It wasn't too long ago when gadget geeks and cell phone lovers were clamoring for each new BlackBerry release the way they do now for Apple's (Nasdaq: AAPL) iPhone. However, as Apple has continued on its path of innovation by focusing on customer needs, Research In Motion (Nasdaq: RIMM) has watched idly as its market share has declined rapidly. RIM has long felt that its enterprise business would continue to be the breadwinner and fend off the likes of Apple's consumer-geared products. But that belief hasn't helped its share price or its business, and now the company is in the fight of its life.

The bad
Investors have pounded RIM's shares over the past few months and with good reason. Some may wonder why RIM's revenue growth of 35% in 2009 is such a bad thing. Well, I guess any revenue growth is good, but when compared to 2008 revenue growth of 84%, one can see the dramatic slowdown. In addition to a much slower rate of growth, the company's margins also contracted significantly.

The slowdown in revenue growth and shrinking margins can be attributed to RIM's lack of innovation and device breakthroughs by competitors. Apple's iPhone and Google (Nasdaq: GOOG) based Android phones have consumers clamoring for updated touchscreen phones and applications that offer more than just email.

The recently concluded second quarter of 2010 marked the first time since 2007 RIM was not the leader in U.S. market share. The top spot belonged to Android-based phones, with 33% of the market. RIM fell to second, with 28% market share, followed by Apple's 22%.

While many handset manufacturers are now making Android-based phones, Motorola's (NYSE: MOT) Droid has been the most popular so far. As the Android-based phones and the iPhone form relationships with new carriers, RIM will only see added pressure on its revenues and margins.

The good
While growth has been slowing for RIM, especially in the U.S., the demand outside the country is increasing at a rapid pace for RIM and other smartphones.  In 2009, only 42% of RIM's revenue was derived from outside the United States. However, in just the first quarter of this year, RIM posted significant year-over-year sales growth of 72% in the U.K., 51% in Canada, and 89% in the rest of the world. This includes Asia and India, which will be huge growth engines in the next 5 to 10 years.

While RIM has fallen behind competitors in the advancement of consumer-geared smartphones, the company still holds a key competitive advantage because of its alignment with corporate and IT and wireless providers. The BlackBerry Enterprise Server is still the safest way to send private and confidential messages without fear of being intercepted. Businesses value RIM's encryption service and will be hesitant to move to other operators with less-safe networks.

RIM also shares revenue generated from its applications with the wireless services that provide the network for BlackBerry users. Competitors such as Apple and Google do not share revenues and are much more difficult for the providers to work with. Closer alliances with wireless providers AT&T (NYSE: T), Verizon (NYSE: VZ), and Sprint (NYSE: S) can only prove beneficial in the future.

What now?
RIM has become a much cheaper stock over the past few months, but it has also become a more risky play for your portfolio. RIM has been extremely slow in its attempts to adapt to the new hypercompetitive smartphone wars, and it has an uphill battle if the company hopes to return to the top. However, there is still much value in its brand, Enterprise system, and strong commitment to corporations which couldn't function without BlackBerries. Investors should watch closely over the coming weeks as RIM forays into the touchscreen world with the Torch. The reception to this new product will be very important to RIM, and could set the tone for a new generation of BlackBerry innovation.

How do you like your BlackBerry? Do you think RIM can keep up in the hypercompetitive smartphone space? Let us know in the comment section below.

Andrew Bond owns shares of Apple. Apple is also a Motley Fool Stock Advisor Pick. Google is a Motley Fool Rule Breakers recommendation. The Fool also owns shares of Google. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.