Research in Motion’s BlackBerry was once so compelling and addictive it was nicknamed “CrackBerry.” But with other smartphones on the rise, will it survive?
According to comScore, Research in Motion (RIMM, NASDAQ, 52 week range 12.45 – 57.32) had a smartphone market share of 13.4 percent in February, down from 16.6 percent in November. Apple held a 30.2 percent market share, and Google held 50.1 percent. On top of that, 94 percent of current iPhone users say they will continue to upgrade as newer releases come to market.
Fueling the exodus is lack of innovation, which is driving away the application developers, a big component in consumer’s decision making. It is reported that only 16 percent of application developers are “very interested” in creating apps for BlackBerrys, compared to 90 percent for Apple and 80 percent for Android.
The company also sat on its hands while relying on its dominance in the “enterprise” market (governments, banks and large corporations). It has now found that these entities are accepting iPhones and Androids, which now have enhanced security. Besides, their employees just prefer the other products.
RIMM’s new CEO Thorsten Heinz is acknowledging that there needs to be “drastic change” at the company, changing his tune from when he first came in last January and said that the company just needed to do some tweaking. He has even been quoted that a sale is a possibility but not the “main direction” at this time.
That news got a short pop in the share price, which has declined 90 percent since its 2008 highs and 74 percent over the last year. The price raise didn’t last long, as people started to think who would buy the beleaguered company. No prospects came to mind. RIMM shares were down almost another 10 percent in Tuesday’s trading, getting close to lows it hasn’t seen since 2004.
Tuesday’s drop even came with news that RIMM would start licensing out its software to its “enterprise” customers, allowing them to use iPhones and Androids on the same BlackBerry servers. It is looking to charge $99 for the licenses and $4 a month usage, with possible discounting available. Besides not generating very much revenue, who would want to combine the two when the security component at this time is not so much of an issue?
Analyst Mike Abramsky at RBC Capital Markets sums it up that RIMM “may have lost too much momentum to recover” and “we are concerned RIMM continues to misread the market.”
Today, when you see someone using a “CrackBerry,” you have to wonder where they have been because it’s “so old school.”
By the way, iPhone 5 is expected out in June!