Nokia and HTC Slide Towards The Brink; Businesses Make Contingency Plans For Possible RIM Shutdown

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News Posted: Mon, Jul 9 2012 3:15 PM
If you're a mobile phone manufacturer with a name other than "Apple," you probably aren't having a very good week. Shares of HTC, the second-largest phone company in Asia, fell to their lowest point in two years today, after the company announced a 58% decline in second-quarter revenue. HTC has released several well-regarded phones in the past seven months, but hasn't had a breakaway winner or a truly stand-out product. Analysts, meanwhile, don't expect the company's fortunes to reverse any time soon. "We do not see any turnaround opportunities for HTC” in the second half, Laura Chen, a Taipei-based analyst at BNP Paribas SA. “We see risk on potential product delays and competitors’ aggressive new product push, such as new Galaxy note and iPhone 5."

Over in Finland, Microsoft's Windows Phone OS has largely failed to lift Nokia out of the doldrums. The company's share price has dipped below the €1.50 mark in European markets for the first time since 1996. DigiTimes is claiming that consumers are holding off on Windows Phone 7.5 purchases now that Windows Phone 8 has been announced as consumers hold off for the new version. With all due respect to our Taiwanese counterparts, this seems extremely unlikely.



All indications are that Microsoft is having trouble convincing people to spring for a WP7.5, period. Enthusiasts may have been disappointed by the news that WP8 wouldn't be offered as an upgrade to existing WP7 models, but that's not an uncommon decision in the mobile phone industry. Even when carriers promise updates, it can take them 8-10 months to roll out the new OS version -- Gingerbread phones are still shipping in significant quantities despite Ice Cream Sandwich's debut nine months ago. Microsoft has already delivered one major update (Mango), and has promised a Windows Phone 7.8 update is in the works.


Photo courtesy of CrackBerry.com

Finally, there's RIM. We could fill a book with what's been said about the company in just the past few weeks, but the bottom line is this: Thorsten Heins has promised that the upcoming BlackBerry OS 10 will redeem everyone's faith in Research In Motion. No one believes him. The company is hemorrhaging money with device sales dropping steadily every single quarter. RIM could possibly stave off a catastrophic loss of confidence by rolling out a blog detailing the new OS, similar to Microsoft's Building Windows 8, but has thus far kept development hush-hush and quiet.

This will almost certainly kill the company. With no reason to expect RIM to deliver what it promises, corporations and individuals are preparing for the day when they have no choice but to switch to a different provider. As Bloomberg reports, multiple companies are bringing in consulting services to prep them for RIM's inevitable failure. "Large enterprises don’t want to be locked in with a single vendor anymore,” MobileIron Chief Executive Officer Bob Tinker Tinker told Bloomberg. . Customers want to embrace all the innovation in mobile and RIM’s delay of BlackBerry 10 doesn’t help that. CIO’s are now asking us: ‘What do we do if RIM gets acquired or if they restructure,’” said Tinker.

What Thorsten genuinely doesn't seem to understand is that launching a new OS and phone isn't the end -- it's the beginning. Right now, RIM looks an awful lot like Palm, a once-mighty company whose last hurrah -- the Palm Pre and accompanying webOS -- was genuinely celebrated. The Pre made a huge splash at CES 2009 and it became the fastest-selling phone in Sprint's history for the month of June that year.

After its meteoric debut, sales slumped badly, due partly to reports of poor build quality and slow software updates. Right now, RIM's trajectory is eerily similar. There's no question that the company can sell a few million BlackBerry 10 devices, assuming that both OS and device debut as reasonably solid products. The question is, what happens when all the party faithful have bought their devices? Will RIM have sold enough BlackBerry's to fuel software development and keep the device feature-competitive with Google, Apple, and Microsoft?

The smart money says "No, probably not." The company may have $2.2B in cash and an untapped line of credit, but it needs to be thinking about cash flow from device sales through all of 2013, not just up to the first quarter. The company's one chance to win sales from onetime customers on the fence about BlackBerry is to start enthusiastically demoing the OS, talking up partners, and previewing apps. It's not enough to say "We delayed the OS to make sure it was up to our high standards." Saying "We delayed the OS to ensure our content distribution deals with Netflix, Hulu, and Xbox were ready" is a heck of a lot more powerful, and gives customers something to talk about.

If the OS isn't in a condition where such statements can be made, it's dead already -- and time to pull the plug.
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"Over in Finland, Microsoft's Windows Phone OS has largely failed to lift Nokia out of the doldrums". It has only been a few months that people can purchase Lumia. In many stores it is out of stock, i don't see how such a phrase it is appropriate. Moreover I read hothardware for analysis made on something more than stock price and some sort of trust the companies have to expect from press and analyst. It is a sad world this where the "war" has is moved partly from the actual market. Bad news for the customers. You should write more articles that take make users reason on the choice they make based on cons,pros, features and not revenue. Take blackberry bold with BES and compare it to another "solution" in the enterprise environment .... from cost to productivity to security

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