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RIM cracks into consumer market with social phones
Pretty in pink…

By Reuters

Published: Tuesday 29 January 2008

RIM has leapt into the retail consumer market with products such as its pink BlackBerry Pearl, exposing itself to shoppers' fickle tastes and competition from Apple's iPhone.

Wireless from A to Z

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A is for Antivirus
B is for Bluetooth
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K is for Korea
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X is for XDA
Y is for Yucca
Z is for Zigbee

The company's devices now include more "lifestyle" features, like cameras, Facebook social-networking software, music players and television, for broader appeal.

RIM's co-chief executive, Jim Balsillie, said: "I think the whole social-networking phenomenon is quite substantial."

Balsillie's comment highlights a big shift for the Canadian company, which first made its name supplying blocky handsets that executives, lawyers and politicians used to send secure emails to their offices and clients.

The departure from that mainstay has produced strong early results, as RIM added BlackBerry subscribers at a rapid clip and posted profits that consistently beat analysts' expectations.

More than a third of RIM's subscribers are now classified as non-corporate or non-government. The company had a total of 12 million users at the end of the quarter ended 1 December.

The Pearl, the main product in the consumer push, looks more like a regular mobile-phone than the traditional BlackBerry. Launched in 2006 at around $200, some carriers now give it away as part of a long-term service contract, while declining plan prices are making the gadget more affordable.

The retail effort reached a critical milestone on November's Black Friday, the day after US Thanksgiving that marks the start of the holiday shopping season. It was, for the first time, RIM's strongest single day for net subscriber additions.

The strategy has also put the company in head-on competition with the iPhone. However, RIM has insisted it has nothing to worry about, and Balsillie shrugged off talk that Apple may target business clients.

He said: "Apple is certainly free to innovate and come into the market, but they are particularly strong in the consumer side. Who knows if they can come across to enterprise?"

Some analysts have said retail and corporate customers could scale back BlackBerry spending if the US, RIM's biggest market, slips into a recession.

Deutsche Bank analyst, Brian Modoff, said: "Part of what they [RIM] have going for them is that they have a desirable product, so that'll help."

After more than quadrupling in value since mid-2006, RIM shares are down more than 15 per cent so far this year.

Balsillie said economic turbulence in the US should have a limited negative effect on RIM. As for retail consumers, he thinks they are more likely to defer larger purchases like cars or houses rather than part with the BlackBerry.

He said: "The mobile phone is kind of one of the last things people give up."