BlackBerry delays raise doubts over technology

4th January, 2012

When Research in Motion said in December that a new line of BlackBerry phones would not appear until the end of 2012, the announcement provoked equal parts of shock and disbelief from analysts.

Shock because even RIM acknowledges that the new phones are vital to reversing its rapid loss of market share in North America. At the same time, analysts were sceptical about the company's explanation that the delay stemmed from its decision to wait for a new, improved microprocessor.
Instead, many analysts say that both the new phones and RIM's new operating system, BlackBerry 10, may have significant performance problems and are delaying the project.

"They can't get the infrastructure and the operating system ready in time," said Peter Misek, an analyst with Jefferies & Co.
Alkesh Shah, an analyst at Evercore Partners, agreed. "Waiting for the chipset is a contributing factor in a number of factors that led to the delay," he said. "Creating the ecosystem for the phones is the bigger problem."

Shah and several other analysts said that delays in the development of BlackBerry 10 and poor battery performance in prototype versions of the new phones were behind the decision to further delay production until faster, smaller and more power-efficient chips became available in late 2012. Those delays made it impossible for RIM to begin selling the new phones early in 2012, as it first promised.
"One of the problems is the delay in the BB 10 software and that may have led to the selection of chips that caused the most recent delay," Rod Hall, an analyst with JPMorgan Chase, said.

While the analysts' scepticism is partly based on speculation, it has also been fuelled by RIM's general loss of credibility with them. For more than a year, the company has been forced to repeatedly restate financial forecasts and failed to deliver some critical, new products on time.

"They don't have a firm grasp of the issues and realities of bringing these phones to market," said Colin Gillis, an analyst with BGC Partners. "There are not many believers right now."

RIM has declined to identify the new chip. RIM also declined to comment directly about development problems with BlackBerry 10 or the battery life of the new phones.
It reiterated the earlier remarks of its co-chief executives, Jim Balsillie and Mike Lazaridis, that the delay was simply the result of its decision to wait for an improved chipset.
"RIM made a strategic decision to launch BlackBerry 10 devices with a new, LTE-based dual core chipset architecture," the company said, referring to a chip that supports a high-speed wireless service known as LTE that is now available in some parts of the United States. "As explained on our earnings call, the broad engineering impact of this decision and certain other factors significantly influenced the anticipated timing for the BlackBerry 10 devices."

But it is no secret that RIM has been struggling with its new operating system, which is based on technology from QNX Software Systems, a company based in Ottawa that RIM acquired in 2010.
The BlackBerry PlayBook, RIM's money-losing tablet computer, was the company's first product to use a QNX operating system. Despite the BlackBerry brand's strong association with email, it arrived in April last year without email software or the ability to directly synchronise users' address books and calendars.

Software that was supposed to remedy those issues and others has been delayed and is now promised for February. Misek said that RIM initially tried to merge, or thread, some of its current operating system with QNX to speed up the development timetable. But that proved unsuccessful, forcing RIM to create more software code from scratch than it initially anticipated.

Michael Morgan, the senior analyst for mobile devices at ABI Research, said that many problems with BlackBerry 10 came from making it work on RIM's network, which moves all BlackBerry data, giving corporate email a high level of security and all users lower wireless data bills.

To accommodate people with both BlackBerry phones and PlayBook tablets, RIM had to redesign security features on its network, which now allow only one hand-held device access to any given user's account, Morgan said. "When you change something that low level in an operating system, it has ramifications which affect every function," Morgan said. "I'm really shocked by a nine-month delay."