RIM's tailspin
The number of BlackBerry phones sold fell 41% year-on-year in the last RIM fiscal quarter. Sequentially the fall was 30%. Though surprisingly poor, I note that Nokia's smartphone business fell even more dramatically last quarter (down 50% y/y and 39% sequentially).
Context & Ripple Effects
RIM entered this quarter after a Q4 miss and senior leadership departures, followed days earlier by its first net loss in eight years, 5,000 planned job cuts and a delay to BlackBerry 10. The new sales figures deepen the problem: the existing BlackBerry lineup is contracting before its replacement reaches market.
Nokia’s even steeper smartphone-sales decline places RIM’s result in a broader squeeze on two established handset vendors. RIM had been showing BlackBerry 10 interface elements to developers, making the prospective scale of its next platform central to that outreach.
First-order effects
- RIM’s falling BlackBerry volumes leave the delayed BlackBerry 10 launch as its increasingly important route to arrest the handset business’s decline.
- Nokia’s larger reported smartphone-volume drop shows that RIM is not alone among established phone makers in losing sales momentum.
Second-order effects
- Developers RIM is courting for BlackBerry 10 face a smaller near-term BlackBerry handset base, raising the commercial importance of a convincing launch and application proposition.
- RIM’s planned job cuts and handset-sales slump put greater pressure on its remaining product and developer efforts to support the BlackBerry platform.
Third-order effects
- If the declines at RIM and Nokia persist, sustaining a separate handset software platform becomes harder for vendors whose replacement products arrive after their existing device sales have weakened.
- The pattern points to handset competition becoming less forgiving of platform transitions: delayed product cycles can erode the developer and customer base needed to support the next release.
The trend: Established handset makers are confronting a platform-transition trap in which declining legacy-device sales weaken the launch conditions for their next software generation.