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Business Comment

Stephen Foley: BlackBerry feels the squeeze and soon it will be crushed

US Outlook: Research in Motion shares have plunged so sharply on the company's profit warning not because the maker of the BlackBerry cut its forecasts, but because it didn't cut its forecasts by enough.

The company's management is losing credibility faster than you can download an app to your iPhone, and its claim that there will be a quick rebound in BlackBerry sales and profits this year beggars belief.

What Thursday night's poor results demonstrated was just how fast demand for the BlackBerry is deteriorating, in the face of a new generation of powerful Android smartphones and the always-sexy iPhone.

Reading between the lines of the latest results, the new, high-end touchscreen Blackberry Torch has clearly been a huge disappointment. RIM says that stocks of unsold phones are piling up with retailers, and the much-needed refresh of its product line is behind schedule.

The problems facing RIM are hardly new news. The BlackBerry went from 20 per cent of the world smartphone market at the end of 2009 to 14 per cent by the end of last year, and there is evidence that corporate customers – the backbone of the Canadian company's business – are starting to loosen their loyalties. Employees want sexy phones too, after all, and IT departments are finding it easy and cheap to integrate workfunctions on Android devices and iPhones instead of signing up to BlackBerry.

Where once BlackBerry was a pioneer, now it looks stale. It has gone from having the most functionality among the products on the market to the least. Apple can boast 350,000 software applications for the iPhone; Android users have a choice of 150,000 apps and growing. BlackBerry App World has mustered only 25,000, and with potential software developers grumbling about the new Blackberry operating system, it doesn't seem likely to gain traction soon.

The sharp cut to the guidance for the current quarter comes only four weeks after RIM published those original forecasts, so it is clear the deterioration has taken management by surprise. Unless RIM has the mythical "iPhone killer" up its sleeve at its annual trade show next week, there is no reason to expect a sudden upturn in fortunes, regardless of what the optimistic co-chief executive Jim Balsillie tells investors.

The smartphone market is fast running out of room for so many different platforms, and BlackBerry looks like becoming an also-ran sooner than even I had suspected.