Future Dims for BlackBerry Maker

A collection of Blackberry devices is shown on a table in Jakarta, Indonesia on Dec. 10. The Canada-based Research In Motion announced last week that new smartphones based on its upcoming operating system would be delayed for several months. (Bay Ismoyo/AFP/Getty Images)

NEW YORK—BlackBerry customers waiting for the next-generation operating system will have to wait several months longer, the company announced late last week. The news sent its already-depressed shares tumbling and caused analysts to sound the death knell for the smartphone maker.

In its quarterly report last week, BlackBerry maker Research In Motion Ltd. (RIM) announced that its new QNX operating system (BlackBerry OS 10) would be delayed until the latter part of 2012. 

That operating system was supposed to be RIM’s holy grail in competing with smartphones running Google Android and Apple’s iPhone, which have taken market share from the BlackBerry in recent years.

Part of the delay is attributed to hardware selection. CNET quoted RIM’s CEO Mike Lazaridis saying the delay was due to availability of certain dual-core smartphone chips that offer integrated LTE 4G-capabilities and more efficient battery usage. Those chips don’t come out until mid-2012, according to the company.

Therefore, RIM’s Co-CEOs Mike Lazaridis and Jim Balsillie said that the company would heavily market and promote its current batch of products. “We ask for your patience and confidence,” Lazaridis said in a conference call with analysts last Friday.

The patience didn’t come as the news sent RIM’s shares tumbling to almost 8-year lows last Friday. They are already down more than 80 percent year-to-date 2011. Many analysts were quick to slash their ratings—and some sound the death bells—on RIM shares following the announcement.

Canadian bank BMO Capital Markets last Friday cut its rating on RIM shares. “ … This could be game over for the BlackBerry franchise,” National Bank Financial analysts wrote to clients. 

“Let’s say it’s a year from now, my concern is that it may be too late,” Evercore Partners analyst Alkesh Shah wrote in a research note.

BlackBerry 10

The new operating system BlackBerry 10 runs on the back of QNX, which was developed by QNX Software Systems. RIM acquired QNX last year and aspired to use it for all of its new products.

BlackBerry 10 made its debut earlier this year on the BlackBerry PlayBook tablet computer. It has taken the company a long time to introduce smartphones.

So far, questionable features and weak sales have dogged the PlayBook. The tablet computer’s baffling lack of software to send e-mails was criticized by technology pundits at its introduction, and RIM said that the feature may not arrive until early 2012.

In total, PlayBook shipments total just 1 percent of Apple iPad shipments year-to-date.

“The last few quarters have been some of the most trying in the recent history of the company,” Balsillie said on the conference call. The two CEOs have already cut their annual base salaries to $1 until they can right the ship.

Choices Galore

Some analysts say that part of the reason for BlackBerry’s recent struggles is a bewildering lineup of phones with little direction.

In the past, BlackBerrys were known as business phones with a knockout ability to send e-mails effectively and securely. Business and government-sector employees were largely its target market and customers only had a few choices.

To better compete in the consumer sector against Apple, today RIM has a full lineup of phones with varied features—some flip, some are touch screen, and some have full physical keyboards.

In addition, BlackBerry has a series of phone names, with specific phones differentiated by four-digit codes such as 9810, 9650, or 9930. 

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