UK backs RIM to weather BB10 delays

UK backs RIM to weather BB10 delays

For a firm based in Waterloo, it is easy to draw on a journalist’s list of military clichés when describing the challenge facing Research in Motion (RIM).

But the BlackBerry manufacturer faces a critical battle for survival after posting its first quarterly operating loss for more than seven years.Around 5,000 roles are set for the chop as the Canadian company looks to streamline its business. But perhaps most crucial for its long-term future is the delay to the long-awaited BlackBerry 10 operating system. Seen as a crucial plank in RIM CEO Thorsten Heins’ fightback strategy, it will now be the first quarter of next year before the next generation of BlackBerry devices hits the market.

Gloomy predictions

Analysts were gloomy about the latter revelation, predicting a dark financial period ahead. Malik Saadi, principal analyst at Informa Telecoms & Media, said: ‘Investors should expect an ongoing bad performance from RIM, at least for the next three quarters.’

Strand Consult CEO John Strand told Mobile consumers may shy away from upgrading to BlackBerry products later this year when they can expect newer devices in 2013. He said: ‘The delay will be expensive and it will probably make Christmas expensive for RIM because of lower sales, lower margins and higher costs.’

Saadi went on to claim that BlackBerry 10 was not enough to turn around its fortunes. He said: ‘Bear in mind that 100% of the 78 million current BlackBerry users are still using legacy devices, so upgrading all these users to BB10 will not happen overnight and RIM might well lose a great number of these users in the process.’ Saadi backed calls for RIM to licence the new OS to other manufacturers and ‘wave goodbye to hardware’.

While the reports circulating in the wake of RIM’s results were almost universally negative – with Heins taking to the Canadian airwaves last week to deny the business was in a death spiral – the manufacturer’s performance outside of North America is encouraging, particularly in the UK. BlackBerry phones are regular UK bestsellers and operators spoke admiringly about its connection with the youth market. One senior source said: ‘BBM [BlackBerry Messenger] has a very strong following and a brand loyalty above and beyond that of operators.’Despite the drip feed of negative stories during the past 12 months, covering system outages, disappointing results and now the delay to BlackBerry 10, it appears no one is set to abandon BlackBerry just yet.

Manufacturer exclusives

Exclusives with the troubled manufacturer are still hotly contested by UK operators. Vodafone recently revealed that its prepay BlackBerry handset sales more than doubled during the past 12 months, while Three has now added a small portfolio of devices to its range. One senior operating source said: ‘It is a really big partner for us. We have a big base and people are still upgrading to BlackBerry phones. The great thing about them is a range of devices that helps massively in creating simple and easy to use smartphones that don’t cost the earth.’ CCS Insight analyst Ben Wood said: ‘For operators the reason they are positive is because they are providing balance against the duopoly of Android and Apple.’

Wood also claimed that the BB10 delay was not necessarily a bad thing, as any fourth quarter device would have to go up against Apple’s latest iPhone and the new Windows Phone 8 devices. He said: ‘While the delay is not helpful, it has a better chance of bringing products to market that are completed, cooked and ready for prime time.’ He also noted that RIM improved its cash position on the previous quarter to $2.2bn.That’s not to say the industry is broadly positive. One operator sighed with exasperation when asked if the BB10 delay came as a shock. The source said: ‘It was really disappointing. RIM was gearing up so much for BB10 as the new thing that will save them. However, I’m honestly not surprised that it moved the delivery date.’

Business challenges

The increasing challenges in the business space have been well documented, as Samsung turns its firepower on the b2b market, Apple prepares to launch its new iPhone, Microsoft readies its family of tablets, and Nokia targets business customers with the Lumia 900’s ability to use the Office 365 suite of services.

There is also a split in sentiment as to where RIM’s strengths lie. One operator talked up the potential of the BB10 platform, saying: ‘It has a great form factor and looks very appealing.’However, another argued: ‘The devices are the problem. Compared to the high-end HTC, Samsung or Apple devices, they are rather rudimentary.’ The source also urged the Canadian manufacturer to licence out its services rather than focus solely on hardware. Another operator claimed that BlackBerry has a large and confusing portfolio of handsets.

While avoiding an incredibly busy fourth quarter may be seen as a blessing in disguise, RIM still has to get the launch of its BB10 devices right, and improve its ailing fortunes in North America. CCS Insight’s Wood said: ‘If RIM fails to deliver in the first quarter of next year, it will be an incredibly challenging year for them.’

Editor: Graeme Neill

Written by Mobile Today
Mobile Today


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