What Happened to Blackberry? RIM in Crisis as Sales Drop

RIM Has Peaked
So, that is a big mystery to me. I will seek to find out where our phones are, and why they are there. Maybe the whole market is now going through a correction and 2Q total smartphone unit sales are down from 1Q? Because Apple's iPhone 5 is delayed and Nokia is collapsing and Blackberries also falling in sales, maybe there is a tiring of the smartphone hysteria and we see a 'correction'.

But the big early bombshell news in Year 2 of the Smartphones Bloodbath, is that Blackberry's unit sales have now peaked. I think it's fair to say, it was not the iPhone that killed the Blackberry, as RIM managed to grow both unit sales and market share of the Blackberry through the first two full years of the sales of iPhone. But once Android came along, Blackberry saw its market share peak in late 2009 and now in early 2011, we see Blackberry's unit sales to have peaked too. Their best quarter was 14.5 million Blackberry sales. Now they are in decline.

And they have the typical management 'solution' to the problem - they are firing staff. That may be good for the bottom line, but in this age of the strongest growth in smartphones ever, that is a very short-sighted move. Now is not the time to cut sales staff - Blackberry enterprise/corporate sales are long sales cycles. Now is not the time to cut Blackberry marketing because the increasing part of Blackberry sales are now to consumers where most sales are driven by marketing. Now is not the time to cut R&D, as this is the most creative, inventive and innovative time in smartphones.

I do think that the tablet PC market is in hype mode, and one where enormous R&D effort is needed to keep up with Apple's iPad and where very heavy investments can result in tiny gains in market share. I am afraid that Blackberry's tablet adventure is hurting them unnecessarily. But I am sure that most who own Blackberry shares and most who study the RIM strategy would think that RIM has to mimic Apple, so if Apple does a Tablet, so too must RIM...

Meet the ONLY phone RIM announced in 2011: BlackBerry 9900 Bold Touch. Still not available.

But as RIM cuts staff, that will hurt its chances to claw back market share in smartphones this year, shaken by continuous product delays (RIM only announced ONE phone in whole of 2011!). Their market share is now to approximately 12% and in severe decline. Two market share points to lose in one quarter is very dangerous in this industry and must be stopped very soon or we will soon start to think of the Blackberry as yet another dead phone brand in the style of the Palm and Microsoft Kin and Nokia Symbian...

Very poor quarterly results from RIM. Very bad performance in this bloody year of smartphones. To use boxing metaphors, RIM, a past champ has taken it on the chin and has fallen to the canvas and is facing a count. Blackberry is not yet out, but staggers up onto its feet feeling very wobbly. Of perhaps, to put it in ice hockey terms for our Canadian readers, it's the Stanley Cup playoffs, you're in overtime in a game, and your team takes a penalty. It's not the end of the game yet, but this is the worst time to be playing one man short on the ice.

RIM needs to turn it around really fast for 3Q. This is perilous indeed.