RIM delays next-generation OS again

BlackBerry users looking forward to updating their handsets to Research In Motion’s next generation operating system are going to be disappointed, again.
RIM co-CEOs Jim Balsillie and Mike Lazaridis told financial analysts Thursday that handsets running BlackBerry 10 won’t be out until “the latter part of 2012.”  Lazaridis said the delay is largely because it wants the new smart phones to use a dual-core chipset that can use the fourth-generation LTE high speed wireless networks expanding around the world. However, that chipset won’t be available until the middle of next year.
It could be quite a blow for a company losing sales to Android smart phones and Apple Inc.’s iPhones that needs a fresh face. Lazaridis and Balsillie told financial analysts that the recently-released phones running the BlackBerry 7 operating system are advanced and selling well. But some industry and financial analysts believe the company can’t stand pat on its lineup for what could be another 10 months.
“This could be game over for the BlackBerry franchise,” wrote National Bank Financial analyst Kris Thompson in a note to investors. “We can’t be confident RIM even hits the 2012 holiday season.” The delay of BlackBerry 10 phones “will make a turnaround very difficult.” And while the U.S. is an important market, promotional spending isn’t a fix for losing market share, he said. What’s needed are better products. Until BB10 handsets come out, RIM will continue to lose market share, he predicted. The latest phones running BlackBerry 7 won’t help, he believes.
In a bid to show shareholders they feel their pain as the company’s shares drop Balsillie and Lazaridis announced they will ask the company’s compensation committee to cut their salaries to $1 a year effective immediately.
They also told financial analysts the company is “not satisified” with its weak sales in the United States and will launch a “comprehensive” advertising and marketing campaign there and in other key markets to boost sales. In the U.S. alone it will spend $100 miilion in the next three months on marketing and customer retention plans. The promotions, which will include “special offers” on the newest phones that run the recently-released BlackBerry 7 operating system, will begin “imminently.”
The promotions and financial review is aimed at holding RIM’s customers and market share until BlackBerry 10 phones can come on the market.
To show that it’s not going to stand still in the meantime, Balsillie said RIM is also undergoing what was called “a major cost optimization” to save money for the sales promotions. However, getting rid of staff won’t be an option.
“We’re evaluating a broad range of initiatives and strategies with respect to how we introduce products, the efficiency of our operations and what is the best organizational structure for the company.” This last may be a response to calls from investors and analysts to either end the co-CEO positions or replace both Balsillie and Lazaridis. The review “may take some time,” Balsillie added, but he and Lazaridis vowed they will leave “no stone unturned” in the hunt for improved corporate performance.
Balsillie also said, he and Lazaridis believe there is a large mobile market opportunity and RIM has a powerful platform to take advantage of it. 
As for the PlayBook tablet, which has needed two rounds of discounted pricing to spur sales, Balsillie was optimistic. He repeated that it is still early days for the tablet market. As previously announced, version 2.0 of the PlayBook’s operating system will be released in February with a player for running Android applications, plus native email and calendar applications.
But Lazaridis said it will also that include manageability features aimed at enterprise IT managers. There will also be a dedicated PlayBook AppWorld where corporations can upload applications for distribution to their users.
The need to discount PlayBook has given rise to speculation that RIM has lost the ability to get into the tablet market. One analyst bluntly asked what some are thinking: At what point do you give up PlayBook? “I still think it’s the tablet market’s in it’s infancy,” Lazaridis replied. “We’re really pleased with the increased demand with the PlayBook promotions … We completely committed to the PlayBook.”
RIM said its revenue for the third quarter of fiscal 2012 was up US$5.2 billion from the previous quarter, but off six per cent from the same quarter a year ago. However, its net income for the quarter was US$265 million, compared to US$329 million for the previous quarter.
During the third quarter, RIM shipped approximately 14.1 million BlackBerry smartphones and approximately 150,000 heavily discounted BlackBerry PlayBook tablets. It took a US$485 million write-off for discounting the price of PlayBooks during the quarter, plus an additional US$54 million for lost revenue due to a four-day service outage in October.
“Despite the challenges faced in the third quarter, the BlackBerry subscriber base grew to almost 75 million customers around the world,” the company said in a statement releasing the results. “In addition, RIM launched a range of new BlackBerry 7 based smartphones globally and introduced holiday promotions that helped drive growth in the installed base of BlackBerry PlayBook users.
Even after the discounts, RIM [TSX: RIM] said earlier this month it still has lots of inventory, although so far this year it has sold 800,000 of the units with a 7-inch screen. And price discounts will continue, Lazaridis said, leading up to the Feburary operating system upgrade.
As for the future, revenue for the fourth quarter of fiscal 2012 ending March 3, 2012 is expected to be in the range of US$4.6-$4.9 billion, the company predicted. It expects to ship between 11 million and 12 million BlackBerry smart phones.

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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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