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Analysts: RIM Gains Won't Start Until Mid-2013

4/09/2012 12:01:00 AM Eastern
NEW YORK – Research In Motion’s (RIM) plans to reverse its market-share slide won’t bear fruit until mid- 2013 after the late second-half launch of BlackBerry 10 smartphones, and the best the company can do this year is to halt its market-share slide rather than expand its share, analysts told TWICE.

The rest of 2012 “is a gift-wrapped present to RIM’s competitors,” said IDC analyst Ramon Llamas. The success of BlackBerry 10 is critical to the company’s fortunes in 2013, he added. “RIM has to knock it out of the park.”

Besides implementing BlackBerry 10, the company also needs phones with large touchscreens and lots of apps “to make a clear distinct breach with the past,” Llamas said. He pointed to Microsoft’s new Windows Phone 7 OS, which he said is “night-and-day” different from the previous Microsoft OS. RIM has also promised much-needed 4G LTE technology in its BlackBerry 10 phones to remain competitive.

Strategy Analytics analyst Scott Bicheno also sees RIM in a waiting period this year. “How quickly the uplift happens depends on the strength of the BlackBerry 10 handsets in the fourth quarter,” he said. If the Black- Berry 10 phones launch in the fourth quarter, “we won’t see upward movement until Q2 or Q3 [of 2013].”

For his part, Alex Spektor, also an analyst with Strategy Analytics, doubted RIM will ever regain No. 1 smartphone share. “To get back to a leading position is nearly impossible,” he said. “Once you lose the No. 1 spot, it’s very difficult to get it back.”

Nonetheless, Spektor believes RIM has the potential to grow back to a gain a “reasonable” share. The company has “the momentum to sustain itself,” he said.

To sustain itself until BlackBerry 10 phones arrive, RIM said it plans to “incentivize” sales of existing BlackBerry 7 devices.

Besides pinning its turnaround on BlackBerry 10, the company will also make a “stronger investment” in the enterprise market and in “high-end aspirational devices” but won’t abandon the consumer market or the “mass market,” said president/CEO Thorsten Heins.

Heins made the comments after announcing RIM’s first quarterly net loss in years. RIM frequently made quarterly losses up until 2003, “and barring a blip in 2005 that was attributable to some one-off occurrences it has consistently made quarterly profits until the latest quarter,” Bicheno noted.

Of the company’s turnaround plans, RIM’s Heins said he plans “to refocus on the enterprise business and capitalize on its leading position in this segment.” RIM “was late” in targeting the “bring-your-own-device” [BYOD] trend in which enterprises let consumers connect their own devices to the corporate network, and as a result, RIM suffered “a significant slowing in its enterprise subscriber growth rate,” he also said.

To compete in the BYOD segment, RIM must create “a compelling consumer offering,” Heins explained, and to do so, the company will “build on our strengths to go after targeted consumer segments and will seek partnerships to deliver those consumer features and content that are not central to the BlackBerry value proposition, for example media-consumption applications.” There’s no need to develop the applications internally, he said.

The company is also considering joint ventures and licensing programs to compete in devices, services and solutions as it beefs up its enterprise investment, he said.

“I want to be in the mass market,” Heins said, but the company is evaluating the right business model to do so.
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