After twelve months of trouble, Research in Motion (RIM) have announced that they will be delaying the release of their next-generation BlackBerry until 2013. The latest handset was meant to turn around the fortunes of the company who have lost out on customers and sales since suffering widespread “blackouts” in 2011, but developments have taken “longer than expected.”
The firm have also been forced to cut costs and therefore staff after shares dropped 14%, with around 5,000 people equating to 30% of its workforce, losing their jobs. It’s expected that these job cuts will cost $350m, having pledged that they will attempt to cut operating costs by almost $1bn.
The delay in releasing the newest models has played into the hands of the biggest name in the smartphone industry, Apple, who are set to release their new iPhone later this year, and Android phones, who look set to capitalize on another blow to RIM.
RIM were one of the very first manufacturers to move into the smartphone industry, delivering their handsets to people who needed to access their computers and documents while on the move, but who didn’t want to carry around a laptop all day. Today, they’ve fallen down the pecking order with their handsets now looking likely to drop to fourth in the ratings behind Android handsets – which lead the operating system market, the iPhone and the Samsung Galaxy.
What’s more, the new handset will miss the peak selling time around Christmas, and those customers are going to look to move away towards the competitors. It’s certainly a fact that when the new model does hit stores, it’s going to have to hit them hard. The iPhone 5 is expected to feature plenty of new functions and a larger screen, Android powered models are growing in stature and popularity with each release, and Microsoft are even getting in on the act by updating its Windows software for the new Windows Phone 8. This list doesn’t even mention the recently released Samsung Galaxy S3 which has been flying off the shelves and receiving rave reviews from existing Galaxy users and those buying for the first time.
The board of directors are now under increasing pressure to look for new options, which may involve forming a partnership with another firm, with Microsoft a name that has been bounded around for a few months now. This sort of collaboration could save the struggling company, but is one that they wouldn’t like to make unless they really had to.
They still expect to announce further losses in the next quarter, having shipped just 7.8m BlackBerry smartphones in the most recent three month period which equates to under 50% of what they were shipping 6 months previously. Since 2009, they have shipped more than 10 million devices.
To put the problems into perspective from other areas of the business, RIM shipped approximately 260,000 PlayBook tablets, while Apple sold more than 11 million iPads in the same three month period. What makes it worse is that RIM have already reduced the price of their flat-lining tablet on several occasions.
In order to keep operating to their own standards, they need to find a way of releasing the new BlackBerry not only quickly, but successfully. I suggest plenty of R&D work is required, but we’ll have to wait and see – it’ll certainly be an anxious wait for the RIM bosses.
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