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Home arrow News arrow Mobile Technology arrow Ovum comments: BB10 will not save RIM     

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Ovum comments: BB10 will not save RIM PDF Print E-mail
GIS News - Mobile Technology
Written by Ovum   
28 January 2013
OVUM COMMENT Jan Dawson, Chief Telecoms Analyst, Ovum RIM will get a boost but not salvation from BB10


“Two major factors have worked against RIM in the past two years: companies are no longer buying the majority of smartphones sold today, and individuals overwhelmingly choose devices other than BlackBerries when they make buying decisions. Both of these have depressed sales for RIM’s devices, and neither is going away. The first of these phenomena is unstoppable, and we expect a significant increase in employee-led rather than IT department-led smartphone buying. Our recent surveys suggest that even when employees aren’t choosing the device, they expect the replacement for their current BlackBerry to be an iPhone or an Android device. The second trend could be stopped in theory, but RIM does not seem to be focusing on this approach in BB10.

“As part of our research for a newly published profile on RIM’s smart device strategy, it became clear to us that RIM’s intention for BlackBerry 10 is to be “the best BlackBerry for BlackBerry users” rather than something that will necessarily win converts from other platforms. The points of differentiation RIM has focused on in teasers for the new platform confirm this – better multitasking, productivity, email, contacts and calendar applications and so on, rather than a better gaming, content consumption or social networking experience.

“We can’t fault RIM for wanting to hold onto its 80 million existing subscribers. While exact figures aren’t available, our analysis suggests that RIM has always sold about half its devices to new customers and half to existing customers upgrading to a better phone. For much of the last two years, the portion bought by upgrading customers has significantly outweighed the portion bought by converts, and this makes it all the more important for RIM to retain existing subscribers.

“We believe that much of the installed base in mature markets has delayed upgrading while BlackBerry 10 is pending, something that has unfortunately dragged on for far too long, thus lengthening the upgrade cycle and depressing results in the interim. If BB10 delivers, it should produce a nice fillip in RIM’s results in the first two quarters of 2013 at least as this pent up demand finally meets supply.

Longer term, RIM will return to its recent patterns of decline

“Despite the brief bump RIM will see from the launch of BB10, we expect its decline to continue longer term. At its peak, RIM shipped between 12 and 15 million devices per quarter, but there is no way it can hit this number on a sustainable basis once the BB10 launch filters through. Though the new platform should have significant appeal to existing users, we don’t expect it to win significant numbers of converts from other platforms. There is little in the new platform that suggests it will have the compelling apps, content stores, or the broader ecosystem that consumers have come to expect in a competitive smartphone platform.

“There are bright spots in emerging markets, where BlackBerry devices have become a middle-class status symbol as they once were in mature markets. But these devices are low-priced and based on BB10’s predecessor BB7, which is destined for the scrap heap in the medium term. As developers shift their focus to BB10, it will be harder and harder for RIM to maintain the appeal of the older platform in these markets, especially since it is unlikely to release new hardware running BB7. BB10, meanwhile, requires high-end specs that will be impossible to deliver at such price points in the near future. Therefore, the current popularity of BlackBerry in emerging markets is likely to be short-lived, especially as Android based alternatives begin to flood the market at even lower prices.

“In all, RIM continues to face the twin demons of consumer-driven buying power and a chronic inability to appeal to mature market consumers. There is nothing in what we’ve seen so far of BB10 that suggests it will conquer the second of these demons, and the first is utterly out of RIM’s control. We don’t expect a speedy exit from the market; with no debt, 80 million subscribers and profitability in the black in at least some recent quarters, the company can continue in this vein for years. But its glory days are past, and it is only a matter of time before it reaches a natural end.”

ABOUT OVUM

Jointly awarded IIAR Global Analyst of the Year 2012, Ovum provides clients with independent and objective analysis that enables them to make better business and technology decisions. Its research draws upon over 400,000 interviews each year with business and technology, telecoms and sourcing decision-makers, giving Ovum and its clients unparalleled insight, not only into business requirements but also the technology that organizations must support. Ovum is an Informa business.

 

 
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