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How RIM’s ‘slow motion car crash’ will impact SA Blackberry users

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Research in Motion (RIM), the producers of BlackBerry, recently delayed the launch of its latest BlackBerry 10 operating system, deemed to be critical to the ailing company’s survival.  This follows the poor execution and uptake of the BlackBerry PlayBook, the company’s entry into the competitive tablet market and one of the most anticipated mobile computing products of 2011.

Simon Leps, CEO of Fontera Digital Works (image: Fontera Digital Works)

Adding to this, during the first quarter of 2012, RIM reported a loss of $518 million and a 43% decline in revenue. These dismal figures resulted in the company laying off 30% of its labour force, that is, 5 000 employees.

The company has been on a steady decline globally since 2007, with its US market share plummeting from 41.1% to 3.7%.  But what does this all mean for South African users of BlackBerry?

Strong competitive market pressures, specifically from iPhone and Android smartphones, are one of the reasons for BlackBerry’s descent. The smartphone manufacturer’s lack of an innovative products and services pipeline means it cannot currently compete on the same scale as other players in the market. 

According to International Data Corp, RIM currently holds an insignificant 6.4% of the smartphone market, which is in comparison to rivals Apple and Android, who have a 23% and 59% market share respectively.

However, as BlackBerry’s global performance continues to dwindle, the company’s foothold in South Africa still remains strong, with an estimated 1.5 million BlackBerry users in South Africa. A study by Google revealed that BlackBerry occupies 44% of the South African smartphone market, which means the pressure for the company to remain one of the key players in this market is immense.

The truth is BlackBerry still remains a viable choice amongst higher-end consumers in South Africa, while still being a practical choice for lower-end consumers due to its all-inclusive data package and instant messaging platform, BlackBerry Messenger (BBM), provided by the BlackBerry service.

However, BlackBerry is slowly falling behind in South Africa as their competitors continue to innovate, offering consistently better products. BlackBerry is also swiftly losing its competitive advantages, namely its BBM service and all-inclusive data package, to similar services being offered by competitors, such as the popular messaging application, ‘WhatsApp’. Against this backdrop there are also rumoured plans by local operators to release Android phones, priced under R1 000, on a fixed-cost data plan. The importance of applications to the smartphone market is increasingly becoming an important factor for consumers when choosing a suitable smartphone.

Without the required significant numbers needed to fund growth, the gap between RIM and its competitors will continue to widen. BlackBerry cannot continue to compete with the R&D budgets of the tech giants Apple and Android.  Without funding or an investment strategy overhaul, Blackberry’s future is bleak.

However, it is likely that RIM’s poor performance will attract new investors and buyers.  As the company’s share prices continue to slip downwards it is progressively becoming an attractive target for a potential acquisition. With a strong global presence, huge customer-base and public awareness, the company is still considered to be a powerful global tech company. Players in the market that can offer both innovative and technology-driven solutions to RIM’s ailing plight, will be a suitable match to the company. Nokia anybody?

BlackBerry is currently down, but cannot (yet) be counted out.

Simon Leps, CEO of Fontera Digital Works

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