RIM Sees BlackBerry Losing to Android on Verizon: Report

Android handsets now handily outsell BlackBerry smartphones at Verizon, says ITG Investment Research. With a Verizon iPhone on the horizon, things for RIM may worsen.

Research In Motion's BlackBerry smartphones are no longer Verizon Wireless's best-selling devices. That distinction now belongs to its Android-running handsets-such as the Motorola Droid and the Samsung Fascinate Galaxy S phone-according to data from ITG Investment Research, posted by All Things D.

If not surprising, the data is at least unhappy news for RIM, which has struggled in its efforts to court the consumer market (the BlackBerry Torch was less than warmly received), where both Android and the Apple iPhone thrive. But, additionally, those same consumer competitors are beginning to catch the eye of RIM's bread-and-butter customer base-enterprise users.

According to ITG, Verizon's sales of RIM handsets have slowly dipped over the course of the year, from 394,000 handsets in January to 371,000 in April, 253,000 in September and 208,000 in October. Meanwhile, sales of Samsung phones rose from nearly 800,000 in January to 1,144,000 in March and, after a small dip, 1,363,000 in October. Sales of LG Electronics handsets-Verizon offers the Android-running LG Ally and LG Vortex-jumped from 917,000 in January to 1,067,000 in May and 1,045,000 in October.

Citing ITG, All Things D reports that Verizon's BlackBerry sales dropped 45 percent year-over year during the third quarter, and ITG expects this to trend down 49 percent year-over-year in the fourth quarter.

Analysts have pointed out the need for RIM to expand its footprint, in order to protect its enterprise territory.

"RIM became the device of choice in the business market because they represented the cutting edge of that market five, six, seven years ago," Pund-IT analyst Charles King told eWEEK after RIM's September announcement of its fiscal 2011 second-quarter earnings. (It will announce its third quarter on Dec. 16.)

Despite the need to regain its cutting-edge stance (in one early review of the BlackBerry Torch, a blogger complained, "They could have at least given the damn thing a better screen"), RIM's revenues are solid. During the quarter, revenues rose 31 percent year-over-year to $4.62 billion, following shipments of 12.1 million BlackBerry devices.

Still, RIM's standing at Verizon should cause the handset maker some concern, particularly with analysts repeatedly confirming that Verizon will get an iPhone in early 2011. (Apple and Verizon, of course, have each remained tight-lipped on the matter.)

In a Dec. 6 research note, Kaufman Bros. analyst Shaw Wu wrote that a Verizon iPhone was not only coming "closer to reality," but that the carrier was negotiating to keep T-Mobile and Sprint from also getting access to the iPhone 4.

"For these reasons, [Verizon] could be more willing to give in to Apple's terms and thus its iPhone economics are likely to remain favorable with the pending launch of [Verizon] in the [first half of 2011]," wrote Wu.

While, elsewhere in the report, he described the Android OS as losing "some of its luster" at Verizon, there was still little for RIM to celebrate, as Wu added: "Our sources indicate that [Verizon] does not believe the pending launch of BlackBerry 6 on its network is likely to have a material impact."

EDITOR'S NOTE: This text has been corrected to reflect that the ITG figures are stated in thousands. Additionally, the data comes from ITG sources and not Verizon Wireless.