RIM on the Ropes

Story first appeared on NPR.

President Barack Obama couldn't bear to part with his BlackBerry. Oprah Winfrey declared it one of her "favorite things." It could be so addictive that it was nicknamed "the CrackBerry."

Then came a new generation of competing smartphones, and suddenly the BlackBerry, that game-changing breakthrough in personal connectedness, looks ancient.

There is even talk that the fate of Research In Motion, the company that fathered the BlackBerry in 1999, is no longer certain as its flagship property rapidly loses market share to flashier phones like Apple's iPhone and Google's Android-driven models.

With more than $2 billion in cash, bankruptcy for RIM seems highly unlikely in the near term, but these are troubling times for Waterloo, Ontario, the town of 100,000 that was transformed by the BlackBerry into Canada's Silicon Valley. RIM is Canada's most valuable technology company, an international icon so prestigious that the founder and its other driving force, are on an official government list of national heroes, alongside the likes of Alexander Graham Bell.

RIM's U.S. share of the smartphone market belly-flopped from 44 percent in 2009 to 10 percent in 2011 according to market researcher NPD Group. The company still has 78 million active subscribers across the globe, but last month RIM issued a warning that it will lose money for the second consecutive quarter, will lay off workers this year, and has hired a team of bankers to help it weigh its options. Last July it slashed 2,000 jobs.

Of RIM's 16,500 remaining employees, 7,500 live in Waterloo, a university town 90 minutes' drive from Toronto, where everyone seems to know someone who works for RIM.

The decline of the BlackBerry has come shockingly fast. Just five years ago, when the first iPhone came out, few thought it could threaten the BlackBerry. Now the Chief Executive says his employees are getting asked all the time, 'What's going on with you guys? What happened? I mean RIM is the star of Canada and what happened to you guys? And how bad is it going to go?'

RIM's software is still focused on email, and is less user-friendly and agile than iPhone or Android. Its attempt at touch screens was a flop, and it lacks the apps that power other smartphones. Its tablet, the PlayBook, registered just 500,000 sales to Apple's 11.8 million in the last quarter despite a price cut from $500 to $200, well below cost.

RIM's hopes now hang on BlackBerry 10, a new operating system set to debut later this year. It's thoroughly redesigned for the new multimedia, Internet browsing and apps experience that customers are now demanding.

The CEO, formerly RIM's chief operating officer, says he can turn things around with BlackBerry. He took over in January after the company lost tens of billions in market value and the founder stepped down along with the co-CEO.

RIM was once Canada's most valuable company with a market value of $83 billion in June 2008, but the stock has plummeted since, from over $140 share to around $10. Its decline is evoking memories of Nortel, another Canadian tech giant, which ended up declaring bankruptcy in 2009.

But Waterloo is home to more than 800 tech companies and is certainly no company town, many here insist. Smaller firms like e-learning company Desire2Learn have doubled their head count in the last year, and Google has opened an office here.

The chairman of the Center for International Governance and Innovation, a Waterloo-based think tank, likens Waterloo to Rochester, New York, where the blow of Kodak's bankruptcy filing is cushioned by the network of startups the company helped to spawn.

They've taken an enormous hit because of the collapse of Kodak, and Waterloo will take an enormous hit assuming that RIM ultimately vanishes from the scene, but the overall economy and region has been so fundamentally changed by RIM that it will actually do very well.

In an interview with The Associated Press at RIM headquarters in Waterloo, the CEO said he won't try to compete head-to-head with Apple but will try to build on RIM's strengths, such as its dominance of the corporate smartphone market. RIM says more than 90 percent of Fortune 500 companies use BlackBerry and that more than a million North American government workers rely on BlackBerry's software security.

But he acknowledges RIM failed to quickly adapt to the emerging bring your own device trend, in which employees bring their personal iPhones or Android devices to work instead of relying on BlackBerrys issued by their employers.

That's where BlackBerry 10 comes in — delayed but not too late to vie with the new Apple iPhone expected this fall, or so the company hopes. At the end of the day if the product is good you can always come back.

Other tech companies have indeed recovered from the ropes. The late Steve Jobs said Apple was less than three months away from bankruptcy when he rejoined it in 1997, and it's now the world's most valuable company.

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Apple, Blackberry spar over Smartphone

Sydney Morning Herald

 

Canada's Research In Motion (RIM) fired back at Apple's Steve Jobs on Tuesday over his claims that the iPhone is outselling the Blackberry and that 18cm tablet computers have no future.

"We think many customers are getting tired of being told what to think by Apple," RIM co-chief executive Jim Balsillie said in a blog post responding to the comments made on Monday by Jobs.

"For those of us who live outside of Apple's distortion field, we know that seven-inch tablets will actually be a big portion of the market," Balsillie said after Jobs dismissed seven-inch (18cm) tablets as too small.
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Blackberry is developing a touchscreen tablet computer called the PlayBook which features a seven-inch (18cm) screen in a bid to challenge Apple's iPad, which features a nearly 10-inch (25cm) screen.

Jobs, speaking to financial analysts during a conference call on Monday, dismissed seven-inch (18cm) tablets as "tweeners" saying they were "too big to compete with a smartphone and too small to compete with an iPad".

He suggested makers of seven-inch screens "include sandpaper so users can sand down their fingers" to be able to tap onscreen keys.

Balsillie struck back with criticism of Apple's refusal to allow Adobe's Flash video to play on the iPad.

"We know that Adobe Flash support actually matters to customers who want a real Web experience," he said.

"We also know that while Apple's attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of websites that use Flash."

During his earnings call, Jobs also said that the iPhone "handily" outsold BlackBerry during the quarter and he didn't see the RIM handsets catching up any time soon.

Apple sold 14.1 million iPhones during the quarter, up 91 per cent from a year ago.

"RIM has achieved record shipments for five consecutive quarters and recently shared guidance of 13.8 to 14.4 million BlackBerry smartphones for the current quarter," Balsillie said.

"Apple's preference to compare its September-ending quarter with RIM's August-ending quarter doesn't tell the whole story because it doesn't take into account that industry demand in September is typically stronger," he said.

"As usual, whether the subject is antennas, Flash or shipments, there is more to the story and sooner or later, even people inside the distortion field will begin to resent being told half a story," the RIM co-CEO said.

Google Blames Developers for Lousy Android Battery Life

The Register

 

Creating a multitasking mobile isn't so easy after all, Google's top execs are discovering. Co-founder Larry Page was pressed with concerns about Android's iffy power management yesterday, and according to reports, all he could offer was a bigger battery. Eric Schmidt blamed third party software developers for using the phone's radio capabilities too much.

Well, duh. That's why the radio's there.

Google's realisation that there's more to mobile than 60fps graphics transitions does help Symbian and Apple, with their two radically different approaches to power management, come up smelling of roses.

Symbian had the advantage of starting from a sound basis, you might recall from our Psion retrospective. When Symbian OS was being devised, between 1994 and 1996, aggressive power management was a top priority.

"Every microamp was sacred," is how David Tupman described the hardware team's philosophy - Psion was still designing its own chips at the time. But the biggest help the hardware team had was an OS that drew very little power. The first Epoc machines used a quarter of the power draw of Microsoft's mobile OS.

It's an advantage that Symbian and Nokia, despite their missteps in recent years, have never really thrown away. If you want a smartphone with maximum power management, there's the modest (and barely promoted) Nokia E52 - eking out 6 hours of 3G talk time (and a month's standby) in a sub-100g package.

Apple has taken a different approach, basically disallowing all third party multitasking. The first iPhone only permitted multitasking for its own music player and in a very limited way, its email package. After two years, it added server-side push notifications, giving background applications the minimal information needed to respond. Still some way short of full multitasking.

This summer sees iPhone OS 4.0 released, with enhanced multitasking in seven areas, but it's closer to the notifications system of OS 3.0 than the pre-emptive multitasking a computer science course would define. An application developer foolish enough to write an application that polls constantly will get little joy. Version 4 does allow most of the use cases - receiving VoIP calls, for example - most people have asked for. But not at the expense of cell phone battery life.

In the long run, Page and Schmidt are right - you can't really improve power management easily if it isn't great to begin with, except by adding hardware. If and when Nokia and the Symbian licensees sort out the user interface problems (and there's not much sign of that yet), they'll continue to have a pretty unique advantage.

Motorola Swings To Profit; Struggling With Comeback

The Wall Street Journal

Motorola Inc. (MOT) swung to a first-quarter profit as a stronger economy lifted its non-handset divisions, but its marquee handset unit continued to struggle with its turnaround amid the competitive smartphone market.

Motorola, which previously warned of weaker phone shipments in the first quarter, said total phone shipments fell 43% despite an increase in sales of smartphones.

The results highlight the difficulty of competing against a flood of alternative smartphone makers in the market even as one of its devices, the Droid, gets serious backing from the nation's largest wireless provider in Verizon Wireless. While the company has rolled out several other devices, none have received the same kind of buzz or marketing support as the Droid.

The Schaumburg, Ill., telecommunications equipment maker posted a profit of $69 million, or 3 cents a share, compared with a year-earlier loss of $231 million, or 10 cents a share.

Revenue fell slightly to $5.04 billion.

Analysts, on average, had a first-quarter estimate of $5.1 billion in sales and a loss of 1 cent per share.

"The non-handset businesses really came through with higher profitability," said William Choi, an analyst at Jefferies & Co.

Co-Chief Executive Sanjay Jha won't have that benefit when Motorola completes its split, expected to occur in the first quarter of next year. In addition to the hanset division, which posted a 9% decline in revenue and an operating loss of $192 million, he will get the profitable home division, which makes television set-top boxes. Despite an 18% decline in sales, the unit posted a profit of $20 million.

Things will only get tougher for Jha from here. HTC Corp.'s (HTCXF, 2498.TW) Droid Incredible is poised to take over Droid's spot as the flagship product at Verizon Wireless. Research in Motion Ltd. (RIMM) just unveiled two Blackberrys, and Apple Inc. (AAPL) is expected to launch the next version of its iPhone in the summer.

"Where does Verizon Wireless highlight their promotions this quarter?" Choi asked.

The competition has already overtaken one rival. Hewlett-Packard Co. (HPQ) said it had agreed to buy embattled smartphone pioneer Palm Inc. (PALM) for roughly $1 billion in cash.

Motorola drew strength from its enterprise mobility and networks units, run by fellow co-CEO Greg Brown. Both units doubled their earnings, as the enterprise mobility unit reported a 6% increase in revenue.

Motorola projected its second-quarter earnings excluding items at 7 cents to 9 cents a share.

Analysts have an average second-quarter earnings estimate of 3 cents a share.

The strong forecast suggests that the stronger mix of smartphones is leading to higher margins in the handset division. Jha has said he expects the unit to post a profit by the fourth quarter.

Motorola shares rose 4.8% to $7.25 in premarket trading.

Smart Phone App Prevents Texting And Talking While Driving

LA Times

One in four American teens of driving age says he or she has texted while driving, and almost half of all youths ages 12 to 17 say they have been a passenger while a driver has texted behind the wheel, according to a survey released in November by the Pew Internet and American Life Project.

So when Darcy Ahl's 16-year-old son tried to answer his phone while driving, she was rattled to the core. The car started swerving on a busy interstate, and Ahl frantically instructed her son to end the call.

"I wondered to myself what would have happened if I hadn't told him to hang the phone up," Ahl said. "I wondered what would have happened if I weren't there."

Immediately after that scare, Ahl, an executive recruiter, went back to her office to figure out a way to keep teenage drivers away from their phones. By the following morning, iZUP's concept was completely formulated in her head.

Ahl came up with an idea for a smart phone application that prevents drivers from talking on the phone and texting while driving. Illume Software is releasing the application iZUP today. Ahl co-founded Illume Software and is now the company's vice president of public affairs.

The application iZUP uses GPS technology to detect a car's speed. If a car is traveling over 5 miles per hour, the application sends incoming calls to voice mail and holds text messages. It also blocks outgoing text messages and calls, except emergency 911 calls.

Account holders have the option of entering authorized phone numbers, such as parents' cellphone numbers, that the driver can both call and receive calls from while en route.

The application is teenager tamper proof, according to Illume Software. It is difficult to improperly uninstall, and if it is successfully uninstalled, the account holder will immediately receive an e-mail alert.

I downloaded iZUP onto an Android G1 phone and tested it out. While the car was in motion, iZUP held my phone hostage. It didn't allow me to do anything but call authorized numbers.

The application prevented texts, phone calls, Internet use and denied me access to my contacts and music ... even when I was sitting in the passenger seat.

An Illume Software representative said that the account holder can enter a pin code that temporarily disables the application if, say, his or her teen will be a passenger on a long road trip and wants full phone access.

The application worked as intended, but there was about a minute-long delay before it recognized the car's speed and either worked or disabled. A few times the lag enabled me to make and receive phone calls while the car was in motion.

But as soon as the application recognized that the car was traveling over 5 miles per hour, it shut down all communication. When the application kicked in, I was not able to make outgoing calls, and when I tried to answer incoming calls, I'd hear music instead of the caller's voice.

The application is only available at the moment for Blackberry and handsets that run on Windows Mobile and Android operating software. It costs $4.95 for a monthly subscription and $49.95 for a year. The iZUP family plan, which allows three to five phones on an account, costs $9.95 per month and $79.95 for a year. The application can be found at www.getizup.com.

Smart Phones Gain as Midrange Handsets Suffer

By The Wall Street Journal

Global sales of smart phones continued to rise in the second quarter as customers sought more features for their money, research firm Gartner Inc. said Wednesday.

However, the overall mobile-phone market declined from a year earlier for the third consecutive quarter, though the decline was at a slower pace than in the previous quarter, Gartner said in its quarterly report on the industry.

The rapid downturn in consumer spending has hammered the wider market as customers delay upgrades and hold off buying new phones. Prices of phones have been falling as phone companies and vendors try to stimulate demand. However, sales of smart phones are on the rise as vendors and wireless companies focus on marketing these devices in the hope of making more revenue per device.

Consumers who would usually buy midrange phones are either now purchasing smart phones, which offer features such as email, or are trading down to less-expensive handsets, said Gartner's research director, Carolina Milanesi. "We are seeing a lower revenue opportunity than we did a quarter ago," she said.

Gartner said about 286 million handsets were sold in the three months ended June 30, down 6.1% from a year earlier. That's an improvement on the record 9.4% drop in the first quarter from a year earlier.

Still, similar to a trend seen in the first quarter, sales of smart phones, such as Apple Inc.'s iPhone and Nokia Corp.'s N97 touch-screen handset, rose 27% to 41 million units.

The overall handset market could return to positive growth in volume terms by the fourth quarter, Ms. Milanesi said, helped by improving consumer confidence and new product launches from vendors including Sony Ericsson and Motorola Inc.

The three months ending Dec. 31 "is going to be a very strong quarter; there are a lot of products coming in time for Christmas," she added.

Heavyweight Nokia maintained its leadership position in the second quarter, even though its market share fell to 36.8% from 39.5% in the year-earlier period as it lost ground to Samsung Electronics Co. and LG Electronics Inc.

Samsung's market share increased to 19.3% from 15.2%. LG's market share increased to 10.7% from 8.8%. Motorola's market share fell to 5.6% from 10%.

Sony Ericsson's market share fell to 4.7% from 7.5%. Gartner said the company has suffered from an uncompetitive range of handsets, missing key trends like full keyboards, Internet browsing and navigation.