RIM Can't Win For Losing
It may not have helped that RIM announced earnings the same day the iPhone 4 went on sale, sparking a media frenzy over the consumer frenzy that had people queued up outside Apple stores in major cities worldwide to get their hands on the latest version of Apple's flagship device. (Did Apple, in all its vaunted marketing genius, intend to overshadow RIM earnings with the iPhone 4 launch?)
The debut of the new iPhone and the market's reaction to RIM's earnings today highlight how intense the competition in the smartphone market has grown. By reporting quarterly revenue of $4.24 billion, below its own forecast of $4.25 billion to $4.45 billion, RIM heightened analyst concerns that the company is losing ground to Apple and smartphones running Google's Android mobile operating system.
RIM's share of smartphone unit sales in the first quarter fell to 19.4% from 20.9% compared to the year-earlier period, while Apple's increased from 10.9% to 16.1%. The market shares of handset makers that sell multiple Android devices, like HTC and Motorola, also went up in the first quarter.
One of the reasons for RIM's softer-than-expected revenue was that the average selling price for BlackBerrys has dropped to $300, from an estimated $357 a year ago. Pricing pressure from Apple and Android phone makers will be difficult for RIM to fight as it seeks a bigger place in the mass market. Apple, for instance, priced the iPhone 4 at $199, the same as the prior 3GS model was, and bumped the 3GS down to $99. Verizon's Android-based answer to the latest iPhone, the Droid X, is also priced at $199.
To meet the challenges from rivals, RIM has its own new models in the works, including the first-ever touchscreen phone with a slide-out keyboard as well as a tablet device to take on Apple's iPad. If successful, it would also create a much-needed new revenue stream for RIM. It will also roll out an upgraded operating system by the end of summer that promises improved Web browsing.
Perhaps most worrying for RIM is whether Apple or other competitors can make serious inroads on its traditional stronghold--the corporate market. While BlackBerry is still tops, with 70% of company IT departments supporting the device, Apple's share has reached 29%, up from 17% a year ago, according to Forrester.
I've noticed on more than one occasion tech industry executives sporting both a BlackBerry and iPhone, typically using the RIM device for business and the iPhone for personal use. But carrying two smartphones is cumbersome, so you have to figure at some point one will win out over the other as the best "crossover" device that's suited equally well for both work and play.
Apple's addition of multitasking capability in the latest update of iPhone software should help it push further into the business sphere. Giving iPhone users the ability to access Microsoft's Exchange email program in 2008 was an earlier step in that direction.
For now it seems easier to imagine the iPhone becoming the go-to business phone than the BlackBerry becoming a media or entertainment device. That's mainly because of the iPhone's huge advantage in applications and its iTunes ecosystem for easily downloading content. But if it lives up to its promises on product rollouts, RIM will have the chance to strut its new stuff in the coming months.