According to Gartner’s second-quarter analysis of worldwide mobile device sales, sales of mobile devices fell 2.3% over the year to 419 million units. 37% of mobile devices sold last quarter were smartphones. Gartner estimates that smartphone sales grew 43% over the year to 154 million units driven by strong performances by both Apple and Samsung. The two players combined accounted for 83% of smartphone sales during the quarter. Android OS–based devices accounted for 64% of the market compared with 43% a year ago. Apple’s iPhone now accounts for 19% of the smartphone market compared with 18% over the year. Symbian and RIM continued to see sharp declines in phone sales, and Symbian phones now account for 6% of the market, while RIM phones contributed just 5%. A year ago, RIM phones had 11.7% of the smartphone market.
BlackBerry manufacturer Research in Motion (Nasdaq:RIMM) saw Q1 revenues fall 33% over the year to $2.81 billion, missing the Street’s target of $3.08 billion. Losses also widened during the quarter as the company reported a GAAP loss of $0.99 per share compared with income of $1.33 per share a year ago. Adjusted loss of $0.37 per share was also significantly worse than the Street’s projected loss of $0.05 per share.
During the previous quarter, BlackBerry sales fell 41% over the year and 30% sequentially to 7.8 million units. PlayBook tablet sales were down 48% sequentially to 260,000 units.
For the current quarter, RIM expects to continue to report losses. It is not clear when the company’s losing streak will finally end. To control the decline in margins, it announced plans to cut an additional 5,000 jobs. The job cut is expected to bring savings of $300 million a year.
RIM’s Product Launches
RIM continues to pin its hopes of revival on the launch of BlackBerry 10. But respite is not coming soon. The product launch has been delayed and now the company expects to launch the device only in the next calendar year. RIM will first release the full touch-screen version of the phone and will follow it with a QWERTY version. Analysts believe that RIM is also evaluating the option of licensing the BlackBerry 10 platform to other companies.
Meanwhile, RIM launched the 4G version of its PlayBook in Canada. The upgraded tablet is marketed as delivering faster performance and features more integrated inbox and front- and rear-facing high definition cameras. RIM is hoping to reverse the trend of weak PlayBook sales with the latest version.
In a recent patent infringement case, the company was asked to pay $147 million to mobile device management services provider Mformation Technologies after a jury found it guilty of infringing on two of Mformation’s patents. However, a U.S. district court judge reversed the decision, thus vacating the award.
The stock is trading near 10-year lows of $6.72 with a market capitalization of $3.52 billion. At its current value, RIM is a very affordable takeover target for players such as Dell that may be interested in getting into the smartphone market and RIM’s global channel may appear attractive even though the product line requires revamping, and even a shift to Android-based products.
Earlier last month, Apple reported a historic win over Samsung in another patent infringement case. Samsung was asked to pay Apple $1 billion as penalty, and sales of a few of its Android-based devices were put on hold. Additional Android device manufacturers are also expected to be hurt by the judgment. But this was a good opportunity for players like RIM, which could step up and capture some market share. Analysts are hopeful that Samsung itself may be evaluating an opportunity with RIM to license the BlackBerry platform.