Gadget Reviews, Product News, Electronic Gadgets

iOS 5 And iPhone 5 Delays Notwithstanding, Major Apple Competitor BlackBerry (RIM) Already Feeling The Pain

Apple may be slow out of the gate getting an iPhone 5 to market, but that hasn’t inhibited its putting the boots to one of the company’s most prominent and established competitors in the smartphone market.
Waterloo, Ontario based Research In Motion (RIM), which pretty much invented the smartphone category with its once-iconic BlackBerry phone, is feeling the pain these days, largely due to competitive pressure from Apple’s iPhone in its traditional market, and failure to make much of an impression in the hot tablet computer sector with its putative iPad-challenger BlackBerry Playbook. Apple’s announcement last week of its forthcoming iMessage service as part of iCloud will essentially eliminate the most significant remaining advantage BlackBerry had over the iPhone. As Cult of Mac’s John Brownlee observed yesterday, RIM is being “punched to death” by iPhone, iPad And iMessages.
The Globe and Mail’s Tim Kiladze is reporting this morning that the company’s stock (RIMM) prices plunged more than 15 percent in overnight pre-market trading, and cites analyst Philip Huang at UBS Securities commenting in a note to clients that the “two main pillars” of RIM’s erstwhile success, which are the enterprise and international growth markets, “are increasingly under attack from the onslaught of Android and iOS devices and we are yet to be convinced RIMM can successfully fend off this competition convincingly.”
Kiladze also notes that RIM’s U.S. year-over-year sales growth fell 36 percent in the last quarter from the same period in 2010, and any potential turnaround from a ‘super phone’ lineup based on the company’s new QNX operating system won’t be released until sometime in 2012 (although an update of the present BlackBerry OS is expected in “late summer” this year) — not encouraging news for RIMM stockholders with Apple’s major iOS 5 upgrade, iCloud, and probably an iPhone 5 all coming down the chute before the fall pre-Christmas buying season, and stiff competition from Android as well.
That said, RIM is far from completely down and out yet, reporting a net income of $695 million or $1.33 per share for its first 2011 fiscal quarter, which is not catastrophically lower than its earnings of $769 million, or $1.38 per share in the same quarter last year, and a strong balance sheet with cash holdings of almost $3 billion. RIM also reports that it shipped (although no necessarily sold) some 13.2 million BlackBerrys and 500,000 PlayBooks in the recent quarter, which fell within analysts’ projections, but that hasn’t been enough to prevent RIM from announcing major layoffs this week as it struggles to get its new generation of products on stream and to stay competitive with Apple and Android.
The Canadian Press reports that RIM co-CEO Jim Balsillie conceded to analysts on Thursday that “The challenges in the United States, in particular, are making near-term earnings growth difficult,” noting that RIM has been selling fewer phones in the United States, where smartphone buyers have been increasingly turning to iPhone and Android handsets instead of BlackBerrys. The report also says that RIM’s other co-CEO Mike Lazaridis also unexpectedly spoke on the conference call, putting on a brave face in an effort to assure analysts that RIM is on track with the new products in its development pipeline, and attributing part of the holdup as being that it’s taken longer than expected for wireless carriers around the world to test and certify the new BlackBerrys, as opposed to being “vaporized by Apple” as Cult of Mac’s Brownlee delicately put it.
Not good enough for National Bank Financial Analyst Kris Thompson, who lowered his RIMM target price to $25, and is quoted by the Globe’s Kiladze commenting “We believe the smart phone sector is moving into a new paradigm of lower margin pricing as Android handsets attack the high, mid and low-end market segments. We do not expect the company’s gross margins to rebound,” adding “We’d avoid this stock until there is some evidence that a sustainable turnaround is achievable.” RIMM stock continued to fall to a five-year-low in early trading Friday, down 18 percent, prompting J.P. Morgan to downgrade its rating for the stock
If Apple can deliver on its scheduled “fall” rollout of iOS 5 and iCloud, and perhaps fulfill the hopes of iPhone 5 aspirants before the end of the year as well, a late summer BlackBerry OS update can hardly be expected to stanch the bleeding for RIM.

This post was written by: Irfan Jam

Irfan Jam is a professional blogger, web designer and front end web developer. Follow him on Facebook