Is BlackBerry the new Nokia?

While Nokia was once the mobile phone industry giant and juggernaut, RIM would not want to be compared to the Finnish handset maker, which has seen its global smartphone market share collapse.

Kevin Anderson July 07, 2011 15:58:58 IST
Is BlackBerry the new Nokia?

Blackberry maker Research in Motion saw its market share decline in the US in the past three months, putting more pressure on the mobile phone manufacturer to find a response to Android and Apple.

Apple pushed Blackberry into third place in the US smartphone market, according to the most recent figures from industry research group ComScore. From February to May of this year, Apple and its iPhone eked out a 1.4% gain in market share while the Blackberry maker lost 4.2%. Both handset makers still trail Google and its Android operating system, which rose more than 5% to take a commanding 38.1% of the US smartphone market.

Outside of the US, the UK and its home market of Canada, the story for RIM is different as it has continued to see growth internationally including in India. That growth will have to power it through its North American slump while it completes an essential update of the software that runs its handsets to compete with the iPhone and Google's Android.

Is BlackBerry the new Nokia

Is Blackberry the next Nokia? AFP

Is Blackberry the next Nokia?

While Nokia was once the mobile phone industry giant and juggernaut, RIM would not want to be compared to the Finnish handset maker, which has seen its global smartphone market share collapse even though it still dominates with simpler feature phones.

Nokia has held the global smartphone crown since 1996, but Nomura estimates that Samsung, maker of the Android-powered Galaxy smartphones, will take the top spot this quarter. It gets worse. Nomura also believes that Apple will push Nokia to number three in the next quarter.

Nokia is reportedly cutting prices on its smartphones in Europe to try to stem the slide, but the company is expected to post losses for the second and third quarters of this year.

Nokia knows it's in trouble, a fact amply illustrated by CEO Stephen Elop's now infamous 'burning platform' memo. For the last several years, Nokia has been struggling to update its ageing smartphone operating system. After a number of false starts, Elop decided to go with his former employer, Microsoft. It must be said Elop and Nokia must be feeling very nervous as ComScore's report showed Microsoft's mobile share dropping even further. Nokia's stock has dropped more than 40% this year.

RIM is in much the same position. It is looking to move from its ageing Blackberry operating system to a totally new system, QNX. The new OS already powers its new tablet, the Playbook. Unfortunately, the Playbook has not been a good advertisement for the future of Blackberry, with poor reviews and lacklustre sales.

It is a mystery when phones will launch with the new QNX operating system, and RIM hasn't released a major new Blackberry since August of last year. In the fast moving mobile phone market, that's too long to keep customers waiting, and RIM knows it. In the latest earnings call, Jim Balsillie, RIM's co-CEO, said, "The shortfall in the United States is primarily related to the age of the BlackBerry portfolio."

In cutting RIM's outlook to sell, Morgan Stanley analyst Ehud Gelblum wrote in a research note, "We believe RIM has now squandered nearly every opportunity and competitive advantage it enjoyed through ineffective R&D resource management, delayed product launches and misreads of the competitive environment."

As Nicholas Kolakowski of eWeek.com said: "It's clear that both Nokia and RIM are betting on the long-term, all the while hoping that existing market share and consumer loyalty will carry them through several bad quarters."

Consumers don't like uncertainty, and with apps playing a major role in the smartphone market, developers are keen to focus their efforts on one or two dominant platforms. Right now, there is a race for third, and Nokia and RIM will be fighting desperately to regain their former glory.

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