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| Not even big in Japan |
| Robert Cyran / Jul 23, 2010, 00:45 IST |
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Apple/RIM: Research In Motion's future looks bleak. The maker of BlackBerries has a traditional stronghold in sales to U.S. companies. But that has been cracked open. Apple said this week that more than 80 per cent of Fortune 100 companies are currently testing or deploying the iPhone. Meanwhile, phones using Google’s Android operating system appear to be making inroads, too. That spells trouble for RIM.
Corporations and consumers used to be happy with handsets that served up email reliably, promptly and securely. RIM’s devices did this very well, so it sewed up the market. Now, though, Google-powered and Apple handsets now adequately handle email, while also doing much more. For instance, iPhone users can download about 30 times as many apps as are available to BlackBerry users, and the process is more user-friendly.
RIM’s share of the US smartphone market reflects this shift. It fell to 41 per cent in the first quarter from 55 per cent in the previous year, according to Gartner. The combined share held by iPhones and handsets running the Google operating system rose to 49 per cent from 23 per cent over the same period.
True, RIM’s sales in overseas markets are increasing, enabling it to hold its share of the global smartphone market more or less steady. Yet handset trends increasingly originate in the United States due to the growing importance of smartphone software.
Moreover, RIM’s overseas push has been accompanied by a sharp fall in the average price of its handsets. While phones are priced differently overseas, the suspicion is the company is losing the pricing power that comes with being the only game in town. Nokia’s troubles - and the decline in its stock price - show that increasing volume doesn’t matter if prices fall too fast.
The BlackBerry maker’s shares may appear cheap. They trade at less than 10 times estimated earnings for this fiscal year. Yet Apple and Google’s dominance in apps means they are becoming de facto standards in the smartphone market. Technology companies that lose such wars often suffer shockingly fast profit declines. RIM still has a shot. This fall it is due to roll out a new operating system, which might help it fight back. But time is running short.
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