BB10 'no salvation' for RIM

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.
Written by Eileen Yu, Senior Contributing Editor

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.

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