RIM disappoints with BB10 delays

BlackBerry maker RIM has further delayed the crucial launch of its BB10 operating system and has confirmed it is to cut 28% of its workforce, indicating once again that the smartphone maker is struggling to compete against rivals such as Apple and Samsung.

Blackberry

The announcements came as the company reported a $518m (£334m) net loss in the quarter to 2 June, compared with a $695m (£445m) profit the previous year. Revenue dropped 43% year-on-year to $2.8bn (£1.8bn) after it shipped 5.4 million fewer smartphones than the same period in 2011.

The launch of BB10 is integral to BlackBerry’s comeback as it looks to regain some of the market share it has lost to its rivals.

BlackBerry has an 11% smartphone market share in the UK, according to Ipsos Mori data for April. Apple’s iPhone is the most popular smartphone in the UK, with a 19% share, while 15% of smartphone owners have an Android device.

BB10 was expected to be available to consumers this year, with BlackBerry preparing its “biggest ever” marketing campaign for the launch back in February, but it is now scheduled for the first quarter of 2013 – meaning it will miss the crucial Christmas and back to school sales periods. It will also be released months after the launch of a new iPhone, an update to Windows Phone software and a number of Android releases.

IDC analyst Kevin Restivo said the delay was “akin to launching fireworks underwater”. Matthew Thornton of Avian Securities said the announcements were like “watching a puppy die”.

Some analysts have claimed the delay suggests that RIM may be looking to sell its network business or form a partnership with another company, such as Microsoft, in a bid to return to profit.

RIM’s chief executive Thorsten Heins, however, says the company’s top priority is to launch the new BlackBerrys successfully.

He adds: “I will not deliver a product to the market that is not ready to meet the needs of our customers. There will be no compromise on this issue.”

“I am not satisfied with these results and continue to work aggressively with all areas of the organisation and the board to implement meaningful changes to address the challenges, including a thoughtful realignment of resources and honing focus within the company on areas that have the greatest opportunities.”

RIM says it expects to report a loss in the second quarter of this financial year as it continues to invest in marketing programmes and work through the transition of BlackBerry 10.

It says it hopes to prioritise its marketing efforts and spend in regions that offer the highest opportunity and return and is looking to “more effectively leverage marketing windows”.

BlackBerry is hoping to make $1bn (£0.6bn) of savings this fiscal year as part of its Cost Optimisation and Resource Efficiency programme. As part of these savings, the company will cut about 5,000 jobs, although it has not yet indicated which divisions will be affected.

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