RIM spurs rare optimism with new phone

SAN JOSE Wed Sep 26, 2012 5:31am EDT

Research In Motion CEO Thorsten Heins discusses features of the Blackberry 10 during his keynote address during the Blackberry Jam Americas in San Jose, California September 25, 2012. REUTERS/Robert Galbraith

Research In Motion CEO Thorsten Heins discusses features of the Blackberry 10 during his keynote address during the Blackberry Jam Americas in San Jose, California September 25, 2012.

Credit: Reuters/Robert Galbraith

SAN JOSE (Reuters) - Research in Motion offered investors a ray of hope on Tuesday, announcing an unexpected increase in subscriber numbers that sent its shares up 5 percent as the company worked hard to drum up enthusiasm for its crucial Blackberry due 2013.

Waterloo, Ontario-based RIM, a pioneer in the smartphone arena, has in past years lost market share in North America to Apple Inc and Samsung, whose more versatile and user-friendly devices took off.

RIM is trying to reinvent itself through a line of jazzed-up smartphones that will run on the BlackBerry 10 or BB10 operating system on which the company has staked its future.

In an attempt to create a buzz around the new devices, Chief Executive Thorsten Heins gave a preview of the smartphone and its features to its developers at a gathering on Tuesday in San Jose, California.

Dressed in an outfit few Silicon Valley executives sport - a grey pinstriped suit - Heins said the company was fighting for its future.

"There is new energy and a new fighting spirit in this company," he said as he listed new features from Internet browsing to multitasking between applications.

Heins said BlackBerry's subscriber base had risen to 80 million in the quarter ended September 1 from the 78 million it reported earlier this year.

The addition of subscribers surprised many on Wall Street and sparked a bounce in the company's share price. Most analysts had expected RIM to begin losing subscribers in the recently ended quarter, for the first time in its history.

In a presentation that lacked the customary pizzazz of major Silicon Valley events, executives showed off some of the key features of the new phone like the browser, and 'flow' and 'peek' features that let users access important features without leaving an open application.

RIM has completely focused on the launch of its new line of revamped devices in recent months, while its aging line-up of smartphones in the market have struggled to compete against the recently launched iPhone 5 and a slew of new Android devices.

It badly needs a hit. The launch of BB10 has been delayed to next year from the final quarter of this year, a decision that had not gone down well with RIM shareholders.

"BlackBerry 10 is our most important launch ever," he said.

WALLOWING AT ITS LOWS

RIM's stock is hovering around 9-year lows on both the Nasdaq and Toronto Stock Exchange. At its peak in 2008, RIM stock changed hands at around $140 a share. On Tuesday, the company's Nasdaq-listed shares closed 5 percent higher at $6.60. Its Toronto-listed shares rose 5.2 percent to C$6.50.

Even as it ceded ground in the crucial North American market, RIM has been able to attract buyers with its lower-end devices in emerging markets, where consumers are much more price conscious and where the much-admired BlackBerry messaging platform gives it an edge.

Growth from last quarter's base of roughly 78 million users, however, may come at a price, with gains skewed toward lower-end devices. This could hurt the closely watched average selling price for BlackBerry devices.

RIM is due to announce results for its fiscal second-quarter on Thursday.

Heins said the company was also getting positive feedback on its new BlackBerry 10 devices from the telecoms c arriers that have had a peek at the new smartphones.

"We are making believers out of our partners. We are making believers out of those who had previously written BlackBerry off," Heins said.

The BB10 devices, due to be launched in early 2013, will run on a new operating system that RIM has said will offer a faster and smoother user interface, and a better platform for apps that are critical to a smartphone's success.

Paras Wadehra, an independent mobile apps developer, said the BB10 was a definite improvement.

"They have brought the older BlackBerry into the modern world," he said, but he added that the delay of the launch has been frustrating. "They are taking a step in the right direction, but they are walking slowly."

Wadehra, who has played with a model of the device for the past couple of months, liked the usability of the browser and the multitasking.

The company, which is doing all it can to attract developers onto its platform, showed off apps during the presentation from Facebook to FourSquare. The company said the BB10 would have all the popular social networking apps on it.

And it played a music video with RIM's head of developer relations, Alec Saunders, crooning a parody of REO Speedwagon's "Keep on Loving You."

The conference attracted app makers from emerging markets in Asia, a region where BlackBerry phones are popular and growing.

Many carried multiple phones from iPhones to BlackBerries to an assortment of Android devices.

Vietnam-based developer Louis Tang decided to develop for BlackBerry as it was free to do so and easy.

"BlackBerry is a very hungry platform," he said. "There is more competition on Android, and you earn less money."

Another developer from Malaysia, Shukri Saad, said his free prayer app on BlackBerry generates $1,500 a month on average through ads. He said that would not have been possible on other platforms.

Bellevue, Washington-based developer Neeraj Chawla said he was impressed with some of the user interface concepts such as "flow" and "peek," and the easy movement between apps in the new BB10.

CCS Insight mobile analyst John Jackson, who was also at the event, said he thinks RIM's new BB10 operating system is gaining traction with developers, and he believes it will offer users a unique experience.

"The question now is whether the devices will be sufficiently competitive and that is in no small way a function of RIM's ability to spend massive marketing dollars to cut through the competitive noise," said Jackson. (Reporting by Poornima Gupta in San Jose, Euan Rocha and Alastair Sharp in Toronto; Editing by Janet Guttsman, Peter Galloway and Bernard Orr)

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