Saturday, March 5, 2011

RIM Backs Away from High-end Smartphones

Marvell in its financial results call on Friday may have given signs that RIM is stepping away from high-end BlackBerry phones. CEO Sehat Sutardja blamed a steeper than expected 34 percent revenue drop primarily on RIM moving to "entry-level smartphones," where Marvell doesn't have chips to offer. Most of Marvell's designs in the BlackBerry line have focused on flagships like the Bold and Torch.

Sutardja didn't say how much of the transition was already taking place or if it knew where RIM's business was going.

The transfer would support beliefs that RIM is increasingly turning to beginner smartphone owners or to those in developing countries. Android and iPhone sales go primarily to customers that can afford a smartphone-level subscription, BlackBerry customers can often pick a cheaper messaging only plan or use prepaid service. RIM's most popular phones for more than a year have been the Curve 8500 series and the Curve 3G, both phones that are often cheap on contract or inexpensive enough to be bought outright for a prepaid user.

RIM has been gradually losing share over the last several months and just at the start of the year sank to third place in terms of platform, just behind Google and Apple. It was symbolically outshipped by Apple twice in a row in the last two quarters of 2010.

RIM's departure may not be permanent. Its 2011 BlackBerry roadmap has revealed that many of its future phones, including flagships like the Storm3, are using Qualcomm's Snapdragon chips. The PlayBook is also using a Texas Instruments OMAP processor. RIM may primarily be phasing out Marvell out of discontent with its high-end roadmap and focusing on cheap phones in the short term.

Performance has been one of the most commonly cited flaws of BlackBerry phones in recent years. The complaints culminated with the launch of the Torch, which used a two-year old, 624MHz Marvell processor at a time when Apple, HTC and Motorola were all using modern 1GHz processors. Its problem was compounded when it opted to run the more demanding BlackBerry 6 platform on the phones; in some cases, it led to performance about half as fast as rivals and occasional sluggishness just in basic navigation.


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