BlackBerry maker Research In Motion (RIM) will release second-quarter earnings Sept. 27. Analysts question the long-term viability of the company despite the imminent launch of the new BlackBerry 10, which goes on sale in 2013.
RIM once dominated the smartphone market, pioneering the use of mobile email with the introduction of the first BlackBerry in 1999—a two way paging device—and later moving to global leadership with the introduction of integrated push email and phone services as well as text messaging in 2003.
Some 10 years later, the company is struggling, suffering from the legacy of its once groundbreaking qwerty keyboard. Competitors such as Apple and Google have embraced the full touch technology from the beginning and analysts believe that RIM held on to its keyboard for too long, completing the transition with its new BlackBerry 10 model. Despite the fact that the device will have two versions—one featuring a keyboard and a touch screen, another with a screen only—the new operating system is now designed to support full touch.
“RIM’s unique selling point for hardware was its keyboard, a feature that is being displaced for all-touch devices in most markets and price segments,” writes Nomura in a report.
RIM CEO Thorsten Heins remains realistic: “There’s never an eternal proposition—there’s a very stable, slowly growing base of physical keyboard users and most of them are really highly ranked officers. At the moment it’s prudent to offer both keyboard and touch screen. If people love a physical keypad I will not talk them out of it but it’s one element of the larger experience,” he said in an interview with the Daily Telegraph.
Tough Competition, Change in Technology Reflected in Numbers
According to market research firm IDC, RIM’s share of the smartphone market plummeted to 4.8 percent in the second quarter, down from 12 percent the year before. A Bloomberg survey of research analysts predicts that the company’s sales will decline by 45 percent at the end of this fiscal year.
This year has been a complete disaster in terms of operating results, as unit shipments fell 30 percent in the first quarter and the gross margin contracted by 12 percent. This trend is unlikely to reverse, according to analyst expectations. The average estimate for earnings per share is a loss of $0.47 versus a loss of $0.37 in the first quarter. The company is eliminating 5,000 people out of a total workforce of 16,500, in a bid to save $1 billion per year and stay ahead of costs.
Despite these alarming figures, the company’s CEO remains optimistic and thinks that fortunes will turn with the introduction of the BlackBerry 10. He believes that the introduction of the full-touch phone with its own platform—distinguishing it from Apple’s iOS and Google’s Android—will give it a clear shot at claiming third place behind the two giants.
BlackBerry 10 to Combine RIM Strength With New Technology
At the BlackBerry Jam conference, held from Sept. 25 to Sept. 27 in San Diego, Calif., a preview of some BlackBerry 10 applications was provided. The new phone will have its own operating system and developers attending the conference were invited to create applications for it. Having the support of developers is crucial for creating an independent mobile platform.
Nick Manning, a company spokesperson cites a report by Vision Mobile, saying that BlackBerry developers achieve 4 percent higher revenue than iOS and 40 percent more than Android. “The cost of development for BlackBerry is significantly cheaper.”
If everything goes well, the new platform will compete with Windows Mobile for third place in smartphone operating systems. Thorsten Heins said at the event, “We want to leverage what you do, and give you an expanded platform to build upon.”
