RIM's BlackBerry 10 impresses, but analysts say more is needed

Research In Motion's (NASDAQ:RIMM) preview of its new BlackBerry 10 platform drew positive reaction from analysts and some developers, but they all cautioned that RIM has a long way to go before it's out of the smartphone woods, and may yet fail.

RIM CEO Thorsten Heins

RIM's Thorsten Heins shows off the company's new BlackBerry 10 software during his keynote address.

RIM CEO Thorsten Heins used his first BlackBerry World keynote address to entice developers and show off several new features in BlackBerry 10. One is a gesture-based user interface that allows users to swipe easily between and within apps. Another was a virtual keyboard that has predictive algorithms, allowing users to swipe and gesture to type in whole words. (Meanwhile, RIM told PhoneScoop that it is not abandoning physical keyboards for BlackBerry 10 devices.) And finally, RIM showed a new camera that features the ability to essentially go back in time for a photo and un-blink someone's eyes. RIM also demoed third-party apps, including those from Gameloft, Poynt and Truphone.

Analysts said as far that went, they were impressed, but that they needed to see more. They said RIM needs to overcome a host of challenges, including boosting its brand, courting developers and fending off carrier interest in Microsoft's (NASDAQ:MSFT) Windows Phone.

Current Analysis analyst Avi Greengart said he liked the BlackBerry 10 user interface, which he called "very smooth, very fluid and quite different from what we really have on iOS and Android," noting that it resembles Windows Phone. Still, he urged caution. "We know a great user interface is not enough to propel a platform," he said. "We know that because of webOS' failure and Windows Phone's slow launch." Greengart also added that Microsoft is targeting users with the same productivity pitch and has cloud and content services RIM cannot leverage.

"If RIM has some killer features that are convincing, they aren't showing them here," he said, and indeed, Heins said RIM is keeping many aspects of the platform a secret. Greengart said RIM cannot beat Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG), but that it must provide enough value to keep its core users--what Heins termed "BlackBerry people"--as well as go after new ones.

A bigger problem may be rejuvenating RIM's brand, which has taken a beating from the company's service outage last year as well as declining market share. ABI Research analyst Kevin Burden said producing strong hardware and software is not enough for RIM. "A lot of this comes down to a very basic principle: brand equity, brand coolness," he said, noting that while RIM should not cut ties to its legacy, it is in a transition. "From this point to the point where they actually launch the phone they need to make that company seem like a new company." 

Additionally, wireless carriers, including Verizon Wireless (NYSE:VZ), once RIM's strongest U.S. carrier champion, have been demonstrating that they want to push Windows Phone more aggressively, putting even more pressure on RIM. "One way of looking at it is saying, RIM needs to beat Apple and Google in order to gain share," Greengart said. "The other way is that RIM just needs to beat Microsoft. If two of you are outrunning a bear, you don't need to outrun the bear, you just need to beat your friend."

Still, the fate of BlackBerry 10 will likely come down to the level of support RIM receives from third-party developers. Gameloft, Mippin Wikitude and others have voiced strong support for BlackBerry 10. Others are less sure. Phill Ryu, CEO of Impending, which made the to-do list app Clear, said making BlackBerry apps would not make sense given the position of Apple and Google. "If this is a horse race, RIM is two laps behind and has a lame leg," he told the New York Times. "Why would I bet my time and money on them?"

Burden said RIM has to contend with core users who do not want to learn a new platform or other smartphone users who don't want to switch. The key, he said, will be for RIM to restore its brand and to find enough market support to get off the ground. "I am confident that the BlackBerry 10 handset is going to be stellar handset," he said. "They are taking their time long enough to get it right. The question is, is getting it right good enough for the market?"

For more:
- see photos and video of BlackBerry 10
- see this RIM page
- see this CNET article
- see this NYT blog post
- see this Phone Scoop article

Related Articles:
RIM unveils Blackberry 10, Heins promises 'laser' focus on execution
RIM unveils BlackBerry 10 in bid to save fading platform
Report: RIM's Balsillie pitched cheap, global data service for Android, iPhone
RIM launches BlackBerry Mobile Fusion, adding iOS, Android security support
RIM reviewing 'strategic opportunities,' including licensing BlackBerry 10
RIM to hand out prototype BlackBerry 10 phones to developers in May

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