Cutting Room: BlackBerry being squeezed out

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Paul Withers reckons RIM needs to speed up the release of handsets and evolve current form factors to get itself back into a market dominating position again

Boring handsets. Lack of change. A brand losing its identity. Amazingly, we’re not referring to Nokia this time.

Perhaps Research In Motion (RIM) isn’t quite in the pickle that Nokia finds itself in. But, as RIM is based in Waterloo, Ontario, we wonder if the manufacturer of the famous BlackBerry may be heading towards its own Waterloo. And not necessarily on the Duke of Wellington’s side.

Having made that excruciating joke, let’s not forget RIM is a profitable company. While Nokia, Sony Ericsson, Motorola and LG have suffered losses, RIM has raised revenues from £184 million in 2002 to almost £10 billion last year.

Which is why its financial results for the quarter ending May 28 came as a shock to the markets. Profits fell 9.5 per cent year-on-year to £435 million. Revenues crashed 12 per cent to £3.06 billion compared to the previous quarter. The paucity of these numbers comes into focus when you realise Wall Street analysts had been expecting revenues of £3.2 billion.

RIM has now downgraded its revenues forecast to £2.62 billion from £3 billion, well below the £3.42 billion expected of it. Some of its 17,500 global staff will also be made redundant.

The last BlackBerry model to ship was the Bold 9780, eight months ago. Yes, BlackBerrys have a long shelf-life, but eight months between model releases is much longer in mobile handset years. Consumers, spoiled for choice, expect more variety. Only Apple can get away with an annual handset release. But Apple is a diversified company, of which the iPhone is but one part of its portfolio.

Tablet distraction
RIM’s obsession with the PlayBook must also be considered. It would have slaved to ensure its first tablet was fit for purpose (early comments suggest it is just that). But the brouhaha over the PlayBook
has resulted in a shift of focus away from its crucial core handset business.

There is nothing terribly wrong with BlackBerrys. They are synonymous with small screens and full QWERTY keyboards, which helps the brand dominate the business market.

But now there are cheaper QWERTY alternatives, such as the HTC ChaCha and Samsung Chat. BlackBerry’s attempt to produce a device with a large touchscreen flopped with the Storm 9500 three years ago. The device was hampered by a 624MHz processor, when rivals were beginning to run 1GHz processors. The screen resolution of 480×360 pixels was behind the standard at the time of 800×400 pixels.

However, RIM gained success in the mid-tier consumer market, with BlackBerry Messenger (BBM) a driving force. But now consumers are expecting more. Apple’s forthcoming iMessage service could hammer RIM’s success with instant messaging.

Stretching the brand
RIM’s job now is to build a brand that will appeal to future customers. It has relied on the strength of its brand identity on the enterprise market. This is no longer enough. It has to stretch further.

Now the Playbook has shipped, RIM can concentrate on its core BlackBerry business. But the ‘BlackBerry’ brand is in danger of becoming stale. RIM must reinvigorate it with a raft of new devices that can run against the best that Samsung and HTC have to offer.

It must change its form factor in an age where HD-quality screens and high-speed processors are the standard for entry into the high-tier. The move to the new QNX platform may solve RIM’s innovation problems. QNX makes handsets easier and faster to operate, but it will not be on the whole range for another year. And a year is an eternity in this business.

1 COMMENT

  1. I still love my Torch. Great keyboard and touch screen combo. If RIM puts QNX and a faster processor in the Torch is would really rock.

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