A Palm reading could foretell Research In Motion’s fate. The BlackBerry maker’s business is melting down, as consumers switch to devices made by Apple or powered by Google software. Yet the top brass at RIM remains bafflingly optimistic. Motorola and Nokia provide cautionary tales. But Palm’s trajectory might be more illustrative. When its cult gadget lost its technological edge, the firm never recovered.
RIM’s latest results were bleak. Product delays and pressure from rivals squeezed sales. Earnings per share declined 4 percent from a year ago and the company said next quarter will be worse. The shares tumbled by more than 20 percent, bringing the total market value lost in three years to over $50 billion.
Consumers, and increasingly businesses, wonder more and more why they should pick a BlackBerry device when iPhones and Android-run handsets boast a bigger collection of useful apps. A year ago, BlackBerry commanded over 40 percent of the U.S. smartphone market, by subscribers, according to comScore. From January to April, its share shrank another five percentage points, leaving it with a little more than a quarter of the market.
Co-chiefs Mike Lazaridis and Jim Balsillie nevertheless expect profit to start growing strongly again by year-end, as some long-delayed phones hit store shelves. They also reckon the new QNX operating system, scheduled to roll out next year, will give it an edge against competitors.
That all will sound hauntingly familiar to anyone who followed Palm. In the late 1990s, professionals latched onto its Pilot devices to organize schedules and beam contact details to each other. The mass market followed, with the resulting growth turning it into a company with a market value of $92 billion at its peak.
But once cellphones started adding similar functions, Palm’s gadgets looked woefully antiquated. New rivals could do everything a Pilot did and more. Palm’s business imploded. With heroic measures, the company made the transition to making phones, and eventually a well-regarded operating system, too. But it was all too little, too late. Rivals, including Research In Motion, had simply gained too big an advantage. Palm was sold for just $1.2 billion last year.
Of course, Research In Motion’s fortune isn’t predestined. More cost-cutting will help tide the company over, as could international growth. QNX offers some hope of a revival. But time is working against RIM, and a distressed sale can’t be ruled out of its cloudy future.