April 3, 2009 / 4:50 PM / 9 years ago

ANALYSIS-RIM's success with consumers defies recession

TORONTO, April 3 (Reuters) - If a deep global recession has eroded consumer confidence, you wouldn’t know it by looking at the millions of people who are snapping up flashy BlackBerry smartphones made by Research In Motion RIM.TORIMM.O.

RIM revealed on Thursday that 70 percent of the 3.9 million subscribers it added in the three months ended Feb 29 were “non-enterprise” -- the company’s term for the broader consumer market.

About half of RIM’s 25 million-strong subscriber base now falls in this category. That’s a huge shift for a company that has pushed hard to diversify its user base beyond the corporate executives, lawyers, politicians and other professionals that have been its mainstay.

The boom on the retail side, helped by wireless carrier promotions, has surpassed RIM’s own expectations as well as those of investors and analysts.

Indeed, RIM suggested strength in the consumer market won’t slow any time soon. The company forecast growth of up to 3.9 million subscribers for the three months ending May 30, and offered a profit outlook that topped analysts’ earlier expectations.

“What RIM has pulled off really is a fairly significant coup in hitting market segments that it could not reach with its earlier range of products,” said independent technology analyst Carmi Levy.

This coup comes at a strategically important time, with RIM, Apple, Nokia and other rivals jostling for ever bigger pieces of the global smartphone market even as a recession stifles some of the growth.

To that end, RIM has rolled out a wide swath of devices, from the multimedia-laden Pearl and Curve models to the touchscreen-based BlackBerry Storm.

This week, Waterloo, Ontario-based RIM also opened an online store to sell entertainment, video game, travel and other software applications for its handsets.

PLAYING CATCH-UP

To a degree, RIM has had to play catch-up with Apple’s wildly successful iPhone with last year’s release of the BlackBerry Storm. Though the RIM device received mixed reviews, it has caught on thanks to promotions from carriers and heavy marketing. It also helps that the devices are now sold at mass-market retailers such as Walmart (WMT.N) and Best Buy (BBY.N).

“Oddly enough, this is a consumer-driven recession, but it’s actually the consumer that is helping RIM’s results,” Research Capital analyst Nick Agostino said on Friday.

RIM’s application store is another part of its strategy to keep more retail subscribers from switching to the iPhone, which has its own software store.

After all, a user who has spent money on software downloads may think twice before switching devices and paying for similar applications all over again.

But with a big flank now exposed directly to competition from the likes of Apple, RIM will have to prove it can adapt to fickle consumer tastes. That adds a dimension of vulnerability to a business that has long relied on relatively steady spending by corporate customers.

For now, RIM is showing it is capable of holding its own against traditionally retail-oriented handset makers, Agostino said.

“They came out of business experience and they’ve been able to do well in penetrating the consumer market,” he said. “I think you’ve got to give them a thumbs-up so far.” (Reporting by Wojtek Dabrowski; editing by Frank McGurty)

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