Strategy includes wider presence, more apps; analysts say it could be too late

Research in Motion (RIM), maker of BlackBerry devices, has embarked on a multi-pronged strategy to stay afloat in the highly competitive smart phone market.

The strategy includes extending its footprint to smaller cities and improving its application ecosystem.

Smaller cities, more apps

“We were in 80 cities last year with 2,500 retail outlets. Today we are in 250 cities and in more than 5,000 retail outlets. We will continue to expand that reach as there are a lot of consumers in smaller cities who are also looking for that experience,” Sunil Dutt, Managing Director, RIM India, told Business Line.

RIM is also ramping up its application portfolio to compete with the Android and Apple iOS market place. “We had 20,000 apps developers last year and today we have around 36,000 of them working on the BB platform. There are 89,000 apps (for BB) in India. These developers are not only in tier-I cities, but also in tier-II and -III cities,” Dutt said. RIM expects to have more than 100,000 applications in the next three months.

Challenges from rivals

Despite these efforts RIM faces a huge challenge from other smartphone makers who not only are aggressively launching new handset models every year but also have a better application ecosystem.

Handset manufacturers such as Nokia and Samsung are launching more than 15-20 handsets every year. In contrast RIM had launched 12 products in fiscal 2012. Others also have the advantage of software such as Symbian and Android, where many applications can be used across different devices.

The biggest worry, however, for RIM is that it is losing out in its stronghold - the enterprise segment, as many organisations are picking iPhones for their staff.

“Many business houses now give iPhones and Samsung phones as their official connectivity device. In the bring your own device (BYOD) segment also, other smartphones are overtaking BlackBerry,” says Sumanta Mukherjee, Principal Consultant, Cybermedia Research.

While Samsung is the biggest smartphone seller in India, Nokia is betting big on its new Windows 8-based phones.

“It is a battle between Android and non-Android because Android users have access to free applications and others (such as BlackBerry and Apple) have proprietary issues. It is tough competition for BlackBerry,” said another telecom analyst.

Sales woes

According to a recent report from IDC, Android smartphones have led the global market with the most sales in the second quarter of this year with 104.8 million units, up 68 per cent as compared with 46 per cent in previous year. Apple (iOS) sold around 17 million units. Its share declined to 17 per cent as compared with 18.8 per cent last year. BlackBerry’s share plunged to 4.8 per cent as compared with 11.5 per cent last year, with 7.4 million units sold in the second quarter this year.

The company’s Q1 revenue in fiscal 2013 declined to $2.8 billion, down 33 per cent from $4.2 billion in the previous quarter and down 43 per cent from $4.9 billion in the same quarter of fiscal 2012.

RIM’s launch of the BB10 operating system has been delayed by a year. Dutt says it is not a concern as the company is integrating many applications into the device.

“We had discussions with carrier partners, technologists, analysts, distributors and other partners, and we thought it was better to integrate all of that and delay it by few months,” Dutt said. RIM has also corrected some products’ prices, whether it was the PlayBook or 8520, to make them affordable to more consumers.

“We also launched products which were relevant in the Indian market, such as 9220 and 9320 – both based on our research findings for markets like India where young customers want affordable devices giving them a lot of experience like language inputs inside, BBM dedicated key, FM radio and extended battery life,” he said.

The company will come out with new models in qwerty, hybrid (qwerty plus touch) and fully touch by end of December. To retain its share in the enterprise segment, RIM is targeting SMBs for its BlackBerry Enterprise Server (BES) Express. These services are priced affordably and apps are bundled free with the device to get small businesses on the BlackBerry bandwagon. “We also have refreshed our brand positioning recently in terms of ‘action starts here’. It was started from India and the results are good. Some of the countries like Thailand have started after that,” Dutt said.

(This article was published on September 20, 2012)
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