RIM 'mass exodus' may push down carrier fees: analyst

Summary:RIM may have to cut its carrier prices amid a mass exodus of corporate and enterprise customers. Two government departments in as many months: will end consumers even care?

BlackBerry smartphone and tablet maker Research in Motion, once the darling of the smartphone world, could be forced to dramatically cut the fees it charges carriers for its service amid further company turmoil, an analyst said on Monday.

Reuters reports that RIM brought in almost $1 billion from its high-margin service in the last quarter, but the figure remains only at one-fifth of its total sales.

Northern Securities analyst Sameet Kanade said that RIM had moved "too slowly" to counter the ever-changing and developing smartphone industry, amid competition from consumer-favourite Android and increasingly business-centric iPhones.

Kanade, in a note to clients investing in the company, revised down his forecast of share projections from $24 to $7, slashing its upcoming earnings target price by over two-thirds.

He also highlighted that carriers, which heavily subsidise popular handsets as part of its efforts to reduce the end-consumer costs, would increasingly move away from paying the BlackBerry service fee.

It comes as a second U.S. government agency, the ATF, pulled away from the BlackBerry service --- which was not only a once-lucrative smartphone segment but remains a secure messaging network infrastructure --- in favour of a cheaper alternative, it said on Monday.

The agency responsible for investigating and preventing federal crimes involving firearms and explosives, said it would remove its BlackBerry infrastructure by the end of the year. Like a dagger to the heart of the Ontario-based smartphone company, the ATF will be moving to iPhones, the agency's chief information officer said.

Some are moving towards a bring-your-own-device (BYOD) model where existing consumer BlackBerry handsets are supported, though not officially sanctioned; particularly in the governmental sector.

But as ordinary consumers move more towards the two-horse race devices of Android and iPhones, the wider competition is struggling to save face. Microsoft's Windows Phone 7 platform lost market share in the last quarter, as its lead rivals both gained.

It's no secret that RIM is in a bad shape; even after a handful of months since new chief executive Thorsten Heins took his seat at the top of the company. His primary focus was to set the agenda for future BlackBerry devices and drive marketing whilst becoming more consumer driven.

BlackBerry 10 is expected in September this year, but the mood has been muted. If BlackBerry 10 is a "game-changer" as it has been described in the past, the company needs to hold out long enough to get the upcoming devices and operating system out of the door.

If Europe's sales are anything to go by --- and they are far from good --- then RIM may not even be able to hold onto the UK as its European powerhouse, with over 8 million subscribers.

The company has to face some serious and difficult questions about its future, and the end to the Lazaridis and Balsillie tag team appears to have done nothing.

Image source: Jacqueline Seng/CNET Asia.

Related:

Topics: BlackBerry, Hardware, Mobility, Security, Smartphones

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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