BlackBerry Growing Overseas, Not Much in the US but Still Beating Analysts’ Targets
BlackBerry smart phone maker Research In Motion beat analysts’ expectations for the 3rd financial quarter but surprisingly, most of the company’s growth came from outside the United States—92% to be exact. That data was compiled by Asymco and the research company also discovered another startling figure. Of the 2.1 million new customers for BlackBerry smart phones, only about one out of every three use RIM’s BlackBerry Internet Service. Long story short, most of these new customers RIM is counting on for continued growth are in developing countries and are relying on prepaid plans to use the phones.
RIM’s shares (NASDAQ: RIMM) climbed about 4% on the news today before the market opened, giving hope that investors are cutting the Canadian company some slack based on growing interest in the coming BlackBerry PlayBook tablet, the new QNX operating system the tablet and future BlackBerry smart phones will run on and RIM’s hard financial data.
BlackBerrys are proving extremely popular in third world countries because of their relatively low cost. According to Todd Coupland from CIBC World Markets, BlackBerry smart phones sell for around $300 in markets like Indonesia while Apple’s iPhone and phones running Google’s Android OS go for around $600. That’s a huge price different.
The strategy that RIM has been following to build such strong global sales of its phones might be its undoing however. Developed markets like Europe and the United States consume smart phones like no one else and BlackBerrys are falling out of favor in these areas. RIM uses low cost, interchangeable components in many of its phones so that it can sell them at a profit even in less wealthy countries. U.S. customers on the other hand, are mostly interested in high-end devices with touchscreens—the iPhone 4 for example. In fact, many BlackBerrys sold overseas lack even 3G cellular radios because 3G infrastructure in developing countries is limited at best and often non-existent. Why make customers pay for something they can’t use?
The company’s attempts so far to build a truly high-end device have been less than successful. AT&T refuses to release any BlackBerry Torch 9800 sales numbers and the Storm series practically died almost as soon as it began. The coming BlackBerry PlayBook tablet from RIM uses a completely new operating system and is widely seen at the company’s best hope to prove that it can still compete against emerging smart phone giants Google and Apple.
Should RIM focus on growing its business globally and going after the underserved, low-end business smartphone market or should it focus on making an iPhone killer? Let me know what you think!RIM, market share, manufacturer news