Is RIM the New Nokia?

What I mean by that headline is the following: Is RIM, the dominant smartphone vendor in the US market, about to see its fortunes decline as it fails to compete with the leaders and innovators in the segment?

Despite a very strong first fiscal quarter, there's a perception that BlackBerry is lagging and will have trouble regaining momentum. According to the company's quarterly results, released yesterday, Q1 sales increased approximately 24%, but still missed analysts' consensus estimates. The company had revenues of $4.24 billion but analysts wanted more. The company announced a stock repurchase program to keep share prices stable. 

RIM co-Chief Executive Jim Balsillie has said that the company will be introducing new devices that will make it more competitive with the iPhone and Android handsets. These include a potential tablet and the forthcoming "Torch," which will have both a touch-screen and slide-out keyboard.

Reportedly BlackBerry App World is now seeing roughly a million downloads daily. However, RIM lags both the iPhone and Android and has the most expensive apps. It's also a platform that less than 40% of developers are focused on.

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Let's be clear RIM is unlikely to be able to produce an "iPhone killer."

What it needs to aim for is a "good enough" alternative to the iPhone -- a version of its current phones that offer the beloved keyboard functionality and a better Web experience that what's currently available. (RIM has vowed to develop a better browser.) The company needs to focus on loyalty and retention. Indeed, BlackBerry user loyalty lags Android but especially the iPhone.

If the company moves too much in the direction of aping the iPhone it's unlikely to best the Apple device and will suffer for the comparison. But because it has won in the enterprise it needs to maintain and strengthen those features that make the handset appealing to corporate IT decision makers as well as building out enough consumer functionality to keep it generally competitive.

Ironically many younger, heavy SMS users, like RIM's handsets because of the keyboard. As they move "up market" and seek mobile-Internet enabled devices they are likely to abandon RIM unless the company can create a better mobile Web experience.