One of the leading smartphone companies faces a decline in market share as it works to transition to a new mobile operating system. Nokia aptly fits that description, but it’s beginning to apply to Research In Motion as well. As the company slowly changes over from the BlackBerry OS to a new platform called QNX, more nimble competitors are stealing away sales, causing RIM to lose both market share and consumer mind share. ComScore today shows RIM’s U.S. share of smartphones at 25.7 percent in April, down from 30.4 percent in January.
The numbers from comScore aren’t based on actual sales data, but instead are from a statistically significant survey of more than 30,000 consumers, which represents ownership trends. The trend of people owning a smartphone from RIM is down, just as it is for Microsoft and Palm, while Google and Apple continue to grow at the expense of others. While RIM, Microsoft and Palm all lost market share, RIM’s decline was the largest. Platform transition may be partly to blame: Microsoft and Palm have already abandoned legacy mobile platforms, while RIM is only in the midst of doing so. Even worse, it hasn’t clearly stated how long the move from BlackBerry to QNX will actually take.
The analysts at UBS seem to agree with my fears. UBS said in a research note issued Friday on the company, while lowing its target price on RIM stock to $45 from $60:
While Nokia’s challenges appear more cumbersome than RIMM’s, what is evident in the mobile industry is that platform transitions can be difficult and profitability transitions (from peak to trough) quite dramatic and sudden. We believe RIMM risks a similar outcome (perhaps with a longer tail given its lucrative Services revenue stream) unless it makes bold moves and executes on the migration to its next generation QNX operating system flawlessly.
Transitions are never easy, but RIM isn’t making it any easier. Earlier this month, the company announced new Bold handsets, the 9900 and 9930, complete with BlackBerry OS 7. The devices use more capable hardware but the software revision is still based on the old BlackBerry platform. These handsets then, aren’t using the new QNX platform that runs on the BlackBerry PlayBook and there’s no guarantee they ever will. Currently available handsets don’t appear likely to even get the BlackBerry OS 7 update, so they’re effectively two versions behind once RIM completes its transition.
As if that weren’t enough of a challenge, there are reports today that the new Bold devices are delayed until September. Not only is the company moving to slow to transition to the QNX platform, but it could run the risk of losing momentum for new hardware, even as improved Google Android devices continue to arrive on store shelves each month. BGR cited several sources regarding the delay, and also says that BlackBerry OS 7.5 may still be in the works before QNX lands on RIM handsets.
Between a slow transition to a promising new operating system and potential delays for smartphones that still run older platforms, the road ahead for RIM looks to be fraught with peril. Even the best hardware keyboards in the business and the company’s flagship BBM service aren’t enough to cover up the age lines of sluggish and non-intuitive software.