comes in. Well, that's where the company hoped to come in, as it now develops exclusively using the Android OS. Sony has attempted to leverage its strong video game brand with the Xperia Play, one of several smartphones that has been “PlayStation Certified” for “high-quality gaming.” It's a nice thought, to be certain, but the results haven't broken any ground. While the limited number of games could be forgiven, the quality of the gaming experience is a little harder to ignore. First and foremost, it's not strong enough to persuade avid gamers to get an Xperia Play instead of (or in addition to) a portable gaming device. Second, it's just not cool enough to prevent consumers from getting an iPhone. And among those who don't want an iPhone, they know where to go to for their Android fix: they go to Samsung. This has to make you wonder: how much longer can Sony go on like this? Really, this question could be applied to every sector within Sony except for its PlayStation division. Sony makes money selling games and consoles; it doesn't make much of anything manufacturing overpriced laptops, inferior iPod docks, lackluster smartphones, lame MP3 players, dated radio alarm clocks, and other irrelevant electronics. Without question, Sony's TVs are the most beautiful on the market. But Samsung's are so close in quality that most consumers don't notice the difference. Consequently, Samsung has become the new leader in this realm. In years past, however, Panasonic PC led TV sales. When high-def TVs first arrived, Sharp cleaned up as well, despite the fact that Sony's TVs were vastly superior. Aside from video games (and the occasional summer blockbuster, such as Spider-Man), Sony has rarely been able to lead the markets in which it competes. But it never stops competing. You never hear about Sony exiting unprofitable industries. For whatever reason, Sony is willing to let its profitable businesses pick up the slack. However, no company can do that forever. If Sony isn't careful, it might lose its ability to profit from gaming. When that happens, the tech giant will have to rely on its movie division for revenue growth. Ten years ago, that wouldn't have been a problem. But now, with the new Spider-Man film facing a potential backlash from diehard Sam Raimi fans (and ridiculous competition from The Dark Knight Rises), Sony might not be able to rule the box office this year. Like it or not, Sony will have to some make cuts eventually. And when it does, cell phones will be one of the first things to go. Follow me @LouisBedigian