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BlackBerry Bets on Europe to Gain Market Share from Rivals
Research In Motion, whose US sales plunged 45 percent last quarter, is counting on Europe to regain ground lost to Apple and Google as the BlackBerry maker races to introduce a new operating system.
Thorsten Heins, who took the top job at RIM last month, heads to Barcelona for the Mobile World Congress this week to convince carriers he has the products European consumers want. His challenge is to bolster market share in the region, where sales in Britain, for example, have begun to drop.
“In Europe, Asia, the Middle East, Latin America, BlackBerry is a very strong brand, a leading brand — we can really rely on that,” Heins, a 54-year-old German who spent more than two decades at Siemens before joining RIM in 2007, said in an interview at the RIM’s headquarters in Waterloo, Ontario, before leaving for Barcelona. “That doesn’t mean we don’t have to earn this every day again. We have to do that.’’
BlackBerry demand has held up better in markets such as the Netherlands and Britain than in the United States, where sales tumbled as American consumers and businesses opted for Apple’s iPhone and touch-screen devices built on Google’s Android software. While RIM made its name by targeting Washington politicians and Wall Street bankers, Europe’s portion of its sales has increased to about a third, said Matt Thornton, an analyst at Avian Securities in Boston.
“The brand is still stronger in Europe than it is here,” Thornton said.
Still, a lack of new BlackBerry models is making Heins’s job tougher and threatens to undermine RIM’s position in Europe, Thornton said.
In Barcelona, Heins will show a new version of the PlayBook tablet and smartphones introduced six months ago, while seeking to build excitement about new BlackBerrys coming on the BB10 platform in the latter part of the year, Thornton said.
That leaves RIM vulnerable to attacks by rivals such as Nokia, Samsung Electronics and HTC, which are preparing to showcase newer models at the Barcelona event starting today.
Samsung and HTC’s latest models run Android and include larger screens than the BlackBerry, and Nokia is displaying handsets using Microsoft’s Windows software, marking the first time the Finnish company is showing new products at the trade show in three years.
While RIM says the BlackBerry is still the top-selling smartphone in Britain, its sales in the country fell to $588 million last quarter from $685 million a year earlier. The traction RIM is retaining in Europe is mostly due to cheaper devices such as the Curve, according to Thornton. “It’s not the high-end stuff that’s working for them there, it’s the Curve and lower-end phones,” he said.
In a speech to BlackBerry developers in Amsterdam last month, Heins opened his remarks by pointing out where BlackBerry is the top prepaid smartphone or top smartphone overall, reeling off the Netherlands, Britain, Spain as well as Saudi Arabia, Kuwait, the United Arab Emirates and South Africa.
RIM had 8.5 million subscribers in Britain at the end of last year and a 26 percent share of phone sales in December, according to data from GfK released by RIM.
“In the UK, they’ve done really well and in the Netherlands, they’ve hit a home run; in Germany and France, not so much,” said Tavis McCourt, an analyst at Morgan Keegan Inc.
Getting the BlackBerry Messenger messaging software, or BBM, to catch on in Britain and Holland was key to that success, said McCourt, who is based in Nashville and rates RIM shares “market perform.”
Still, BBM wasn’t enough to keep users addicted to the BlackBerry in the United States as the larger screens and faster Web browsers of the iPhone and Android appealed to consumers. The competition is beating RIM on Web-browsing, Chavez says, even as she still plans to stick with her BlackBerry for messaging.
RIM’s US smartphone market share dropped to 16 percent in the three months through December from 19 percent in the previous quarter, according to ComScore. In that time Apple’s share rose to 30 percent from 27 percent and Android’s climbed to 47 percent from 45 percent.
Heins is counting on four new BlackBerry models introduced in September to catch on better in Europe than they have in the United States. He said last month that RIM needs to do a better job of marketing the BlackBerry 7 phones and their improved browsers and touch-screen navigation.
A PlayBook software upgrade, which delivers dedicated e-mail, calendar and contacts programs to the tablet, was pushed out to BlackBerry users last week after repeated delays under his predecessors’ management.
Heins’s bigger challenge is to get the next round of BlackBerry smartphones, using the new BB10 operating system, into stores before the year-end holiday shopping season. Lazaridis said in December the first BB10 device would come out “in the latter part” of 2012.
BB10 will position RIM to capitalize on the changing ways people are using smartphones in the United States and Europe, Heins said.
One thing playing for RIM’s advantage is the missteps of former market leader Nokia, which have left Apple and Android dominating the market. As long as Nokia is still struggling, executives from European carriers that Heins meets with in Barcelona will want him to succeed, McCourt said.
“Carriers around the globe, whether it’s Europe or the US, would love to see another successful platform,” he said. “They don’t want be just to be low-margin resellers of Apple and Android.”
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