The problem, says one senior executive at a Canadian wireless carrier, is RIM’s competitors have closed the gap on e-mail and messaging, but RIM has failed to similarly catch up on software applications. Even with the crop of BlackBerrys coming out, “the value proposition is getting tougher to justify,” he said.
“They are, bit by bit, moving in the right direction,” said the executive, who spoke on condition that his name not be used because his company has a sizable business relationship with RIM. “I think their challenge, simply put, is that things change so fast, and other people are moving at a rapid pace, too. They just have to make sure that the gap isn’t growing, it’s got to be shrinking.” Referring to the new lineup of BlackBerrys, he added: “I definitely think these are steps in the right direction. I don’t think they’ve closed the entire gap, for sure.”
Most observers have long considered RIM’s Web browsing and multimedia functions as subpar, and with the exception of a number of so-called “super apps” - such as ultra-fast BlackBerry Messenger (BBM) - the broader array for third-party applications remains far behind those of Apple and Android.
Mr. Walkley and two others on his team at Canaccord Genuity use BlackBerrys for work but iPhones and Android devices on their own time, something that is becoming more common. “A lot of clients have the same – a BlackBerry for work, and a separate personal phone,” he says. “While the new BlackBerrys have faster processing speeds, and a sleeker design, they’re still going to be seen as your work device.”
The touch-screen BlackBerry Torch, released a year ago, addressed many of these issues, as did the upgrade to the BlackBerry 6 operating system. But the Torch was not as powerful as some had hoped; some complain that browsing the Internet on it can be slow. The device sold well initially at AT&T stores, Mr. Walkley notes, but has since slowed, failing to capture the consumer imagination.
He expects there will be similarly strong initial sales of the new BlackBerrys – such as a touch-screen version of the popular BlackBerry Bold – as existing BlackBerry users go for an upgraded experience. But he forecasts that RIM’s market share loss will continue unabated.
While the view from the U.S. remains bleak, it remains only part of the picture. The BlackBerry is selling phenomenally well in many emerging markets, particularly in Latin America, certain countries in South Asia, and the Middle East. RIM is seeing phenomenal growth in these regions, posting 67 per cent increases in revenues outside North America in the first quarter, leading many to think that the heated rhetoric surrounding their recent problems is overblown.
“The epitaph of RIM has been written far too early,” says Kevin Restivo, who tracks global cellphone shipments for the research firm IDC.
The company’s enormously popular BBM service is also part of the international story. But competitors such as Apple’s iMessage, and a new collaboration between Google and French telecom giant Orange in Africa to send text messages from computers for free, will inevitably pressure RIM to innovate in these markets, says Ken Campbell, a global wireless executive.
“[RIM’s] advantage is they’re able to move large amounts of data very efficiently, more efficiently than any of the other platforms,” says Mr. Campbell, who helped launch BlackBerry with carriers in Romania, the Baltics and recently as chief executive officer of Wind Mobile in Canada.
As developing markets shift from older 2G networks to wireless data-capable 3G networks, the huge populations of the global south are going to put enormous strain on wireless networks. RIM could help alleviate that with cheaper smart phones that use less bandwidth.
“I don’t know if RIM is planning on going into the lower end of the market, but Google definitely is,” Mr. Campbell says. “But it’s a risky road, because most handset manufacturers have tried to maintain good margins by staying in the high end [smart phone segment]. It’s very low margin. It’s a very different business.”
How RIM navigates the expansion of the BlackBerry’s international presence - as well as defending its smart phones from an influx of cheap Android phones and, eventually, a cheaper version of the iPhone - will largely define the company’s longer-term future.
“The international markets are really where the growth is going to be in the future – there’s so much attention focused on the high-end devices, but it’s increasingly a volume game,” Mr. Restivo said.
“Even if they’re lower-margin devices in people’s hands, it’s still important. And as those countries grow economically … that gives them the potential for the long term to grow with those users in emerging markets.”