BlackBerry tops 6M users, but trouble may lie ahead

IDG News Service |  Mobile & Wireless

The number of BlackBerry account holders reached 6.2 million at the beginning of September as Research In Motion Ltd. reported revenue up 34 percent -- but market researcher IDC said trouble may lie ahead for the company.

RIM warned of some problems on its own on Thursday. The Waterloo, Ontario, company became the latest to announce a review of its options-granting practices, and said it could restate earnings to reduce them by between US$25 million and $45 million over the period since its public offering in 1997.

The company also said its fiscal second quarter financial results, which it announced Thursday, will be considered preliminary until the results of the options probe are known.

RIM's revenue for the quarter ended Sept. 2 rose to $658.5 million, from $490.1 million during the same quarter last year. Net profit was $140.8 million.

Approximately 72 percent of its revenue came from handhelds, 19 percent for service, 6 percent for software, and 3 percent for other revenue, RIM said. The company added 705,000 new BlackBerry subscriber accounts in the quarter.

RIM expects even stronger subscriber growth in the current quarter, which ends Dec. 2. The company forecast it would add 800,000 accounts, taking it to 7 million subscribers.

Market researcher IDC, however, rained on RIM's strong announcement. In a report titled "Attack of the BlackBerry Clones", IDC said the popular handheld faces growing competition "in a relatively untapped market, converged mobile devices for the enterprise."

As that market grows to 63 million units per year by 2010 from just 7.3 million last year, the BlackBerry's overall share will decline, according to IDC.

While RIM has set the standard in the industry, Microsoft Corp. is coming on strong through partnerships with Motorola Inc., Palm Inc. and others. As the market for converged mobile devices grows, IDC expects Windows Mobile handhelds to grab an increasing share of the pie, for a 32.3 percent share of the market by 2010.

Nokia Corp. is another major rival to watch out for in the future, since it is already offering an end-to-end solution of its own, IDC said.

"Several BlackBerry clones have previously attempted to challenge RIM's reign in the enterprise market, but this is a more formidable strike," said Sean Ryan, research analyst for IDC's Mobile Markets, in a statement. "The timing is right for a more powerful attack against RIM's BlackBerry as competitive forces converge."

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