Consumers may not wait to buy Research in Motion's new smartphones while the BlackBerry maker struggles to produce its devices on time and without any bugs, say analysts.
The comments come as shares in the Waterloo, Ont.-based company (TSX:RIM) closed down 14 per cent Friday -- a day after it lowered its earnings expectations for the first quarter. RIM said it now predicts fewer shipments of BlackBerry smartphones and lower average selling prices.
"It's not like the consumer is missing or waiting to buy a phone because RIM hasn't come out with their new ones," technology analyst Anil Doradla of U.S.-based William Blair & Co. said Friday.
"RIM is not becoming part of their buying decision," he said.
PC Magazine's lead mobile analyst Sascha Segan said it's not a lack of vision that's hurting RIM.
"This is a lack of being able to bring the product to market on time and without bugs," said Segan, managing editor of PCMag Mobile in New York.
Segan said that while the new BlackBerrys aren't expected out until later this year, they need to be problem free and out in time for the holiday shopping season.
"At the moment, BlackBerry is turning into a top provider of cheap texting phones," he said.
"When we look at North America, we see their phone line being driven relentlessly downmarket because its strengths are doing things which are now considered commodities and are not considered differentiators."
Unless consumers see a more appealing BlackBerry with a new operating system and advanced software applications, it will continue to decline, Segan said.
Doradla said consumers may have to wait months just to get a new BlackBerry model that gives them an "iPhone-like experience."
Recent RIM product launches such as its PlayBook tablet and its first touchscreen phone in 2008 have all had some glitches, he said from Chicago.
He said execution is a challenge for RIM, the Canadian technology giant that has grown rapidly and become a household name around the world for its secure BlackBerry devices.
"I think there's more hiccups as we go along the way."
Investors haven't taken kindly to RIM's warning that it will likely report lower first-quarter profits. Its new smartphone operating system, considered crucial to its new generation of BlackBerry smartphones, is taking more time to launch.
Shares in Research in Motion (TSX:RIM) plummeted more than 14 per cent in trading Friday, falling $7.74 to close at $46.09 in heavy trading on the Toronto Stock Exchange.
A major problem that Research In Motion is facing is the length of time it takes to get BlackBerrys to market, Doradla said.
The company has been used to taking about 18 months or so to get a BlackBerry model like its Curve or Pearl into users' hands but the cycle for getting out new smartphones has shrunk to about six months, he said.
RIM has its own operating system, hardware, software and other proprietary elements that go into its smartphones and it needs more than "snapping it in to a good looking piece of plastic" to sell, Doradla said.
Segan said RIM needs to show it is still relevant when it meets with analysts on Monday in Florida at the BlackBerry World conference and shows off its new QNX operating system, also in the PlayBook tablet.
"I think a good demo of that along with a solid timeline for fixing the PlayBook problems could do a lot to stop this perception of decline."
National Bank Financial analyst Kris Thompson also criticized RIM's ability to get its new smartphones to market quickly.
"Consumers are fickle and are not waiting around for products that are only catching up to smartphones that have been available for a year in some cases," Thompson wrote in a research note.
Thompson downgraded the stock's price target to about $50, down from an initial price target of $75.
"Consumers are voting with their dollars, and they're being spent in Apple stores and on Google's Android platform."
RIM cut its financial guidance for both earnings per share and revenue after markets closed Thursday, saying that sales of BlackBerry smartphones would likely be lower than initially expected and would be selling for less on average.
It now expects fully diluted earnings per share to be in the range of US$1.30 to $1.37 for the first quarter of its 2012 fiscal year, which ends May 28. That's lower than the range of $1.47 to $1.55 previously forecast.
Revenue will be slightly below the range of US$5.2 billion to US$5.6 billion.
