Phones4u — industry report — 5th May - 11th May, 2009.
Bono flashes his BlackBerry in a battle of smart phones…
The Times - 10/05/09
The cool executive tool is now being pitched at the man in the street. When Bono strides onto the stage at the Nou Camp stadium in Barcelona on June 30, Jim Balsillie will be a happy man. The beginning of U2’s world tour marks the start of a high-profile sponsorship for BlackBerry. This tie-up is designed to speed up the journey of the gadget from the businessman’s briefcase to the pocket of the ordinary consumer. For Balsillie, the joint chief executive of Research in Motion (RIM), it shows he intends to do more than simply defend his patch in the battle with Apple and Nokia for supremacy in the growing smart-phone market, where the mobile phone has morphed into a handheld computer. What started life as a portable e-mail device, wrecking family weekends, has become something the younger generation uses to listen to music through applications such as Pandora and Slacker. Pictures of Barack Obama clutching his BlackBerry while on the election trail have only burnished its credentials.
“Everyone is using it in Los Angeles and New York, in every age group,” said Chris De Wolfe, co-founder of the social networking website MySpace, which supplied BlackBerry’s most downloaded application. “They have really widened the demographic in a big way.” More than half of BlackBerry’s 25m users are ordinary consumers. It is not just for businessmen these days. While iPhone has grabbed the headlines for its sleek design, BlackBerry has held its own. Both generate revenues from customers going to their applications sites, which sell small downloads covering everything from weather reports to virtual pets. Smart phones, representing 12% of the mobile pie, are the only segment of the market expected to grow this year, when most consumers are delaying upgrading their handsets to save money. Figures from Gartner show that Apple’s share of the smart-phone market rose from 5.2% to 10.7% last year, while BlackBerry increased 10.9% to 19.5%.
The big loser was Nokia, whose N-series has lost its lustre, although it still holds a commanding 40.8% of the market. Gartner analyst Carolina Milanesi thinks smart-phone sales will be up 27% this year, against a 4% drop in the size of the overall mobile market. Balsillie said the thinking behind BlackBerry’s shift, which began when he launched the Pearl almost three years ago, was driven by simple mathematics. “If two-thirds of the market are not business customers and you don’t address it, you seriously sub-optimise your efforts to build your business,” he said. Others think that handset improvements and customers’ higher expectations made it easier to broaden the BlackBerry’s appeal as an e-mail device with internet, attracting customers who today access Facebook on the move instead of sending texts. “The coming change was obvious,” said Patrick Chomet, global director of terminals at Vodafone, which joined BlackBerry to produce the Storm handset. “The development of colour displays in the past couple of years, along with access to great games and music, bigger memory and touch display have been fundamental in moving the BlackBerry from a businessman’s gadget to a cool consumer handset.” Its progress has not been without cost, however. Ramping up advertising and sales has knocked RIM’s margins below their traditional 50%. “Our focus is to drive mass adoption of the BlackBerry,” said Balsillie. “If it comes with some incremental margin compromise, this is a small price to pay.”
For consumers, the choice comes down to whether they prefer BlackBerry’s keyboard or iPhone’s touchscreen. The keyboard is better for e-mail. The touchscreen is better for surfing the internet. RIM hopes to cover both angles with one of its next designs. Shareholders are supportive, pushing the share price up 73% so far this year.
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