BlackBerry Feels the Heat

By Reuters  |  Print this article Print

RIM's PlayBook tablet computer will sell for less than $500, undercutting Apple's iPad, according to RIM Co-CEO Jim Balsillie, whose company's BlackBerry smartphone has been a stronghold in enterprises but now is facing credible threats from both iPhone and Android.

RIM has long been the dominant player in the corporate smartphone market, but its dominance of the corporate sector, where its secure email once reigned supreme, is weakening as companies increasingly allow use of iPhone and a slew of devices running on the Android system.

Blackberry's stranglehold on corporate communications is being eroded by rival devices, with Bank of America and Citigroup joining a growing throng of financial institutions eyeing alternatives to the Blackberry.

The company has also being dogged by demands from countries including India and the United Arab Emirates for easier access to the encrypted data sent over its network.

Balsillie shrugged off market concerns and said sales of its smartphones are set to grow by two-thirds in two years.

"We're close to 60 million BlackBerry subscribers now and if we continue to perform moderately, we'll be 100 million (subscribers) in couple of years...two years."

He said enterprise demand for BlackBerry remained strong and its Asian business was not affected by the security issues, dismissing investor concerns it keeps losing market share to rivals such as Apple.

Apple overtook it as the world's No.2 smartphone maker last quarter, trailing only Nokia (HE:NOK1V), by selling 14.1 million units. RIM sold 12.4 million phones in its July-September quarter and saw its market share slipping more than 4 percentage points from a year ago, according to industry tracker IDC.

Balsillie reiterated that Apple was surrounded by a "distortion field," saying RIM's staggered quarters made the comparison difficult. RIM's last fiscal quarter ended Aug. 28 while Apple's ended Sept. 25.

RIM is increasingly dependent on lower-margin emerging markets in Latin America and Asia for sales growth but India and other countries are also causing headaches with demands for access to encrypted data.

"We have seen tremendous growth in India, Taiwan, Philippines, Indonesia, China...It is paradoxical, the security issue," adding it is not affecting the company's business. (Additional reporting by Alastair Sharp in Toronto; Editing by Anshuman Daga and Frank McGurty)