Can the Blackberry Compete in the Smartphone Market?

The stock of Research in Motion is on the skids again as the company guides lower its earnings forecast for the first quarter of 2011. The reduced guidance came on the back of lower BlackBerry shipment volumes and increasing sales of lower-priced Blackberrys in the company's mix.

The company is also losing ground as new products are being delayed until later this year while RIM develops models with touchscreens and tries to shift to a new operating system.

RIM continues to have problems as its BlackBerry smartphone struggles to retain market share in the ultra-competitive smartphone market. According to research firm Canalys, the company's share of worldwide smartphone sales slipped to 14 percent in the fourth quarter from 20 percent a year earlier.

Industry forecasts are for Blackberry's global smartphone market share to fall to 11 percent by 2015. Amazingly, it is even expected to fall behind a somewhat resurgent Microsoft, thanks to its recent tie-up with Nokia.

Many in the industry are ready to write off Research in Motion as a non-competitor to the hevyweights in the industry. Apple and phones using the Android operating system from Google continue eating its lunch. Android-powered phones are forecast to have nearly half of the 2015 global smartphone market.


Blackberry's BBM


However, there is one hope for the company to retain a decent percentage of the smartphone market...BBM or Blackberry Messenger.

Many young people around the globe between the ages of 15 and 24 are buying the Blackberry phone in great numbers for one single feature – BBM, which is an instant messaging application only available on RIM devices.

It looks similar to SMS text messaging. But BBM is both faster and cheaper, coming free without the need for a data package.

It is used by more 39 million people worldwide, although its usage has yet to take off in the United States. BBM is extremely popular in the UK, Netherlands, Brazil, Indonesia, South Africa and Middle Eastern countries.

And its usage is up 500 percent over the the past 12 months, making it a real threat to phone companies' text-message revenues in some markets around the globe. In fact, the consultancy Mobile Youth forecasts that SMS volumes will drop by 20 percent in the next two years in countries like the UK

RIM's management team did not even realize they had a winner on their hands at first... which does not say much about their acumen. Graham Brown, a director at Mobile Youth said BBM took off “before RIM saw it on their radar”.


RIM's Hope


The growth of Blackberry Messenger globally could be a significant event for RIM. It is the reason that consumers now outnumber business users of Blackberry.

What Research in Motion hopes will happen now is that BBM's entrenchment in the youth market globally will spread back up to their parents. The company believes if this happens, it will prevent older customers from switching to their rivals.

The company is now building on this opportunity by providing new “gifting” capabilities in BBM. This allows people to send each other talk-time vouchers. Other virtual items such as music tracks are expected to follow.

RIM is also opening up BBM to third-party developers. This will allow the company to build other services on top of or incorporating into its messaging system. This development may lead to BBM being opened up to ads and marketers, which will lead to increased revenues.

There are even rumors that the company is considering opening up BBM to other mobile platforms, through an iPhone or Android application.

However, this Blackberry Messenger “social platform” is still in beta testing mode. And as if they still don't believe it, RIM's management remains cautious about its outlook.
It really does say something about how the company is run. RIM finally has a weapon it can yield in the war against Apple and others...yet its management is reluctant to push it.

Instead, it should be pushing BBM every chance it gets, particularly here in the United States.