Wednesday, 3 August 2011

BlackBerry Readies iPhone Challenge

AUGUST 3, 2011

Research In Motion Ltd. plans to release a group of new BlackBerry devices, a delayed effort to reinvigorate its brand and gain back some of the market share it has lost in North America.

But it's unclear the new devices will be able to deliver the sort of buzz—and sales—that will help BlackBerry catch up quickly to offerings by Apple Inc. and Google Inc.

RIM, which once dominated the sector, has taken more than a year to release a new model and is now a distant third place in North America.

The Canadian company's stock has fallen 68% year-to-date and on Tuesday closed at $24.15—near its 52-week low.

RIM has acknowledged that delays in launching the new phones have kept them out of some carriers' back-to-school programs, which will cost the company sales.

The new BlackBerrys also won't be running the company's recently acquired operating system, QNX. The company has bet its future on the new software, but QNX phones won't be ready until next year. Instead, the new models will run on an update to RIM's existing BlackBerry software.

RIM bought QNX last year, betting a major overhaul of its legacy software would help its phones compete better with faster video and other features. But QNX phones won't be ready until early next year.

Meanwhile, Apple is expected to roll out an updated iPhone this fall, and a number of new phones with Google's Android software are on the way, including models that will work on U.S. carriers' fast, new 4G networks.

Consumers have shifted away from BlackBerry in favor of Apple and Android's more innovative, consumer-friendly devices.

RIM is also seeing pressure among business customers, its traditional stronghold, as more companies allow their employees to buy their own phones and use them at work.

Steve Chong, manager of messaging and collaboration for San Francisco-based Union Bank, part of UnionBanCal Corp., said that over the past year its employees have been electing to use iPhones and Android devices instead of BlackBerrys.

Mr. Chong doesn't believe RIM's new products will be able to reverse the company's market-share losses. "There will probably be a significant decrease in usage," he said. "The people still consider BlackBerry a business device."

At the end of the first quarter of this year, smartphones that run on Android made up 50.9% of the North American market, followed by the iPhone operating system at 27.1% and RIM, at 16.5%. RIM's market share fell from 41.3% in the first quarter of 2010, according to Gartner Inc., a technology advisory.

Underscoring the severity of the crisis, RIM announced massive job cuts last week, slashing more than 10% of its global work force. While the cuts will reduce costs, analysts said they won't speed along new products to compete with Apple and Android.

Missed deadlines have also cost the company some credibility with carriers, which want RIM to succeed but believe the company is struggling to come up with products that appeal to consumers.
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