SAN FRANCISCO - The BlackBerry isnt just for business anymore - and thats paying off for parent company Research In Motion.(RIMM)
Waterloo, Ontario-based RIM Thursday reported strong quarterly earnings that topped Wall Street estimates. Revenue of $1.7 billion doubled from a year ago. Net income of $371 million, or 65 cents a share, rose from $175 million, or 31 cents a share.
The bulk of these earnings came from RIMs traditional business - corporate-grade cellphones and equipment for large companies. But this is the first holiday season that RIM got a big boost from a new consumer push.
About 34% of BlackBerry subscribers in the quarter were consumers and small businesses, RIM co-CEO Jim Balsillie said. On the Friday after Thanksgiving, RIM signed up a record number of new subscribers. Thats a huge change, because the busy holiday shopping day (and slow business day) has traditionally been sluggish for RIM, Balsillie said.
The results show that RIM has become a powerful consumer player in a relatively short time, says wireless analyst Hugues De La Vergne at researcher Gartner.
"Consumers want smarter handheld devices," says tech analyst Tim Bajarin at researcher Creative Strategies. "RIM was smart enough to see this trend early."
A handful of consumers have used BlackBerrys for years. But most were sold as part of corporate communications packages. The combination phone and e-mail devices were big, bulky and, more often than not, black.
A year ago, RIM began catering to consumers with a new BlackBerry, the Pearl. The sleek device costs about $150 with a typical service plan, compared with about $300 for some traditional BlackBerrys. It comes in several colors, including red, gold and titanium.
Other consumer-friendly models followed, with more expected for 2008, says wireless analyst Michelle Warren at Info-Tech Research.
The impact was dramatic. About 45% of BlackBerry owners surveyed by researcher In-Stat in October said they purchased their device from a retail store, instead of getting it from an employer. Thats up from 20% the last time the survey was conducted, in August 2006.
The move gives RIM access to a huge new market. RIM has about 39% market share for high-end data phones in the USA, but it has less than 5% of the overall worldwide cellphone market, De La Vergne says.
But the new strategy has some big drawbacks. U.S. consumers are used to getting phones for free with a service plan and balk at high prices, says In-Stat wireless analyst Bill Hughes. That could cut into RIMs high margins, he says.
Consumers desire for trendy, cutting-edge phones could force RIM to carry more inventory. Consumers also sometimes need more technical support than businesses. And RIM must compete with new rivals, such as Apple and its popular iPhone, Hughes says.
