RIM's new smartphone has been compared to Palm's doomed operating system. But the difference this time is that global telecoms carriers are already on board.
Mobile operators set to deliver for BlackBerry
Research In Motion (RIM) is counting on its relationships with 150 carriers to avoid the fate of another smartphone pioneer that fell on hard times - Palm.
RIM's BlackBerry 10, due to be introduced on Wednesday, has been compared by analysts to Palm's doomed WebOS, a smartphone operating system unveiled four years ago this week. The technology drew rave reviews at the Consumer Electronics Show and sparked a stock rally for Palm, only to fizzle months later.
Like Palm, RIM rebuilt its latest operating system to compete with Apple's iPhone after years of market-share declines. RIM has also received positive reviews for the changes, more than doubling its stock since late September, including a 14 per cent gainthis month.
The difference this time is RIM has the support of carriers around the world, said Frank Boulben, the chief marketing officer for the Waterloo, Ontario-based company. Palm relied purely on Sprint Nextel Corporation, the number three mobile phone service in the United States.
"They launched with one carrier worldwide," said Mr Boulben. "We are currently in the labs of 150 carriers around the world. We are not comparing things that are comparable."
While Palm eventually added more carriers when the WebOS-based Pre phone was sold in Europe, the decision to debut with just one carrier in the US was a "really, really bad choice", said Alexander Peterc, an analyst at Exane BNP Paribas in London, who has a neutral rating on RIM. "RIM has wider carrier distribution going for it."
Analysts such as UBSs Phillip Huang and Morgan Stanley's Ehud Gelblum have compared RIM to Palm during the past two months, suggesting that optimism surrounding the BlackBerry 10 is excessive. In 2009, WebOS excitement sent Palm's stock to about US$18 from $3, only to fall back below $4 the next year. Palm's revamped phones failed to catch on with consumers, and the company agreed to a takeover by Hewlett-Packard in 2010. The products were discontinued the following year.
RIM's rally "is reminiscent of Palm", Mr Huang said in a report last month.
The company's 14 per cent gain to $13.56 in New York was the biggest since April 3, 2009.
There are also technological similarities between the BlackBerry 10 and WebOS. RIM's software lets users flip between apps with their fingertips, just as the Palm Pre did in 2009.
In both cases, the companies faced the daunting task of pitching an unfamiliar platform to consumers, said Brian Blair, an analyst with Wedge Partners in New York.
With BlackBerry 10, RIM aims to persuade long-time BlackBerry fans to adopt a touch screen, rather than RIM's hallmark keyboard. While the BlackBerry 10 lineup will include models with regular keyboards, the RIM chief executive Thorsten Heins has said he expects the touch version to account for most sales.
"As they ask their 80 million customers to do this, those same customers are going to be taking an honest look at the other devices that are out on the market," said Mr Blair.
RIM's most loyal business customers will give BlackBerry 10 an initial boost. That could account for 5 million to 10 million units in the first full quarter BlackBerry 10 is on sale, said Exane BNP Paribas's Mr Peterc.
Wooing the broader public will be tougher, he added.
"It will be enough to keep them going this year, but next year will be much harder," said Mr Peterc, who now mostly uses an iPhone himself. "As a consumer, I've moved on."
Sales of the BlackBerry 10 will begin next month. Some carriers - including Rogers Communications, Canada's largest - have already begun taking BlackBerry 10 orders.
"If you have the carriers committed, that's very important for a successful launch," said RIM's Mr Boulben, who previously worked at Vodafone Group and France Telecom's Orange unit.
RIM also had 79 million subscribers and $2.9 billion (Dh10.65bn) in cash at the end of last quarter, money it can tap to market the new phones.
Palm only had about $250 million in cash and short-term investments at the beginning of 2009.
Still, RIM today faces a hurdle that Palm didn't. The smartphone market is more mature today, said Steven Li, an analyst at Raymond James in Toronto. Apple's iOS platform and Google's Android also did not account for more than 80 per cent of US sales in 2009.
"Back then, smartphone penetration was still quite low and there was no entrenched ecosystem," said Mr Li, who has the equivalent of a hold rating on RIM.
"Today, you have two major entrenched ecosystems in Android and iOS, and smartphone penetration is maturing."
The company is planning to launch six brand-new BlackBerry devices in the next 12 months to freshen up the handsets available to business users, according to Arrow Comunications, a UK telecoms solutions provider.
While RIM did not have a stand at this year's Consumer Electronics Show in Las Vegas, a number of executives are present, talking up the release of the new devices this year, which will be discussed at the launch of the BlackBerry 10 operating system.
Speaking to FierceWireless, Mr Boulben said two handsets running BlackBerry 10 would be launched at Wednesday's event.
He said one would be a full touchscreen device, while the other will boast a Qwerty keyboard, as the firm looks to appeal to those who have stuck with it on the back of the keypads.
By the time next year ticks around, RIM will have launched six new devices on to the market covering high, middle and low-end sectors.
Mr Boulben also noted that the company had not done any exclusive deals with carriers, adding: "We intend over time as we transition the portfolio to have a full range of devices."
Corporate and government customers will be targeted by the mid and high-end devices, which will boast the increased security provided by the new OS.
As well as a boost in security, Mr Boulben also promised the introduction of 70,000 applications at the launch of the devices, with 90 per cent of the most popular apps around ready to go on the devices by the time they come to market.
BlackBerry 10 is the evolution of RIM's existing BlackBerry operating system and will feature a new interface, which boasts a host of time-saving features for business users.
BlackBerry Flow, which allows users to scroll seamlessly between apps, has been added, as well as BlackBerry Peek, a feature allowing users to glance at other applications without leaving the one they are currently using. BlackBerry Hub can combine a number of inboxes, message and notifications into one location, meaning that professionals spinning a number of plates can keep their eye on a number of things and never miss a meeting.
* with Bloomberg News