RIM Looks to Distant Shores, Tablets for Growth

Research In Motion (RIMM) on Dec. 16 reported strong smartphone sales, shipping 14.2 million BlackBerry devices in the quarter, which helped boost revenues to $5.5 billion. A breakdown of the sales figures, however, reiterates that RIM is losing ground in the U.S. market as consumers and enterprises alike continue to adopt phones running Apple's (AAPL) iOS and Google's (GOOG) Android platforms. Looking forward, RIM is counting on its upcoming PlayBook tablet device to energize sales and create new opportunities for the company.

The overall sales numbers are certainly positive for RIM; after all, how can one be upset when the company sold 40 percent more handsets than in the year-earlier quarter? But RIM's growth isn't keeping pace with that of some rivals, which are capitalizing on the smartphone craze at the expense of the Canadian company. Apple, for example, increased sales by 90.5 percent over the past year, passing RIM on the global handset sales list and cracking the top five. Samsung's Galaxy S has crossed the 7 million-sold line (about half of RIM's sales for the quarter) in early November and shows little sign of slowing.

Yet, even with heavy competition, RIM is still increasing revenues. How so? By finding growth outside the U.S. Horace Dediu's Asymco blog notes that last year the U.S. accounted for 57 percent of RIM's revenue, but in the just-reported quarter that figure dropped to 34 percent.While that could mean sales are struggling here, it indicates RIM is increasing sales overseas. The Street's Anton Wahlman thinks RIM could increase pressure on Nokia (NOK), the smartphone leader in most markets outside the U.S.

PlayBook Tablet

Aside from looking beyond U.S. borders for growth, RIM will seek help from its upcoming PlayBook tablet, expected to launch sometime in the first quarter of 2011. The company's tablet strategy seems to differ from that of Apple: On Dec. 16's investor call, RIM Chief Executive Officer Jim Basillie said "the PlayBook redefines what a tablet should do." Based on that comment and prior PlayBook demonstrations, RIM's tablet is poised as an enterprise solution first, and consumer tablet second.

Depending on what RIM delivers in its PlayBook, that approach could energize sales as businesses seek ways to enable faster and cheaper mobile solutions for employees. RIM will still be competing against Apple's iPad; even though the device is a consumer hit, businesses continue to adopt the iPad due to improving enterprise software features and the rise of more business-specific apps in Apple's App Store.

Like many others, RIM is late in following Apple to the tablet space, but if it can illustrate more value to the enterprise with PlayBook, being late to the party may not hurt. RIM's grand entrance to the tablet ball is at least three months away, however, so until then it's turning its eyes, and its handsets, to distant shores.

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