BlackBerry maker Research In Motion (Nasdaq: RIMM) is facing rough roads ahead as its newly released BlackBerry Torch with a revamped operating system has failed to impress the market, at least on the software side, and the company has been facing several regulatory issues in UAE and India.
Industry observers feel that RIM could be the next Palm, if it fails to develop a much-more advanced operating system than OS 6 or else migrate to Android platform.
RIM, which has been losing its market share to Apple's (Nasdaq: AAPL) iPhone and Google's (Nasdaq: GOOG) Android -powered devices, earlier this month launched its new BlackBerry Torch that was touted as RIM's answer to iPhone with its latest operating system-BlackBerry OS 6.
But, market analysts said the sales of the device have been lackluster and brokerage Morgan Stanley had even downgraded the stock to "underweight" from "overweight."
Though, RIM has made significant enhancements to its new BlackBerry 6 operating system, the updated version lacked the punch to compete with the operating platforms of iPhone and Android.
The market also took notice of the developments and shares of the company fell over 3 percent on August 20.
Meanwhile, software is not the only issue, RIM has to cope with. A number of countries including the United Arab Emirates, India have recently threatened to shut down BlackBerry services over security concerns amid worries that RIM's encrypted messaging and e-mail services provide a safe haven for criminals and terrorists looking to evade authorities.
Nowadays, buyers of a smartphone are very much concerned about the software of the device, rather than hardware, for which the Torch has definitely got rave reviews.
Experts, however, say that consumers who are fond of plastic keyboards, or cannot shed the BlackBerry brand, only may buy BlackBerry devices, but people who use internet, applications, games, multimedia on a large scale tend to buy iPhones or Android phones.
There are about 200,000 applications available for iPhone, and 30,000 for Android users, way ahead than 8,000 apps available for the BlackBerry. In addition, coding for the BlackBerry platform is generally more difficult and time consuming for developers as there are too many different models with varying features and screen sizes.
The trend was visible with the Canadian company's market share in the second quarter that declined to 17.8 percent from 19.1 percent last year, while Apple's share rose to 13.3 percent from 12.4 percent, according to a data from IDC.
If the story goes on, RIM could be forced to cater mostly toward the low end of the market, where the margins will also be lower.
A survey conducted by the Nielsen Co. in July found only 42 percent of existing BlackBerry users planned to purchase another one. The rest said they would switch to a rival platform
Market analysts said RIM could migrate to Android to avoid a Palm-like fate.
Palm, which was a major player in the PDA market, struggled to transform itself as a smartphone company. Despite good reviews for its webOs platform, Palm failed to survive in the cut-throat competition for its Pre and Pixi smartphones and finally fell in to the arms of HP.
Even, market is speculating a possible suitor for RIM could be Microsoft (Nasdaq: MSFT), They said it could be a killer combination as the hardware of RIM and Windows 7 phone software of Microsoft could give Apple and Android a run for their money.
In the another scenario, if RIM adopts Android, it could be a fitting rival to Apple, and moreover, an Android-based BlackBerry could get more billing from carriers compared to Android devices from Motorola, HTC or Samsung since BlackBerry is a top brand.
RIM's strengths lies in email service and BlackBerry Messenger, and they could be moved to Android. Further, RIM is cheaper than Apple and other expensive Android devices. RIM sells its BlackBerry device in 175 countries, while Apple sells its iPhone in less than 100 countries.
Switching to Android also helps RIM to benefit from ever-increasing Android apps platform and could save costs from developing it.
Android is also not a bad strategy for RIM, considering the platform's future potential success over Apple's iOS.
According to a data from iSuppli, Android will be used in 75 million smart phones by 2012, up from 5 million in 2009. Meanwhile, iOS usage will amount to 62 million in 2012, up from 25 million in 2009.
Shipments of smart phones running the Google-backed Android operating system grew at an incredible rate of 886 percent in the second quarter, according to a research firm Canalys.
By 2012, the global market share of Android will soar from 2.7 percent from 2009 to 19.4 percent, while Apple's iOS for the iPhone will see its share rise to 15.9 percent in 2012, up from 13.8 percent in 2009, iSuppli said.
But, switching to Android for RIM would not be easy as the company should ensure seamless transition of its back-end servers to the Android. RIM might have to overhaul its supply chain and invest a lot, and it also has to adapt itself frequently to keep up to date with Google's latest features.
Looking all these developments, it becomes more or less certain that RIM's new BlackBerry Torch may indeed be the company's best BlackBerry yet, but the Torch is not going to light up BlackBerry as expected and plug its decline.
International Business Times, The Global Business News Leader
