Research In Motion's top executives say the BlackBerry will hold its ground in a fierce battle with Apple's iPhone and other rivals, even as a boom in smartphone sales shakes up a market segment that their company once ruled.
Shares of RIM have tumbled almost 30 percent since late September as analysts downgraded the stock. Their concern is that an invasion of new smartphones from the likes of Apple and Nokia will erode the BlackBerry's dominance as North America's top selling smartphone brand.
But in an interview, RIM's co-chief executives say the company has weathered similar storms in the past and is confident it will keep pace with ripples that are now generating uncertainty in the market.
When we went public everyone was saying, 'Oh my God, you're going to get crushed by Motorola, Ericsson and paging and this emerging Nokia,' said Jim Balsillie, one of RIM's co-CEOs. The company launched its initial public offering in 1997.
I'm not trying to be dismissive, and I'm not trying to be glib, but this has played before, several times. All that's different is there's a couple more zeros on everything.
Although sales of smartphones such as the BlackBerry and Apple's iPhone are still a fraction of the overall mobile phone market, they are growing rapidly while sales of basic mobile phones stagnate.
Worldwide mobile phone sales totaled 308.9 million units in the third quarter, up 0.1 percent from a year earlier, according to market research firm Gartner Inc.
Smartphone sales topped just 41 million units, but that was up 12.8 percent from the same period a year ago.
The market's rapid growth has broken down walls between the corporate and retail markets as smartphones gain mainstream acceptance. Initially the mainstay of executives and other professionals, smartphones are now being snapped up by consumers eager to replace older mobile phones.
The growth also forced RIM to become more responsive to consumer tastes and trends. The company loaded its devices with multimedia features and software aimed at retail users and introduced sleeker models including the BlackBerry Storm, its answer to the iPhone.
There's no question the stakes got higher, Balsillie said in the interview at RIM's headquarters in Waterloo, Ontario. The world has shifted to smartphones faster than I expected, really.
DOWNGRADES ARE JUST SENTIMENT
That shift represents a threat to RIM, which has long dominated the so-called enterprise market in North America, catering to corporations and government departments equipping their employees with smartphones.
Worldwide, Nokia is the top smartphone maker, according to Gartner data, with a 39.3 percent market share. RIM, which employs more than 13,000 people around the world, is second with share of 20.8 percent. Apple is third with 17.1 percent.
The revolution of product and application service offerings is going to start to crack open the enterprise door and pose a risk for Blackberry, Citi Investment Research analyst Jim Suva wrote to clients earlier this month.
Balsillie said he did not find such analyst reports to be very valuable, adding he pays more attention to industry facts and statistics.
I pretty much ignore it, he said. Whether somebody says you're going to get crushed by this, or somebody says you're going to be No. 1, that's just sentiment.
Mike Lazaridis, RIM's co-founder and co-CEO, said he wants to understand what outsiders think of the company's performance, but that their opinions do not dictate the company's strategy.
If you just sit there chasing the stock all day, you're going to make mistakes, Lazaridis said.
BLACKBERRY BROWSER NEEDS WORK
Still, he conceded the company made errors, citing the launch of the clamshell Pearl Flip model of the BlackBerry, which he said took too long to get on the market, as well as RIM's Web browser, which has been criticized by users as unappealing.
I would not sit here and say to you that we've never made mistakes, Lazaridis said. We've plenty of mistakes. But we've learned from them and we recovered well.
In August, RIM bought software developers Torch Mobile to shore up the BlackBerry's Internet browsing capabilities, which have been seen by some as weaker than those of the iPhone.
The company also sees great potential in designing applications or apps for its handsets that blend data from several sources.
For example, instead of a simple calendar with notifications, the company is looking at a calendar which would notify the user of road traffic or weather problems which could affect their ability to make a scheduled meeting.
That increased breadth, depth and integration of such software will be a key driver of growth in BlackBerry sales, Lazaridis and Balsillie said.
RIM launched an app store in April, following on the success of Apple's much larger offering. Both Apple and RIM are trying to attract top developers to their platforms because they understand that consumers are starting to factor in apps into their smartphone-buying decisions.
Earlier this month, RIM announced that developers of games, news summaries and other apps will be able to insert advertising more easily into their software. As well, RIM will help the developers better integrate and process payments for premium content.
RIM also appears not to be planning a BlackBerry running on Google's Android operating system any time soon, as some observers have suggested it should. Both Lazaridis and Balsillie said BlackBerry's own operating system is very strong and using Android on a RIM device wouldn't add much.
I don't know what it would give, Balsillie said. It's not a logical thing.
(Reporting by Wojtek Dabrowski; editing by Frank McGurty and Jeffrey Hodgson)