BlackBerry maker RIM to reinvent itself in 2011

The BlackBerry is facing an image problem. Reliable, yes. Hip — not as much any more. Research In Motion (TSX:RIM) will spend next year reinventing itself in a fashion, with its new PlayBook computer tablet and a new generation of smartphones intended to lure consumers away from Apple and Android products.

The BlackBerry is facing an image problem. Reliable, yes. Hip — not as much any more. Research In Motion (TSX:RIM) will spend next year reinventing itself in a fashion, with its new PlayBook computer tablet and a new generation of smartphones intended to lure consumers away from Apple and Android products.

“So 2011 is the year where they either sink into being an entry-level device provider or they turn it around,” said PC Magazine analyst Sascha Segan.

Segan said the BlackBerry maker has been able to mask its lack of competitiveness with iPhone and Google-powered Android devices by tapping into the “huge well” of demand for its phones in emerging markets. “But that’s probably not going to go at the same speed in 2011 and they need to get back to core markets like North America, where consumers are more demanding,” said Segan, lead analyst for PCMag Mobile.

The PlayBook tablet is expected to initially appeal to business and health-care users who have access to WiFi networks when it makes its debut early next year. It will be tethered to a BlackBerry for use and offer the same level of security. “Corporate — that is their No. 1 priority because it’s still the company’s greatest strength,” Segan said from New York. “Are they going to try to sell it to consumers? Of course they are. If it’s really a speedy, effortless fun device with great apps, consumers will want it.” The PlayBook will compete against Apple’s iPad, Samsung’s Galaxy tablet and a host of other consumer and business tablets.

William Blair & Company analyst Anil Doradla said “apps” are going to be key for RIM, which opened BlackBerry App World almost a year after Apple’s App Store.

“What will hold onto consumers is their application store front and that’s what they will have to work hard on,” said Doradla, who’s based in Chicago. Co-CEO Jim Balsillie recently said that RIM’s app store had 16,000 apps, including games, social networking, shopping, banking and business software applications both free and paid. He added that there were two million downloads daily. In contrast, Apple’s App store had several hundred thousand apps and Google’s Android store had more than 100,000.

A “gush” of tablets that will hit the market in 2011.

RIM’s tablet could be out in late March, he said.

“I don’t think we can assume it’s going to be a runaway success largely because there’s so many different tablets out there,” he said, adding he expects RIM’s new phones to have more success.

“I think 2011 is the inflection point for these guys, one way or the other.”

What analysts are also expecting are new BlackBerry smartphones, expected out in the second half of 2011, using the same operating system as the PlayBook tablet.

The PlayBook will have a new operating system based on technology from RIM’s recent acquisition of QNX, a maker of a real-time operating systems used in vehicle navigation systems.

“If they can lever the tablet to get back into the high end of the smartphone business, then the numbers are going to go up,” said senior analyst Matthew Robison of Wunderlich Securities in San Francisco.

Robison said RIM’s strategy of using its tablet to bring in a new operating system that will make its way into its phones is a smart move.

“Once they get it in the market, I think it allows them to address the smartphone business from the high ground with advanced features,” he said of the PlayBook. “But I want to see it work for a while.”

Balsillie, hit with questions from analysts recently about RIM’s future, was nothing but bullish.

“I think we are laying in the pieces here to sustain really exciting growth for a long, long, long time. I feel great about where we are sitting for 2011 with the carriers and in North America,” Balsillie said.

However, Apple recently surpassed RIM to become the world’s fourth-largest mobile phone vendor reflecting the release of the latest version of the company’s iPhone, tech trends firm IDC has reported.

PC Magazine’s Segan said RIM should be given credit for identifying its problems.

“They’re getting on these problems probably a year later than they should have but, hey, they’re getting on them.”

The challenge could lie with consumers themselves.

“One thing we have learned over the last five years is that mobile phone consumers are fickle. They will always jump ship if something cooler comes along,” he said.

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