RIM says its relationship with 150 carriers around the world will make the launch a success
Will RIM face the same fate as Palm?
TORONTO Research In Motion counting on its relationships with 150 carriers to avoid the fate of another smartphone pioneer that fell on hard times — Palm Inc.
RIM’s BlackBerry 10, due to be introduced Jan. 30, has been compared by analysts with Palm’s doomed WebOS, a smartphone operating system unveiled four years ago this week. The technology drew rave reviews at the Consumer Electronics Show i n Las Vegas and sparked a stock rally for Palm, only to fizzle months later.
Like Palm, RIM rebuilt its latest operating system to compete with Apple’s iPhone after years of market-share declines. RIM also has received positive reviews for the changes, sending its stock up more than 80 per cent since late September.
We are not comparing things that are comparable. FRANK BOULBEN CHIEF MARKETING OFFICER, RIM
The difference this time is RIM has the support of carriers around the world, said Frank Boulben, chief marketing officer for the Waterloo-based company. Palm relied purely on Sprint Nextel, the No. 3 mobile-phone service in the United States.
“They launched with one carrier worldwide,” Boulben said. “We are currently in the labs of 150 carriers around the world. We are not comparing things that are comparable.”
While Palm eventually added more carriers when the WebOSbased Pre phone was sold in Europe, the decision to debut with just one carrier in the United States was a “really, really bad choice,” said Alexander Peterc, an analyst at Exane BNP Paribas in London, who has a neutral rating on RIM. “RIM has wider carrier distribution going for it.”
Analysts such as UBS AG’s Phillip Huang and Morgan Stanley’s Ehud Gelblum have compared RIM with Palm over the past two months, suggesting that optimism surrounding the BlackBerry 10 is excessive. In 2009, WebOS excitement sent Palm’s stock to about $18 US from $3, only to fall back below $4 the next year. Palm’s revamped phones failed to catch on with consumers, and the company agreed to a takeover by Hewlett-Packard in 2010. The products were discontinued the following year.
RIM’s rally “is reminiscent of Palm,” Huang said in a report last month.
There are technological similarities between the BlackBerry 10 and WebOS as well. RIM’s software lets users flip between apps with their fingertips, as the Palm Pre did in 2009.
In both cases, the companies faced the daunting task of pitching an unfamiliar platform to consumers, said Brian Blair, an analyst with Wedge Partners in New York.
With BlackBerry 10, RIM aims to persuade longtime BlackBerry fans to adopt a touch screen, rather than RIM’s hallmark keyboard. While the BlackBerry 10 lineup will include models with regular keyboards, RIM CEO Thorsten Heins has said he expects the touch version to account for most of sales.
“As they ask their 80 million customers to do this, those same customers are going to be taking an honest look at the other devices that are out on the market,” Blair said.
RIM’s most loyal business customers will give BlackBerry 10 an initial boost. That could account for five million to 10 million units in the first full quarter BlackBerry 10 is on sale, Peterc said.
Wooing the broader public will be tougher, he said.
“It will be enough to keep them going this year, but next year will be much harder,” said Peterc, who now mostly uses an iPhone himself. “As a consumer, I’ve moved on.”
RIM will publicly unveil the first BlackBerry 10 phones on Jan. 30, with sales beginning in February. Some carriers — including Rogers Communications, Canada’s largest — have already begun taking BlackBerry 10 orders.
“If you have the carriers committed, that’s very important for a successful launch,” said RIM’s Boulben, who previously worked at Vodafone Group and France Telecom’s Orange unit.
RIM also had 79 million subscribers and $2.9 billion in cash at the end of last quarter, money it can tap to market the new phones. Palm only had about $250 million in cash and short- term investments at the beginning of 2009.
Still, RIM f aces a hurdle that Palm didn’t. The smartphone market is more mature today, said Steven Li, an analyst at Raymond James Ltd. in Toronto. Apple’s iOS platform and Google’s Android also didn’t account for more than 80 per cent of U.S. sales in 2009.
“Back then, smartphone penetration was still quite low and there was no entrenched ecosystem,” Li said. “Today you have two major entrenched ecosystems in Android and iOS, and smartphone penetration is maturing.” Washington Post