From Buckingham Palace to the dairy farms of Argentina, everyone loves their BlackBerry. But when does a necessity become a luxury?

Keeping a close eye on what's new at Barcelona is Mike Lazaridis, chief executive of RIM, the company that makes the BlackBerry smartphone. His device may no longer be quite as trendy, in light of the latest iPhones, but it is still functional – particularly for Argentinian milk farmers.

Mr Lazaridis says: "I like the way it's being used by the farmers so they are always up to date. Milk is a perishable item, so delivery and production standards are incredibly important."

He is reminded of the company's early days: "This is where we started in 1987, with a wireless vertical data business for the Swedish lumber industry, and then fire brigades, ambulances and garbage trucks. And here we are in 2008, talking about how that original target market is now successful. These are the same arguments that launched this industry."

But some of Mr Lazaridis's customers move in higher-profile circles – apparently the Queen likes to use the device, as do Brad Pitt, Claudia Schiffer and the easyJet entrepreneur Sir Stelios Haji-Ioannou. There is even a website devoted to spotting famous BlackBerry users out and about with their phones.

Mr Lazaridis says: "It was obvious that business people and self-employed professionals would buy the BlackBerry, but we were not expecting the response we had from consumers. The tipping point came when people started to want a messaging device with a qwerty keyboard to facilitate social networking, instant messaging and email."

While the BlackBerry was quick to establish itself as the accessory of choice for business professionals such as Wall Street traders, the cheaper price plans and new, more colourful handsets now on offer have opened it up to a much wider market.

RIM introduced a slimmer model, the Pearl, which replaced the standard BlackBerry full keyboard with a clever, double-tap system that is actually much easier to use for phone calls than a standard model.

RIM also revamped its industrial designs, using shiny, piano-black casings with silver accents. And in what was a radical move – for RIM, at least – it started making BlackBerry phones with cameras.

But the company has to be flexible, Mr Lazaridis explains. "There are still markets and industries where it's inappropriate to have a camera ... and we have software so you can turn off the camera remotely."

Nonetheless, the move to add consumer-friendly features has significantly broadened the BlackBerry's appeal, as the company's most recent results show. Turnover reached $1.67bn (£860m) in the last quarter of 2007, double the figure for the same period in the previous year. BlackBerry now has around 12 million subscribers worldwide.

This broader customer base has led to greater interest from the wireless operators in offering BlackBerry services, Mr Lazaridis claims, and is helping to bring down prices. A couple of years ago, most European operators charged between £150 and £200 for a BlackBerry handset. Now phones can be picked up for around £50 or even for free. Despite its reputation as a premium product, Mr Lazaridis says that RIM designed the BlackBerry to be economical to use, and for operators to support in large numbers.

But RIM does not have it all its own way. The BlackBerry is facing a challenge from Micro- soft's Windows Mobile operating system, which is now backed by 140 manufacturers and promises easy integration with Microsoft's back-office software. Analysts point out that, for smaller businesses, Windows is often a quicker and cheaper route to mobile email. Nor is Nokia, the global market leader, willing to cede the business device market to RIM.

The BlackBerry's reputation for reliability also took a knock last year when its network suffered a serious failure (though company executives argue that email was not lost, just "delayed").

To add to its troubles, RIM had to restate its financial results for 2004, 2005, 2006 and the first quarter of 2007 following an internal inquiry into the way it accounted for stock option grants. This led to its co-chief executive, Jim Balsillie, stepping down as chairman, a position he also held. He and Mr Lazaridis agreed to pay up to $5m to RIM to defray expenses attached to the probe.

The greatest challenge for RIM, however, could lie in the coming economic downturn, when individuals and companies alike may see devices like the BlackBerry as luxuries they can do without. In response, the company has to make its product indispensable to the lifestyles of consumers, or prove that they bring a real return on investment for business users.

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