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

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?

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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.

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Topics: BlackBerry, Hardware, Mobility, Security, Smartphones

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13 comments
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  • Patience, pilgrim

    [ul][i]the end to the Lazaridis and Balsillie tag team appears to have done nothing.[/i][/ul]Not that he ever will do any good, but let's give Mr. Heins more than two months to turn the company around. Even if he had the best new product idea in the world, it would take a year to design it and put it into production.

    [ul][i]The agency responsible for investigating and preventing federal crimes involving firearms and explosives[/i][/ul]And let's be fair to the ATF as well. They are also the agency responsible for [b]causing[/b] crimes involving firearms and explosives, especially those committed by Mexican drug cartels.
    Robert Hahn
  • only android can save BB

    BB should adopt android ASAP to survive.
    The Linux Geek
    • The Linux Geek: Couldn't agree more...

      I can't say I could agree more. I've been saying it since what happened to Palm. Once android took the stage, RIM has Palm painted all over it. I didn't think it was possible to botch two such awesome companies in such a short period of time. Do whatever you have to do to put Android on your awesome hardware, get BES to support it, and you're back in the game. I really think it's as simple as that!
      patrickd26
      • Not a good idea

        Playing in markets that are essentially bleeding contests is very difficult. Your whole corporate culture has to be tuned to play that game. RIM has never played that game. They are a highly-differentiated, high-margin, high-service-level provider. Send them into battle against Samsung, and they won't come back alive.

        It's not about picking the OS that is "most popular" in the consumer market. If you can't win a bleeding contest, that's not the market you want to be in.

        RIM's whole claim to fame was secure communications. That's what won them favor in corporations and in government. Android and "secure communications" are at least a year of really hard work apart. RIM doesn't have a year.

        What RIM should be doing is strengthening its claim to being THE secure comms provider. It'll wind up a smaller market than they had; they won't be a fad among teenagers anymore. But they'll survive, because there will always be customers who will pay a premium to keep their secrets.
        Robert Hahn
    • They can't. They built their reputation on security. android is the least

      secure of the mobile os contenders. No enterprise in their right mind would allow android phones to connect to their resources.
      Johnny Vegas
      • There's no real problem that can't be solved

        ... but hey, you're a comedian, right? ;)
        Heenan73
  • How do you Spell Crooks

    TORONTO, Aug. 19, 2011 /CNW/ - Jaguar Financial Corporation ("Jaguar" or the "Company") (TSX: JFC) today announced that the Company has been advised that Vic Alboini, Chairman and Chief Executive Officer of the Company, and Northern Securities Inc. (an investment dealer registered with IIROC and of which Mr. Alboini is Chairman and Chief Executive Officer), and certain other executives of Northern Securities (together, the "Respondents") were issued a Notice of Hearing from the Investment Industry Regulatory Organization of Canada ("IIROC") dated July 29, 2011 (the "Notice"). The Notice sets out six matters alleging failures by the Respondents to comply with the provision of margin in Northern Securities' client accumulation account; supervision of trading activities; findings from earlier business conduct compliance and trade conduct reviews; best price obligation; and financial reporting.
    CanNet
  • Great Reporting...but

    Next time do your due diligence and at least search these guys and see if they are criminals or sketchy characters before you quote their cronies....
    CanNet
  • Zack what data are you basing youre WP7 claim on? The link you provided

    shows WP7 global sales increasing 36% last quarter. (quarter over quarter). Do you have some other data that shows the global market as a whole growing more than 36% in the last quarter?
    Johnny Vegas
    • Could be

      I don't think any data Zack linked to supports his conclusion. He has global growth of 36%, but declining U.S. market share. The two can't be compared.

      That said, Apple burned up the charts last quarter, with 83% quarterly revenue growth, most of that from the iPhone 4S. So it may well be that WP7 grew 36% but lost share, even globally. It is unlikely that Apple can sustain that level of growth; a lot of it was presumably pent-up demand for the "new" iPhone. Of course, the same thing might be true of the new Lumia phones. We'll just have to wait and see.
      Robert Hahn
    • That's 36% of WP7, not 36% of the whole market ..

      ... and 36% of sod all is a small blip in the total market :)
      Heenan73
  • Expected

    This isn't really a surprise to anyone and if it is, it shouldn't have been.

    http://www.tech-thoughts.net/2012/02/how-to-fix-rim-nokia.html
    sameer_singh17
  • boo hoo for the unfit

    RIM has fast email and awesome calandars, but at the expense of the internet and media. It is like a car with awesome brakes but can only accelearte slowly up to 25mpg. With BB OS 10, RIM has a fast car but regluar brakes but no advantages over others. Lowering the cost won't prevent people from abandoning RIM. Those that absolutely need RIM phones will keep them. I am forced to use one because our work prefers it. I still keep a real smart media phone to make up for the Blackberry's shortcomings
    I do not feel sorry for a company rhat cannot compete. Perhaps they should invest in Canadian oil where the REAL money is at
    flyguy29