Analyst: Why BlackBerry 10 Won’t Save RIM

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bb 10Research in Motion will make a giant leap towards relevance on Wednesday when it unveils a new BlackBerry 10 smartphone and operating system. RIM showed Forbes a demo of the new-look interface earlier this month, and the software looked sleek, efficient and perfect for professionals. But can its much-hyped launch reverse a long-term decline that has beset Research in Motion in the last two years: a share price down by 73%, along with slimming market share and profits?

There are an estimated 80 million BlackBerry users out there, and a good chunk will almost certainly upgrade to the new device over the next two quarters to give RIM a financial boost after months of holding out for BB10. But that may be as good as it gets according to analysts at Ovum, who contend that RIM will continue to suffer from two big problems:

1) The “BYOD” phenomenon, in which companies have given up buying smartphones (read: BlackBerrys) for their own staff, leaving employees to choose their own devices.

2) A struggle to appeal to mainstream consumers.

As IT departments have let employees buy their own smartphones, more of them are choosing iPhones and Android devices over BlackBerrys. BlackBerry phones currently has just 1.1% of the U.S. smartphone market, according to the latest statistics from Kantar Worldpanel, while the iPhone has grown to 51% and Android, 44%.

To appeal to a broader range of consumers, RIM perhaps should have distanced itself from the category of “company phone,” yet it shows no signs of doing that with BlackBerry 10, Ovum contends. RIM has touted multitasking, productivity, email contact and calendar applications in its latest teasers for the device, the “best BlackBerry for BlackBerry users,” rather than better gaming, content consumption or social networking experience to appeal to a wider audience, says Ovum’s lead telecom analyst Jan Dawson.

“We can’t fault RIM for wanting to hold onto its 80 million existing subscribers,” he says, estimating the Waterloo, Ontario-based company has always sold about half of its devices to new customers, and half to existing BlackBerry user who are upgrading to a newer model. Yet for the last two years, the portion of upgrading BlackBerry users has significantly outweighed the converts — meaning RIM essentially has little choice but to focus on maintaining its existing user base.

To its credit, that user base is strong. The trade-in experts at NextWorth recently pulled together data that showed re-sell values for BlackBerry handsets were not far behind HTC and neck-and-neck with Samsung models, indicating the “dedicated nature of BlackBerrry enthusiasts.” (See chart.)

BlackBerry 10 will give RIM a healthy financial boost in the short term, says Dawson, and the company will plod along for a few years yet with its loyal subscriber base, zero debt and some profits.

“But its glory days are past,” he adds “and it is only a matter of time before it reaches a natural end.”

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17 thoughts on “Analyst: Why BlackBerry 10 Won’t Save RIM

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