The sale of smartphones increased by 57% in the first quarter of 2010, according to researcher IDC, far outpacing the general growth of the mobile market.
Winners and losers
The major winners: Apple (Nasdaq: AAPL), whose iPhone drew the expected fanfare and excitement, and Google's (Nasdaq: GOOG) Android operating system. That's good news for Motorola (NYSE: MOT), which saw market share growth behind its flagship Droid phone and other Android offerings. It's also a positive sign for companies like Dell (Nasdaq: DELL), which have staked not only smartphone, but tablet growth, on the operating system.
Unfortunately, one of the losers was Research In Motion (Nasdaq: RIMM), maker of the email- and business-savvy BlackBerry smartphone. Despite holding an impressive 41% of the North American market, RIM has continued to cede ground since early 2009. Here are the three biggest problems I see for RIM moving forward:
- Technology: One of the biggest complaints from BlackBerry users is that the browsing experience is less than stellar. The ability to surf the Web, listen to music, or watch videos is exponentially more difficult to do than on an iPhone or a Droid. As an analyst at BMO Harris Private Banking noted recently, "The right thing to do is to invest every dollar they need to refresh the product and excite people again."
- Apps: Application usage has grown tremendously on smartphones, from people downloading games to others trying to find their favorite retail outlet. Here are the simple statistics: the iPhone has 225,000 apps, Android has some 65,000 apps, and yet the BlackBerry only has about 7,000 apps. Unless RIM wants to constantly defend the perception that it's a company that only makes phones for enterprises, it's going to have to be more aggressive in the growing app department.
- Revenue: Currently, about 40% of RIM's subscribers are located outside of North America -- that international subscriber base was only 33% two years ago. People outside of North America tend to purchase cheaper phones, so ultimately, the larger the segment of international subscribers becomes, the less revenue RIM can possibly expect. This is already being reflected today, as RIM's average revenue per user has fallen from $140 to $92, a pretty staggering drop.
It's not all bad
There are a few things we can't ignore -- primarily, that RIM has been able to triple its worldwide subscribers in the past two years, and that's never a bad thing.
In addition, at the end of August (tentatively) BlackBerry 6 will be released, and it is supposed to offer a much more media-friendly platform than previous versions. Potentially, photos will be organized more efficiently and videos watched more easily. The touchscreen will support pinch-to-zoom, which should also make general navigation much simpler.
If RIM is worried about the recent decline in market share, it certainly isn't showing it. Co-CEO Jim Balsillie has said that "the wind is about to gust on our back" and that consumers will be "blown away" by the upcoming technology revelations.
The new software release is slated for this summer, so fortunately, investors don't have to wait too long to find out how successful BlackBerry 6 is actually going to be.
What do you think -- is RIM just fighting against the current or does it have the wherewithal to defend its No. 1 smartphone status?
Sound off in the comments below!
