Economic analysis

Difficult days for RIM

BlackBerry-maker Research In Motion Ltd. has finally lost its crown as the biggest smartphone platform in the United States, according to new data by research firm ComScore. The research shows that phones running Google’s Android software now command just over 31 per cent of the U.S. smartphone market, up from about 24 per cent last October. RIM, by contrast, has dropped to a 30 per cent share from nearly 36 per cent over the same period. Apple, meanwhile, is holding steady around 25 per cent.

In some ways, a changing of the guard was inevitable. Unlike RIM (and even Apple for that matter), Google’s strategy has been to make its OS available on multiple phones, made by multiple manufacturers, sold at a range of prices. But the meteoric rise of Android in just a few years still appears to have taken many in the industry by surprise. Nokia CEO Stephen Elop told employees last month in a now infamous memo that the Finnish cellphone giant essentially got caught flat-footed by the competition, citing Android in particular. Elop compared the Finnish cellphone giant’s predicament to a man standing on a burning oil platform in the icy North Sea with two options before him: either stand there and burn to death, or jump. Nokia jumped. A few days later Nokia announced that it was partnering with Microsoft and will use Windows-based software on future devices.

As for RIM, the Waterloo, Ont.-based company still owns the enterprise market, but most of the growth these days is happening in the consumer space. And RIM still seems to be playing catch-up when it comes to slick multimedia devices. It still doesn’t have a worthy iPhone competitor (although its touchscreens have gotten progressively better) and Apple has already come out with the second iteration of its iPad, while RIM’s PlayBook tablet has yet to make it to store shelves. Equally as troubling, at least for investors, is the recent departure of chief marketing officer Keith Pardy, a former Nokia and Coca-Cola executive, for “personal reasons.” Not only is it bad timing, right before a major product launch, but it suggests RIM’s effort to make its brand as loved as Apple’s has foundered. “Mr. Pardy was likely brought on to help with this image transformation given his prior experience at Nokia and Coca-Cola and his departure may signal a lack of success in this endeavour,” wrote Amitabh Passi, an analyst at UBS in a research note.

On the other hand, investors should take comfort in the fact that RIM isn’t afraid to make changes when the market demands it, or when something isn’t working. Because, as Nokia learned the hard way, the last thing you want to do when you’re falling behind in the fast-moving tech business, is nothing at all.

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