Why RIM’s Future (Unfortunately) Hinges on BlackBerry OS 6

Research In Motion this week will reportedly unveil a new touchscreen BlackBerry the company hopes will compete with the likes of the iPhone and Android devices. The hardware is already garnering headlines, but it’s RIM’s updated operating system that will make or break the company’s prospects in the superphone era. And the smart money is currently against the Canadian manufacturer.

RIM’s ability to ride the surging smartphone tide and expand beyond the boardroom has been impressive. The BlackBerry Curve famously surprised the industry last year by outselling the iPhone in the first quarter, and comScore recently reported that RIM still claims a dominant 41.7 percent of U.S. smartphone subscribers.

But a closer look reveals a disturbing lack of momentum: BlackBerry’s share of the U.S. smartphone market has fallen a precipitous 14 points in the last year, according to recent figures from Gartner. Indeed, Forbes predicted the iPhone will overtake BlackBerry’s share of the worldwide handset market by early next year.

There are several reasons the device is falling out of favor. RIM long ago mastered mobile e-mail and security concerns, but BlackBerry OS has failed to support the kind of rich-media that lures users to gadgets. And the platform’s inferior web browser is so slow and kludgy it has more in common with a feature phone than, say, Apple’s Safari.

Those shortcomings weren’t as worrisome in the days when IT departments controlled which devices you could use in the workplace. But with employers increasingly letting employees choose their own phones, the lack of consumer-friendly features on BlackBerry has become costly for RIM. And Android devices and the iPhone are capitalizing by making their way into the enterprise.

BlackBerry’s most glaring weaknesses could be addressed — or perhaps even erased — if the company produces a world-class version of its OS. Indeed, early reports indicate RIM has finally developed a smartphone-worthy browser a full year after acquiring the startup Torch Mobile. And investors last week seemed somewhat convinced, sending RIM shares up about 4.5 percent on Wednesday.

But it’s unlikely that it’s even possible to compete with the newer platforms. BlackBerry OS is a dated platform built to support enterprise applications and to “mobilize” corporate email — not to deliver high-quality multimedia or a compelling web experience. BlackBerry OS is really just an implementation of Java ME (Micro Edition), a feature-phone platform that for years has powered low-end devices. As Boy Genius Report pointed out a full year ago, “There’s so many limitations to RIM’s OS, and even RIM’s data network, that it offsets all the wonderful things they’ve managed to accomplish.”

Unless RIM has a huge surprise up its sleeve in the form of an entirely new OS — and there’s no indication it does — upgrading the platform is the equivalent of putting lipstick on a pig whose wrinkles become more apparent by the day. I believe that’s why RIM tried so hard to pick up Palm and webOS, though it failed to outbid Hewlett Packard for the acclaimed platform.

And it’s no overstatement to say RIM’s days as a major player are numbered if it can’t produce that top-notch OS and support rich multimedia and other consumer-targeted features. Not only will BlackBerry continue to lose market share, its decreasing traction will assure that BlackBerry App World is less attractive to developers. And given App World’s relatively anemic library, it’s apparent that RIM needs all the help in wooing developers it can get.

RIM won’t immediately disappear of course, even if BlackBerry OS 6 is a flop. The company continues to make headway in emerging markets (which are far less lucrative), and its huge market share in the U.S. and deep pockets could conceivably buy it more time to somehow come up with another platform. But with webOS off the table, it looks like upgrading its platform is RIM’s best hope to remain relevant. And as my grandfather used to say, that’s a pretty weak reed to lean on.

Question of the week

Can BlackBerry 6 compete with Android and iOS?
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Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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