RIM makes gains in consumer market

Research In Motion reported better Q2 growth in its non-enterprise business than enterprise market.

In its second quarter, Research In Motion reported better growth in its non-enterprise business than in the enterprise market, as the company continues to push into the consumer space.

While announcing earnings, the company pointed to a gaggle of new products targeted at consumers and small business, including two smartphones and free mobile collaboration software, BlackBerry Unite, that provides mobile access to shared calendars, pictures, music, and documents on desktops to up to five users.

The company reported revenue for its quarter ending September 1 of $1.37 billion, up 27 per cent year-over-year. It reported net income of $287.7 million, or $0.50 per share, up from $140.2 million and $0.25 per share, posted last year.

RIM added 1.45 million subscriber accounts and shipped three million wireless units during the quarter, and reached a milestone of 20 million devices shipped and 10 million subscriber accounts.

One growth factor for RIM was the diversification of its user base, said Jim Balsillie, co-CEO of RIM. Growth in the non-enterprise space was bigger than the enterprise space, he said in an earnings conference call. The company hopes to grow further in that space with new multimedia and consumer-centric devices.

The new consumer wireless devices he detailed during the call include the BlackBerry Pearl 8120 smartphone, which has a 2-megapixel digital camera, Wi-Fi connectivity, a memory card slot, email and Web browsing features. The phone will be first launched in Spain.

RIM announced the BlackBerry Pearl 8130 smartphone, which has a 2-megapixel camera, e-mail capabilities, Web browsing, maps, built-in GPS navigation and expandable memory. The phone will launch in the US later this year.

RIM also is reaching out to consumers with BlackBerry Unite, mobile collaboration software that helps users interact more efficiently by sharing calendars, multimedia files and documents on desktops with up to five users. The free software is a low-cost way for family members and small businesses to collaborate, said Balsillie.

The software can backup data to a desktop computer if a device is lost or stolen. It can also wirelessly erase data from a lost or stolen handset.

The idea of RIM pushing into the consumer business makes Bill Hughes, an In-Stat analyst, uncomfortable.

The US handheld device market is already saturated, Hughes said.

"The next big wave [in handheld devices] is for business use," he said. "The company that has achieved success in that area is RIM. To dedicate as many resources to the consumer side, it's going the wrong direction."

Though the Pearl smartphone, designed for consumers, was a success, RIM has a niche in the enterprise market and the company should exploit it, he said. RIM is succeeding internationally with the BlackBerry e-mail application and the mobile device has been the epitome of the business device.

"The consumer effort is a distraction," he said.

Moreover, RIM will have its challengers in the consumer space, like handhelds running the Windows Mobile OS. RIM will need to put a lot of effort into attracting retail consumers, which is a challenging task and could affect the resources it has, he said.

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Agam Shah

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