BlackBerry Smartphone Sales Remain Strong, RIM Says

Research In Motion's BlackBerry remains a strong brand despite competition from Google Android and the Apple iPhone, the enterprise mobility company insists in an earnings call for its fiscal second quarter.

Reports of the BlackBerry's imminent demise at the hands of the Apple iPhone and Google Android devices may have been premature, at least based on Research In Motion's latest quarterly numbers.

For the second quarter of fiscal 2011, RIM reported quarterly revenues of $4.62 billion, a year-over-year growth of 31 percent. On Sept. 16, the company also reported shipments of 12.1 million BlackBerry units, an increase of 45 percent over the same quarter in 2009. Net income was $796.7 million, a rise from the previous quarter's $768.9 million.

RIM also reported 4.5 million net BlackBerry subscriber accounts added during the quarter, raising RIM's total subscriber base to more than 50 million.

"This accomplishment and RIM's solid financial results during the second quarter were driven by effective business execution and strong demand for RIM's portfolio of BlackBerry smartphones and services in markets around the world," Jim Balsillie, co-CEO of RIM, said in a Sept. 16 statement. "We expect a continuation of this momentum in the third quarter as we extend the rollout of new products, including the BlackBerry Torch, into additional markets."

RIM's latest attempt at a cutting-edge smartphone, the BlackBerry Torch 9800, is meant to appeal to both consumers and businesses. In addition to having a sliding QWERTY keyboard, the device, carried exclusively by AT&T in the United States, is the first to run the new BlackBerry 6 OS, which includes features such as unified social-networking feeds, wireless syncing with DRM-free music on a user's PC and a Universal Search application that allows users to scan for content on both the device and the Web.

"In order to create a bulwark against incursions in their market from Apple and Google, RIM needs to expand its footprint," Charles King, an analyst with Pund-IT Research, told eWEEK Aug. 3. "RIM became the device of choice in the business market because they represented the cutting edge of that market five, six, seven years ago."

But the Torch 9800 may have met with initial lukewarm response. According to analysts at RBC Capital Markets and Stifel Nicolaus, the Torch 9800 sold only 150,000 units during the weekend following its Aug. 12 wide release. On top of that, Morgan Stanley is estimating a total of 600,000 shipped. In comparison, Apple's iPhone 4 sold more than 1.7 million units during its first three days of release.

During the Sept. 16 earnings call, RIM executives suggested the Torch 9800's reception was warmer than analysts believed. "We are pleased with the positive impact," Balsillie told analysts and media. "Torch sell-through run rates have more than tripled in AT&T stores." However, he offered no specific sales numbers.

Balsillie indicated that several large enterprise customers, RIM's traditional backbone, had BlackBerry 6 OS on an accelerated adoption schedule. He also described RIM's discussions with India and other countries about BlackBerry encryption as "positive" but declined to offer details.

On Sept. 14, RIM unveiled the latest version of its lower-end BlackBerry Curve 3G. The device ships with BlackBerry 5 OS, although RIM claims it is "BlackBerry 6-ready." The Curve 3G includes a 2-megapixel camera with zoom and video recording, built-in GPS, a MicroSD/SDHC card slot for expandable memory up to 32GB, and access to BlackBerry App World.

RIM said it expects its revenues to reach $5.30 billion to $5.55 billion next quarter. However, the BlackBerry franchise will face competition from the upcoming Windows Phone 7, as well as the rapidly growing number of devices running Google Android.