Deserting the BlackBerry

Ian Austen has an article in The New York Times about the (unlamented, except by RIM) death of the BlackBerry:

Research in Motion said recently that it lost a million BlackBerry owners worldwide during the company’s last financial quarter, the first such decline in the device’s history.It reported other bad news as well, a month before introducing its new BlackBerry 10 phones to the public. Revenue fell 48 percent in the company’s fiscal third quarter, ended 1 December, to $2.7 billion from $5.2 billion a year earlier.
After a favorable tax gain, RIM reported a net income of nine million dollars, or two cents a share. A year ago during the same period, RIM earned $265 million, or 51 cents a share. The company said that using nonstandard accounting methods to adjust for the tax gain and other pretax charges led to an adjusted net loss of $114 million for the third quarter, or 22 cents per share.
Analysts had expected a larger loss of 35 cents a share, according to a survey by Thomson Reuters. Nevertheless, RIM’s shares fell about nine percent in after-hours trading. Before RIM’s announcement, shares closed at $14.12, up for the day by 3.6 percent.
The company has pinned all its hopes on the BlackBerry 10 to win back customers who may have defected to iPhones or phones using Google’s Android operating system. RIM said 79 million customers were using BlackBerry devices. “We believe the company has stabilized and will turn the corner in the next year,” Thorsten Heins, the chief executive, said in a conference call with analysts. “We are realistic about our competitors, but we know that customers in this industry demand and respond to innovation.”
Until now, RIM had been able to offset the sharp drop in the BlackBerry’s popularity in its traditional markets, particularly the United States, through increased sales to users in developing countries. Because every BlackBerry user generates high-margin monthly fees from carriers for RIM, the last quarter’s loss of subscribers is more than just a symbolic setback.
In the conference call, Heins indicated that RIM had been reducing those fees, which account for 36 percent of RIM’s revenue, in a bid to keep BlackBerry’s current product offerings alive. And in an announcement that seemed to concern some analysts on the call, Heins said that the new BlackBerry 10 phones would substantially revamp how RIM set service fees.
With the BlackBerry 10, Heins said, corporate and government users will be able to pick and choose what services they purchase from RIM, a step that he said could mean that some of them would no longer generate any user fees. The company was unclear about what fees BlackBerry 10s sold to consumers would produce. Last month Heins said that consumer BlackBerry 10 models would no longer benefit from RIM’s special web compression technology, the chief service provided to consumers by RIM.
RIM, which has no debt, pleasantly surprised analysts by increasing its cash on hand by $600 million, to $2.9 billion. The company was vague about how it achieved that beyond saying that the newfound cash came from “working capital conversion”. In the past, several analysts have speculated that the company has mainly become better at collecting its outstanding bills.
Heins said that the introduction of BlackBerry 10, however, would bring an end to the company’s cash hoarding. RIM, he said, will dig into its cash reserves during the quarter to stockpile BlackBerry 10 phones in advance of their release, and to finance advertising and other marketing campaigns for the devices.
Nevertheless, Heins predicted that RIM would still hold more cash at the end of its fiscal year than the $2.1 billion it had on hand at its beginning.
RIM shipped 6.9 million current-model BlackBerry phones during the quarter and 255,000 of its BlackBerry PlayBook tablets. During the call, company officials indicated that those products were being heavily discounted.

Rico says they're whistling past the graveyard...