Looking back at 2011: RIM on the ropes

2011 was a huge year for the wireless industry. Global mobile connections surpassed 6 billion as the world’s total population hit 7 billion people, and worldwide smartphone penetration is now approaching 10%. In the United States, smartphone penetration has now topped 44% as converged, connected devices continue to flood the market across all age ranges. The rapid growth in the smartphone space can be attributed for the most part to two platforms, Android and iOS, and other companies continue to struggle to gain or even maintain their ground in a market that is expanding faster than it ever has before. Microsoft’s Windows Phone OS is heralded as a breath of fresh air but significant sales still elude the company’s vendor partners. On the other side of the coin, age finally caught up with Research In Motion’s BlackBerry OS and smartphone users are becoming increasingly disinterested in a platform that was once the most desirable mobile experience in the world.

The year started out well enough for the Waterloo, Ontario-based smartphone maker. BGR exclusively revealed a number of upcoming BlackBerry devices in mid-January — the next-generation Curve, Torch, Storm (which was later added to the Torch line) and the highly anticipated BlackBerry Dakota all made appearances — and BlackBerry fans around the world eagerly awaited their arrival.

RIM was also hard at work on its first tablet offering — the BlackBerry PlayBook — and while other platforms were building a huge ecosystem lead in the tablet space, BGR revealed that RIM had a trick up its sleeve. The company was planning to offer a number of options to developers looking to support its first QNX-based device, and adding support for Android applications would give RIM access to Google’s massive Android ecosystem. It would also ensure that PlayBook users had a huge catalog of apps available right out of the gate.

Unfortunately, things didn’t go according to plan.

The PlayBook finally launched on April 19th and software had proven to be a bigger challenge than RIM had seemingly anticipated. The pressing need to launch forced RIM to bring its debut slate to market without native support for email, contacts, calendar or even BlackBerry Messenger, the mobile chat client that put BlackBerry devices on the map among consumers. Instead, PlayBook users were forced to tether to their Blackberry smartphones in order to make use of this core functionality. The tablet also launched without support for Android applications, and the small catalog of lackluster apps available for the PlayBook remains a big problem to this day.

To compound matters, BGR revealed shortly after the PlayBook launch that despite RIM’s best efforts it was only ready to announce one device at the BlackBerry World conference in late April. That device was the BlackBerry Bold 9900 and while it was a device BlackBerry users had been clamoring for, it also came to market more than a year later than it should have with an operating system and user interface that was stale at best.

Things grew worse still when pent up unrest among RIM’s own employees finally reached its boiling point. Fed up, a high-level RIM executive provided BGR with an open letter in an effort to finally get his message across to RIM’s top brass. RIM issued a defensive response to the letter, explaining that it was addressing several issues but it was “thankfully in a solid business and financial position to tackle the opportunities ahead.” The company would go on to disappoint with its second and third-quarter earnings, and its fourth-quarter guidance suggested that relief would not come soon.

Today, RIM sits in a tough spot. It’s first major PlayBook update won’t come until February next year at the earliest, though continually weakening sales make the update less significant than it might have been six months ago. The new software will include native email support and other PIM functionality, but BBM is still proving to be a challenge for RIM’s software team. Even more of a concern, however, is that the first RIM smartphone to carry its next-generation BlackBerry 10 software is now delayed until the third quarter next year at the earliest.

Even more concerning is that while RIM waits for new LTE chips before it can launch any BlackBerry 10 phones — apparently the vendor is only working on 4G smartphones right now, despite the fact that many of its biggest markets have not even begun to deploy LTE networks — the company also continues to have huge development issues that grow more daunting each day.

There is no question that RIM has the talent to succeed in the modern smartphone market. It also has a user base that continues to grow with each quarter. The vendor has a lot of catching up to do, however, and it once it finally does launch its first BlackBerry 10 phone, it had better be a blockbuster with a massive marketing budget to back up its launch. In the meantime, RIM has a tough six-plus months ahead.

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