RIM defying recession so far

The recession apparently hasn’t hit Research in Motion yet, and the company doesn’t think it will strike in this quarter.

The Waterloo, Ont.-based handset maker said Thursday it pulled in $3.46 billion (all figures in U.S. dollars) in revenue in the three months of the fiscal year ending Feb. 28. That capped a year in which revenues totaled $11 billion and net earnings of $1.89 billion, suggesting that consumers and executives alike are loath to give up their BlackBerrys despite the economic turmoil around them.

It also confirms RIM as Canada’s IT champion for the time being.

“I think smartphones are such an advantage that even if you have only a few dollars in your hand you want one,” concluded Iain Grant, managing director of the Montreal-based telecom consultancy SeaBoard Group. “RIM has never had as broad and deep a portfolio of products as it has now.”

The results can be seen as evidence against those who thought RIM made a mistake in turning to the consumer market with products like the Curve and the Pearl, he said. In fact, Grant, added, had RIM not made that move and left the consumer market to the Apple iPhone and others it would have been a much bigger mistake.

The financial results of RIM and Apple carriers such as Rogers Communications suggests rising spending is so far benefiting all smartphone makers.

“The connected appliance is one of the few strong sectors in the B-to-C (business to consumer) economy,” RIM co-CEO Jim Balsillie told financial analysts in a conference call about the results. “We think it’s the new kind of consumption, the new kind of stimulus, the new kind of stimulus where jobs are going to come from.”

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What was remarkable was that RIM’s fourth quarter revenue was up 24 per cent over the previous quarter, although the recession really began to bite in the last three months of 2008. Balsillie admitted that the numbers far exceed the company’s expectations. He attributed them in part to aggressive promotions by carriers.

Worldwide there were 7.8 million new activations during the company’s final quarter. Of that, approximately 3.9 million were net new BlackBerry subscribers. There are now about 25 million users of the device. Half of those are consumers, showing RIM’s success of moving away from the enterprise market.

The company believes that for the current quarter revenues will remain steady, based on the current orders it has from carriers and retailers.

Balsillie has talked in the past about being in a “land grab” for consumer market share, and in the conference call said it is still in “early earnings” in that match. Going further, he reached for a baseball metaphor to describe the situation as “two down in the second inning.”

Not to slight his enterprise customers, Balsillie said RIM is still a “trusted element” among organizations, and his company is trying to leverage that by expanding BlackBerry use through partnerships with unified communications providers. In addition, it is on the verge of releasing BlackBerry Enterprise Server 5.0, which he said will offer increased manageability and scalability. In addition, end users will be able to take advantage of file sharing, secure file downloading from corporate networks and enhanced e-mail management.

Meanwhile on the consumer side, RIM has just opened a store for downloading applications for social networking Web sites and buying music. In September it signed a deal to become Ticketmaster’s “official smartphone,” and there’s more partner deals to come. One app to launch soon will allow BlackBerry users to download and play TV shows on their handsets.

BlackBerrys used to be seen an executive e-mailing tool. But Balsillie now describes them as a “lifestyle devices that people use a couple hundred times a day.”

But he also warned carriers that selling a popular device won’t give them satisfied customers, saying they have to upgrade their networks for the expected demand multimedia applications will put on their systems. “This is not like pulling an optical network and repurposing the optical network. Wireless is different … It’s going to be the defining aspect in many respect for the success of carriers.”

There was no news about new handsets, nor will there be for several months. All he would say is “we have an exciting roadmap for the back half of the year.”

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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