Apple 2.0

Covering the business that Steve Jobs built

How the iPhone and Android sandbagged the BlackBerry

June 17, 2011: 8:47 AM ET

It's no accident RIM has had to slash its guidance and cut its workforce

Click to enlarge. Source: Needham & Co.

The analysts were all over Research in Motion (RIMM) Friday after the company issued sharply lower guidance for 2012 and warned of forthcoming layoffs. See, for example, Barron's take here.

Most recognized the role Apple (AAPL)'s iPhone and Google's (GOOG) Android played in marginalizing the BlackBerry. But none of them were quite as blunt as Needham's Charlie Wolf, who titled his note to clients "RIMM: What do you do when your one trick no longer works?"

The key paragraph:

Watching BlackBerry's share in the U.S. smartphone market beginning to crumble, Research in Motion made the strategic decision in 2009 to attempt to offset U.S. share losses through growth in international markets. BlackBerry's loss of share in the U.S. initially reflected Verizon's decision to switch its "halo" brand status from BlackBerry to Android. Verizon had promoted BlackBerry as an alternative to the iPhone, relying on a steady barrage of buy-one, get-one- free (BOGO) promotions to bolster BlackBerry sales. But the strategy backfired because there was no mistaking a BlackBerry for an iPhone. In the fourth quarter of 2009, Verizon hitched its wagon to Android, reportedly spending over $100 million to build the Verizon Droid brand. Verizon continued to offer BlackBerry BOGOs. But no longer in the spotlight, BlackBerry's share at Verizon began to recede.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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