“Because of the influx of new users, lead analyst Rod Hall believes companies that closely integrate hardware and software are in a better position to cash in on the growth,” Gallagher reports. “‘We believe that user experience complexity will grow and weigh in favor of those companies that can control and deliver superior integration through vertical integration of software and hardware,’ Hall wrote in his report.”
“As such, Hall said he prefers vendors such as Apple, which makes the iPhone; Research In Motion, which makes the BlackBerry; and Nokia,” Gallagher reports. “The latter two were upgraded to overweight, or buy, ratings. J.P. Morgan already rates Apple as overweight.”
“Hall maintained a neutral view on Palm, noting the company’s recent troubles in selling its latest smartphones. He said the company’s fate likely rests on introducing another hit product and improving its distribution,” Gallagher reports. “Also, the brokerage started coverage of Motorola with a bearish underweight rating, noting that the company is relying on the Android operating system from Google for its latest phones — putting it at a disadvantage to other vertically integrated rivals.”
MacDailyNews Take: Not to mention the potential for patent infringement lawsuits. 
Gallagher reports, “Users highly value things like location-based services, battery life and push delivery, which give an advantage to companies that can closely integrate their software and hardware. ‘We expect this unstable period to last for another 2-3 years before expected user experience stabilizes and a more horizontal industry emerges,’ he wrote.”
MacDailyNews Take: Yeah, just like it didn’t in the portable media player and online music sales markets which Apple continues to own. Vertical integration simply gives the user a superior experience, just look at the Mac, iPod, iPhone, and very soon, iPad, for proof. Plus, iPod+iTunes proves that vertically integrated solutions can dominate markets and not cede them in “2-3 years” to the too-many-cooks-in-the-kitchen approach.
Full article here.
[Thanks to MacDailyNews Reader “cptnkirk” for the heads up.]
Research In Motion still makes the Black what? Aren’t they giving up like Palm?
“iPod+iTunes proves that vertically integrated solutions can dominate markets and not cede them in “2-3 years” to the too-many-cooks-in-the-kitchen approach.”
Well said MDN
I can’t believe. This article is not from Fred Mertz! Fred, are you okay buddy!
Where is everyone today?
Cars brands are intergrated. I don’t see people wanting cars that have interchangable parts other car brands. Why a phone?
You know, I thought it was odd when Steve J described Apple as the largest mobile computing company in the world…
Now I see, he had already begun skating to where the puck is going to be.
The iPad is a whole new direction in computing. A year or two from now the windows weenies in the tech press chanting “But it doesn’t have serial ports” will look every bit as insightful as they did when they predicted the certain failure of the iMac because of it’s lack of a floppy disk.
“Where is everyone today?
Fucking everything chano.