RIM’s BlackBerry 7: A case of unfounded optimism

After months of getting its teeth kicked in by Apple’s iOS and Google’s Android, things appear to be looking up for Research In Motion. All Things D claimed this week that RIM is “on the rebound,” thanks to a new pair of handsets running BlackBerry 7. Mobile Computing News proclaimed that the comeback is “already under way,” and investors have swooned, too, boosting shares as much as 10 percent early in the week.

Don’t believe the hype. BlackBerry’s market share among U.S. smartphone owners continues to slide, and a revamped BlackBerry OS will do precious little to slow that decline. RIM needs to produce some QNX-powered phones that are as compelling as the iPhone and its competitors, and quickly.

In addition to the upgraded OS, RIM backers say Nokia’s transition from Symbian to Microsoft’s Windows Phone provides an opportunity for RIM to regain some ground in the U.S. Nokia’s Windows Phone–powered handsets aren’t likely to hit North American shores until next year, Sterne Agee analyst Shaw Wu told All Things D, giving RIM more time to position itself as the major alternative to Android and the iPhone. What’s more, RIM is hoping to hold on to existing customers with its Trade Up program, which gives buyers of new BlackBerry gadgets $100 in exchange for their old, fully-functioning BlackBerrys.

The problem, though, is that none of these factors will bring RIM any new customers. BlackBerry 7 offers increased speed and new security tools, but it’s an incremental improvement of an old operating system that is simply inferior to Android and iOS — it’s less intuitive and simply can’t support the immersive apps and games that make younger platforms so compelling. In fact, the upgrade is strikingly similar to last year’s rollout of BlackBerry 6: an improvement that narrows the gap with the competition but doesn’t offer enough to be a threat. (It’s worth noting that BlackBerry’s share of the U.S. smartphone market has dropped precipitously in the past year.) Indeed, Tech Trader Daily reported this week that one analyst found a “relatively muted response” to the new handsets at carriers’ retail outlets. And it doesn’t help that RIM’s trade-in program targets existing BlackBerry owners, not users from other platforms.

The competition is fiercer than ever, too. Apple is expected to unveil the iPhone 5 in the next several weeks, and the Wall Street Journal reported last week that Sprint will soon offer the iconic device. Android is enjoying a worldwide market share of nearly 50 percent, according to recent data from Canalys. And Nokia/Microsoft looms like a building storm, particularly given Microsoft’s enormous presence among the kind of business users that are RIM’s bread and butter. Even if Wu’s prediction is accurate, RIM has only a few months before the wave of Nokia Windows Phones hits the U.S.

While RIM hopes to target budget-conscious smartphone shoppers with phones like the new BlackBerry Torch 9810 (which AT&T offers for $50), that market is getting more crowded. Sprint, for instance, recently launched a WiMAX-enabled, Android-powered Samsung Conquer 4G for a mere $50. Reuters reported last week that Apple is launching a stripped-down iPhone for the emerging markets that have become crucial to RIM as it loses footing in North America.

RIM is on the right track with some of its new phones, which combine consumer-friendly features like colorful touchscreens with the full QWERTY keyboards that some business types demand. But it must ship those devices with QNX, which supports the kind of mobile entertainment offerings that users increasingly demand. It must aggressively grow its community of QNX developers to ensure it offers enough applications to keep its users happy. And then to help move those phones, it must strengthen the crucial carrier support that has withered alongside BlackBerry’s market share. If it can’t do all those things in the near future, its chance to become anything more than a niche option for businesses will disappear.

Question of the week

Will BlackBerry 7 do anything to help stop RIM’s bleeding?
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Colin Gibbs

Colin Gibbs

Founder and Principal Peak Mobile Insights

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8 Comments Subscribers to comment
  1. Do they have the time to even switch directions at this stage?

    It would mean reinventing the core of their business. Essentially, starting afresh.

    1. I don’t think it’s a matter of switching directions, Manish. QNX is already integrated with BlackBerry (to some degree, at least), so the transition to the new OS doesn’t require reinventing RIM’s business. The question is how seamlessly RIM can make that transition while it moves in the same direction.

  2. RIM needs a new approach to their developers platform as well. Apple is definitely the benchmark.

  3. Agree. They need dramatic changes to the OS and devices they offer to even stay relevant.

  4. Exactly, Derek, and thanks for the recent comments. And casualties (or impending casualties) like Symbian, Windows Mobile and BB OS prove your point.

  5. RIM Blackberry OS 7? I’ve tweeted it before, and I’ll say it again: no smartphone OS that existed prior to 2007 is competitive in today’s market. No matter how many version revs get rolled. It takes a new build , from the ground up. Anything less is just a tourniquet that can slow the bleeding for a while.

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