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Business
Julian Richardson | Online Content Manager  
January 23, 2012

Dropped signal: Which way now for BlackBerry?

THE once mighty BlackBerry has suffered a rapid and disastrous fall from grace in North America, culminating with the resignation this week of co-CEOs Jim Balsillie and Mike Lazaridis.

But can their replacement, Thorsten Heins, restore Research in Motion (RIM) to its commanding position in the smartphone market? And what about the product’s viability in Jamaica?

With disbelief swirling around the company’s bad fortunes up north, local experts have mixed views on whether the Canadian maker of BlackBerry will keep its stranglehold on the Jamaican smartphone market for much longer.

Dane Spencer, managing director of SMS – Smart Mobile Solutions, suggested that given its perceived technological shortcomings compared to other smartphones, the BlackBerry could easily see a reversal of fortunes in Jamaica if, for example, dominant mobile phone player Digicel began to distribute the iPhone and subsidise its cost.

“The truth is that devices tend to be carrier-driven in Jamaica,” Spencer said.

“The reality is that if tomorrow morning, Digicel gets up and says ‘the iPhone is where it’s at’ and begins to entice users with a limited data plan and a fleet of applications that are pretty much localised and useful for the average consumer, you could easily see a shift,” Spencer said, adding that “Apple marketing worldwide is very good as well”.

Spencer said however that he believes RIM will work hard to protect its Latin America and Caribbean market, which he said is highly regarded by the Canadian firm.

RIM was worth more than US$70 billion a few years ago but now has a market value of around US$8.2 billion.

Its often ubiquitous devices made email mobile and were dominant in the North American smartphone market until the iPhone came along. Under Lazaridis and Balsillie, the company struggled to adjust to the times and match the iPhone’s facility with Web browsing, third-party applications and multimedia.

The company suffered a public relations nightmare last year when the firm’s European infrastructure failed, highlighting problems with its back-up system which also didn’t work. The system’s failure led to a backlog of messages and emails from across Europe, which then affected RIM’s data service for its 70 million plus BlackBerry subscribers worldwide.

And it said last month that new phones deemed critical to the company’s future would be delayed until late this year. And its PlayBook tablet, RIM’s answer to the Apple iPad, failed to gain consumer support, forcing the company to deeply discount it to move the devices off store shelves.

Apple co-founder the late Steve Jobs said in 2010 that RIM would have a hard time catching up to Apple because RIM has been forced to move beyond its area of strength and into unfamiliar territory of trying to become a software platform company.

But there may yet be hope for the firm.

Heins, 54, said Lazaridis and Balsillie took RIM in the right direction and they are “more confident than ever that was the right path”.

Barbara Stymiest, a former chief operating officer of the Royal Bank of Canada who has been a member of RIM’s board since 2007, has been named chair of the board of directors. RIM also announced that Prem Watsa, the chief executive of Fairfax Financial Holdings, is a new board member. Watsa has become a significant shareholder.

Lazaridis said he was so confident in the direction of the company that he intends to purchase an additional $50 million of the company’s shares on the open market.

Financial analyst Dennis Chung believes that BlackBerry — which controls over 70 per cent of the Caribbean market — is not under any serious threat in Jamaica because of its largely corporate clientele.

“It is under threat in the US because the US has a higher penetration of retail consumers using phones there, while we have a higher penetration of business people using phones,” Chung told the Business Observer yesterday.

“The phone market in the US depends more on the person who is going to use it for their personal application — individuals who want a nice phone,” Chung said.

RIM’s share of the US smartphone market dropped from 44 per cent in 2009 to 10 per cent in 2011, according to market researcher NPD Group.

The Associated Press reported that “in the trendsetting North American market, BlackBerry phones have gone from must-have messaging toys to outdated clunkers” in a few years, while at the same time, Apple has been profiting from its iPhone which set a new standard for phone software.

The Android smartphone, backed by Google, Samsung and other software developing heavyweights, also gobbled away at RIM’s stake in the market.

But Chung doesn’t see this trend following, at least not any time soon, in a weak Jamaican consumer market where Messenger is arguably the most frequently used application on the BlackBerry.

“We don’t have the technology, firstly, for some of those apps on a broad basis,” Chung said.

“How many people in Jamaica, for example, can afford to be using a 4G on the iPhone which you pay per minute?” he asked. “With the BlackBerry, you only pay once — a constant amount every month.”

LIME launched the iPhone 4S in Jamaica and its other regional markets two weeks ago. But Chung does not think the device has the mass appeal or the affordability to be a hit in the Jamaican market anytime soon.

“I don’t think it will particularly do well… It’s like when LIME went with Mobile TV,” Chung said, suggesting that “LIME’s business model is wrong; they are focusing on the hype around a product which is not really a mass appeal product.”

RIM still has 75 million active subscribers, but many analysts believe the company will lose market share internationally, just as it has in the US.

Some industry analysts believe RIM is following the same trajectory as struggling Finish handset maker Nokia or former Canadian tech giant Nortel, which declared bankruptcy in 2009.

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