With Research In Motion’s next-generation smart phones still at least five months away comes more word of the company’s struggles.

RIM’s share of the global smart phone market dropped to 5 per cent in the second quarter of this year, according to figures released Wednesday by a Canadian financial brokerage.

The report from National Bank Financial analyst Kris Thompson said the Waterloo, Ont.-based company’s international revenues are following the drop in Canada and the U.S., which is “very concerning.”

For the three-month period ending in May year over year revenue dropped 73 per cent in Canada, 47 per cent in the U.S., 46 per cent in the U.K. More significantly to Thompson is that in the rest of the world revenue dropped 36 per cent. That is “most concerning,” he wrote” since RIM is counting on its growth in international markets to help regain market share.”

He noted RIM has expansion plans in Dubai, Africa (including flagship stores in Nairobi, Kenya and Lagos, Nigeria) and India (plans to add15 stores by the end of the year, including Mumbai, Bangalore and Kolkata).

Globally. RIM [Nasdaq: RIMM] was knocked out of fifth place in smart phone sales by China’s ZTE.

The average selling price of BlackBerrys has also dropped the report adds – as it has for iPhones as well. But Thompson believes RIM has dropped prices for competitive reasons, while Apple’s decline has been in part due to an increase in sales of its lower-priced 3G and 4G models and a higher U.S. dollar.

RIM has put all of its hope into the launch of smart phones that will run the new BB10 operating system. However, that often-delayed debut won’t happen until early next year.

Sales of its current BlackBerry handsets, which run the BB7 operating system, have slowed as buyers turn to what they see as more advanced devices.

RIM has reported slumping revenue in the past several quarters and have warned more of the same is expected in the short term.

RIM will issue its next quarterly financial results Sept. 27.

The company is looking to craft a new strategy that will possibly include patent sales, licencing the BlackBerry operating system to other handset makers and joint ventures.

But Thompson believes decisions on these will be deferred until the launch of BB10.

In the meantime it has begun laying off staff.

Meanwhile, Apple Inc. is expected to release its next-generation iPhone with LTE connectivity next month, while Samsung Electronics continues to roll out new models of its Android-powered handsets.

Globally, Samsung has extended its lead over Apple, Thompson wrote. Samsung, which makes more models of handsets than Apple, held 33 per cent of the world-wide smart-phone market in the second quarter of this year compared to 17 per cent for the same period a year ago.

In the second quarter it sold 50.2 million smart phones, including its flagship Galaxy S III. In July alone it sold just over 10 million of that model.

Meanwhile, Apple sold 26 million iPhones in the second quarter. That’s an increase of 28 per cent over the same period last year, but in terms of overall market share it dropped to 17 per cent from 19 per cent for the same period a year ago.

But Thompson believes that share will increase when the new iPhone goes on sale.

On the other hand, industry analysts believe iPhones are much more profitable than Samsung’s handets.

According to a report from Reuters based on a pre-trial filing at the Apple-Samsung patent trial in California, Apple earned gross margins of 49 to 58 percent on its U.S. iPhone sales between April 2010 and the end of March 2012.

After Samsung and Apple, the top five smart phone makers are Nokia, HTC and ZTE.

In terms of mobile operating systems, Android (used by Samsung, HTC, ZTE, Sony and Google-owned Motorola) continues its lead over Apple’s iOS.

But Thompson also notes that several makers – including Nokia and HTC — are expected to launch handsets using the new Windows Phone 8 operating system. The new OS, he feels, holds promise.

“With the growing dominance of the Android and iOS platforms and carriers reducing their BlackBerry promotions (to avoid monthly service fees), carriers are in need of a third ecosystem,” writes Thompson. “With the delay of BlackBerry 10 to Q1 2013, Microsoft seems poised to fill that void with the arrival of Windows Phone 8 smartphones.”

He points out that Nokia has a World Tour event slated for Sept. 5-6, when a new Nokia phone could be announced.

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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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