BB10 'no salvation' for RIM

BB10 'no salvation' for RIM

Summary: Its BlackBerry 10 launch looms but shouldn't be counted on to save beleaguered Research In Motion, which has failed to address its "chronic inability" to appeal to consumers in mature markets, says Ovum analyst.

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Research In Motion (RIM) may be gearing up big time for its BlackBerry 10 (BB10) launch, its first in two years, but the device won't pull the beleaguered smartphone maker out from its downward spiral.

Jan Dason
Dawson: BB10 won't save RIM.

In a statement released Tuesday, research firm Ovum said RIM failed to address current market trends and designed its latest release primarily for existing users, building "the best BlackBerry for BlackBerry users". 

Jan Dawson, chief telecoms analyst for Ovum, said the new smartphone will give the company some reprieve but will not be its "salvation". He noted that RIM still faces the "twin demons" of consumer-driven buying power and a "chronic inability" to appeal to consumers from mature markets.

Dawson said enterprises no longer buy the bulk of smartphones sold today and consumers are opting to purchase other devices over BlackBerry, leading low sales for RIM's offerings.

These two trends will continue, he said, adding that employees expect their companies to replace current BlackBerry with either an Android or iPhone device.

And rather than attempt to encourage consumers to convert to the RIM platform, the smartphone maker instead looking to fulfil the needs of its current user base.

Pointing to the vendor's promotional message for its new offering, to be launched January 30, the Ovum analyst said the focus seemed to be on better multitasking, e-mail, productivity, contacts and calendar apps, rather than on providing a better games, content consumption or social networking experience.

"We can't fault RIM for wanting to hold onto its 80 million existing subscribers," Dawson noted. "While exact figures aren't available, our analysis suggests RIM has always sold about half its devices to new customers and half to existing customers upgrading to a better phone. For much of the last two years, the portion bought by upgrading customers has significantly outweighed the portion bought by converts, and this makes it all the more important for RIM to retain existing subscribers."

BB10 marks the Canadian company's first device launch in two years, though it released the BB7.1 update last year. Its official Singapore launch is scheduled for February 21.

Dawson remarked the launch took far too long, dragging the upgrade cycle and pulling down RIM's results in the interim. Should BB10 deliver, it would boost the company's numbers for the first two quarters this year, he said. Longer term, however, the vendor's performance will return to its downward trend.

While the device will appeal to existing users, BB10 will unlikely do likewise to users of other platforms with few compelling apps, content stores or a robust ecosystem.

And although BlackBerry devices have become middle-class status symbol for consumers in emerging markets, these are low-priced and run on BB7, he added. With developers shifting their focus to the latest release, RIM will find it increasingly difficult to maintain the appeal of its older platform in these markets as the company will unlikely release new hardware on it.

Dawson added BB10 requires high-end specs which it cannot continue to deliver on these low price-points. As such, the popularity of BlackBerry in emerging markets cannot be sustained, he said, noting that Android devices will also offer better priced alternatives.

The Ovum analyst, however, said RIM will be able to hang around for a while yet. "We don't expect a speedy exit from the market; with no debt, 80 million subscribers, and profitability in the black in at least some recent quarters, the company can continue in this vein for years.

"But its glory days are past, and it is only a matter of time before it reaches a natural end," he concluded.

More coverage on BB10 on ZDNet:

Topics: Smartphones, Mobile OS, BlackBerry

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 16 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings.

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57 comments
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  • Soothsayers

    Like all soothsayers may we hold you to your view one, two, three months or a year from now? Personally, I think RIM has done a superb job of methodically working through their issues and BB10 will be a first step to a slow but steady recovery.
    charlie4468
    • methodically working through their issues ...

      Translation: LATE TO THE GAME

      On top of that, all the talk about selling out to Lenovo (a Chinese company) is making government personal think twice about renewing the contract with RIM.
      wackoae
    • Not needed

      Just like in the early days of the automobile, where at one time there were over 100 auto manufacturers, the mobile OS market is too crowded. Already, there is iOS, Android, Windows Mobile, and soon-to-be-released Ubutnu. Being a solid OS will not help much...where is WebOS? RIM should have followed HP's lead and dropped BB10. Instead, they have squandered time and money that would have been better utilized by at least switching to a custom UI Android system. Oh, and let's not forget convincing software developers to create or port over yet another variant of their apps. If the RIM is lucky, they will see the light, soon, and make the switch.

      BTW, I am more of an iOS person, than Android. So, it's not a fanboy going, "Android/Apple rules, others drool!". I just think that it's a really, really bad move to keep pushing forward with a custom OS, at this point in the mobile industry.
      bigtrav261
      • People don't get it...

        BB10 isn't simply another OS, the underlying kernel is much more suited to mobile computing then any of the others, read this;

        WHAT MAKES QNX SO PERFECT FOR MOBILE?
        http://crackberry.com/history-qnx-and-it’s-implementation-blackberry-10

        It makes no sense for RIM to be yet another Android firm where it's extremely hard to add any value to the base OS, only Samsung rule in that space with others getting the scraps. No, the only way is their current path and time will tell if they succeed or not, but it won't be without a fight no doubt, but a good one.
        CarusDave
        • people dont get it - Precisely!

          The problem is, nobody out there knows how good QNX is. A layman wouldnt care if their underlying kernel or OS or whatsoever powers nuclear plants and NASA space stations. If iOS/Android works for them, then it works for them, even if it's the same technology that runs a rubber duck. or something.
          Mohd Taufiq Zalizan
  • Semantic backpeddling

    ok so now the nay sayers are going from RIM will be dead in the water at the gate to RIM may gain a little steam at first but will never return to it's glory days. It seems they are looking for a way to wiggle out of putting their foot in their mouths. I think the time is perfect for a New Blackberry unveiling . Regardless of Android and Apple's current market share in smartphones, consumers are saying they want a 3rd option ... and windows 8 isn't it. Perhaps the time is now for everyone to stop speculating and just let the consumers decide.
    celebalex@...
    • Win 8

      A little too quick to conclude that WP8 isn't it. And as far as consumer appeal, I can't help looking at the UI on BB10 and think consumer. At least WP8 looks and feels modern.
      tsf1
      • clarify

        To rephrase...I the word "consumer" doesn't come to mind when I see the BB10 UI.
        tsf1
  • Validity of this Article

    First off: You used the term "Blackberries". RIM's legal will be after you shortly: http://www.rim.com/legal/trademarks/guidelines.shtml
    What kind of author makes such a silly mistake?

    Second: You don't at all address the recently increased popularity of the BlackBerry brand, nor do you address the decreased sale/interest in Apple's iPhone. You say it's a consumer driven market: Consumer's are driven simply by "What's hot and trending", so your attempt to analyze the consumer market as an intelligent being that has picked a superior product, is irrelevant.

    Third: While this doesn't make a positive case for RIM, you continue to cite 80 million subscribers, but any analyst should know at this point that this number has decreased since their last quarterly report.

    This is an irrelevant article by an irrelevant author.
    Mike Kovacs
    • Blackberries

      "RIM Legal" can suck on my blackberries! That's RIMs problem, too stodgy, too academic, they have never really "gotten" it and are incapable of designing a device that works the way it should. BB10 will not preform in next two quarters and RIM will be snapped up by samsung or lenovo or some other loser company
      rogerrobie68
      • RIM Legal

        I don't care what you need "sucked"... That's not a valid argument. The point I made is that the author of the article doesn't even know how to properly write a story about the company she is targeting. If you saw someone writing about Apple or Android and calling them "apel" or "androyd", you'd discredit the article pretty quickly too!
        Mike Kovacs
    • Validity of your post

      1) Who cares? Blackberries, blackberrys, blackberries - RIM Legal can hum a tune on mine.

      2) Increased popularity? I call bull on that. All data has shown that RIM's popularity is in a downward spiral and they seem to be hedging their bets on BB10 and the new line of BB10 devices - they look decent but will it be enough to counter the headinthesanditis they displayed when iOS and Android were released?

      3) You say that subscribers have DECREASED sine their last report - doesn't that completely invalidate your previous point?

      An irrelevant post in response to a relevant article.
      athynz
      • Agree on one point

        Splitting hairs over the mispelled (mispelt? misspelt? hehheh) word is worth nothing. I agree with you.
        Further, I like your expression "headinthesanditis"! Gave me a great laugh
        As far as downward spiral goes, atleast youdid not use the term "death spiral" which invoked absolute hopelessness. I think RIM has a shot here.
        respighifan
        • I don't

          Our company shut down its BES servers after 90% of the work force went to Android and the other 10% to iPhones and others. There's a handful still being used anyway, the users just haven't got to replacing them yet. I really don't see BB making a resurgence in what used to be their turf -- the corporate world. I'm sure other companies have pulled their BB infrastructure as well, and aren't inclined to start looking back.
          jvitous
        • From the screenshots

          I've seen thus far the new BB device looks slick and the interface is different from iOS and Android - it more closely resembles WP7/8 without the whole rainbow of colors and the IMHO "busy" look. I do like the looks of both - I hope the functionality matches. I used to own a few crackberrys and they were not horrible devices but when iPhone brought their new paradigm to the market by comparison the BB seemed antiquated and second best. I went from a BB 8703e to a BB 8503 curve to a BB8305 curve to the Storm and honestly I felt RIM really didn't get what the new direction was - hence my "headinthesanditis" term. Now - now I hope BB10 isn't a too little too late thing and RIM becomes relevant and more importantly a much more viable force in the smartphone market - that will in turn hopefully get Apple, Google, Microsoft, and the OEMs off of their collective duffs and throw down on some really killer devices and OSes.
          athynz
    • Increased popularity?

      Increased popularity of the brand, if that is the case, means nothing if not accompanied by sales. I haven't particularly seen an increase in brand popularity for BlackBerry, and they have certainly lost subscribers.

      And I'm really not sure what you mean by decreased iPhone sales. 47.8 million phones last quarter is a substantial increase, even if Wall Street has even insanely higher expectations. Sales are not falling, though they of course they may level out in the future. Of course that still pales in comparison to Samsung shipments.

      Unfortunately RIM is releasing their phone into a very crowded smartphone marketplace, 90% of which is owned by Samsung/Android and Apple/iOS.
      lborsato
  • Does OVUM know anything about BB10?

    "Ovum analyst said the focus seemed to be on better multitasking, e-mail, productivity, contacts and calendar apps, rather than on providing a better games, content consumption or social networking experience" wow, a better-informed opinion I could find in the youtube comment section. The Hub alone makes this the most brutally efficient communication device ever created. All social networks are integrated, or can be, by the developers. The Hub is on the OS LEVEL. All it takes is some reading and research and if you do that for a living you have no excuse for not knowing this OS intimately. And the browser? The future of smart phones is games? The future of games are OS independent HTML 5 games. Which, BB10 has the best browser ever. On any platform, mobile or desktop. Google it. Read. Research. It's set to be the next big thing, the only thing that would stop it from taking market share is RIM's history of terrible promotions for their products or under-informed consumers. Both are possible, but Ovum's saying it will be the OS is just....stupid.
    Daniel Kinem
    • Social networking is built into BB10...to the OS level

      Not sure I made that one point clear enough. You can see and take action on all messages from all social content without 1) ever closing the app you are in, 2) without opening the native app for that social content. Example, running a game, see blinking LED, swipe up to peek and see EVERYTHING SOCIAL YOU HAVE IN THE WORLD, see one from LinkIn you want to respond to? Swipe over, respond in the Hub (never opening any LinkedIn app...unless you want to.) Swipe back, app still running. Stunning. Saving you seconds per action and that action is 100s of times per day for 'social' phone users.
      Daniel Kinem
      • Oh no!

        Everything social with one swipe? On a BB? No thanks. Just keep mail, messaging and all the social stuff separate please.
        capeleopard
        • and the lad fails to understand the nature of innovation

          Innovation = change.

          Commodore, Intel-MS, RadioShack, Apple, Netscpae, Yahoo, Google, Amazon, Facebook, Nokia, Sony, Samsung, HTC, and RIM all grew on providing added value or added benefit; that made most users life"s a bit better or easy. They accomplished this using or leveraging existing technology. All these companies, provided at their time, the next best thing.

          The current next best thing most likely will not be games (I can't fully rule it out), as its a subset of the entire universe of users.

          The next best thing is a device that will change your life and the way you do things. What this may be only those lucky enough that at involded with innovating and access to a deep budget (I mean tens of millions or more) are the ones that actually have a clue. The rest can dream.
          Uralbas