Research In Motion unveiled a new BlackBerry aimed at wooing consumers away from Apple's iPhone and other rivals, but analysts said the handset won't blow away the competition.
Even though the main features of the BlackBerry Torch, including a touchscreen and slideout keyboard, were well-known within the industry, investors registered their disappointment, driving RIM's Toronto-listed shares down 4 percent.
The Torch will go on sale in the United States on August 12 for $199.99 with a two-year contract -- about the same price as an iPhone. The new BlackBerry uses a revamped operating system and has a faster and easier-to-use Web browser.
Underscoring RIM's intention to compete head to head with the iPhone, the Waterloo, Ontario-based company will launch the phone in the United States with AT&T Inc, the same carrier that has exclusive U.S. rights to the iPhone.
Analysts at Tuesday's launch event in New York said the Torch does not represent a major advance but that its consumer-friendly features were enough to help RIM to catch up to rivals.
RIM is playing catch-up. This is clearly the upgrade for BlackBerry users, but otherwise not a lot here is super exciting, Altimeter analyst Michael Gartenberg said.
The Torch does not represent a leap forward, but will help RIM compete with rivals such as iPhone and Google Inc's Android software, used in phones from several vendors including Motorola Inc, said NPD analyst Ross Rubin.
This gets the experience competitive again -- if they can do that with the efficiency and stability that RIM is known for, then it's a positive, Rubin said.
Some analysts have said the Torch's success will depend how heavily it is promoted by AT&T, which said it collaborated with RIM on the device for thousands of hours.
AT&T described the device as the best BlackBerry ever but declined to say how much advertising the company will spend on the phone or how it would compare to the amount of money it spends on iPhone advertising.
It will be as big a campaign as you've seen in some time, Chief Marketing Officer David Christopher told Reuters.
BlackBerry's nearly air-tight encryption has come under scrutiny in several overseas markets recently. The United Arab Emirates threatened on Sunday to ban some BlackBerry services unless RIM gives it access to encrypted messages. India's Economic Times reported that RIM will allow Indian security authorities to monitor BlackBerry services.
RIM Chief Technology Officer David Yach declined to comment on discussions with specific governments.
I believe they'll have trouble pulling the trigger to shut down BlackBerry, Yach said. Most governments in the world rely on BlackBerry.
While the BlackBerry has long been the gold standard for corporate and government customers because of its speedy, secure email service, critics said it needs a big overhaul to expand its popularity beyond business customers.
One of the new features RIM touted is the ability to search any application, media content or contact by typing a word on in Torch's universal search function.
BlackBerry Torch users can type messages on the screen or a slide-out keyboard. It comes with a 5-megapixel camera with a flash and a built-in GPS for location-based applications.
The new BlackBerry 6 operating system also offers an inbox where users can access updates from social networking sites like Facebook and Twitter in the same place as their emails.
It's a really special product because so much new goodness has been added to it. said Mike Lazaridis, RIM's president and co-chief executive.
The August launch was earlier than some analysts expected.
I'm glad to see they got it out sooner rather than later, said Nick Agostino at Mackie Research Capital. RIM's success will depend on positive industry reviews and adoption by developers of applications, he said.
The Torch's success could also hinge on RIM's ability to convince software developers to create applications for the device. Analysts say a big part of the iPhone's appeal is the huge choice of applications that it has to offer.
Developers want to go where the consumers are and consumers want to go where the developers are. RIM is going to have to tell a very compelling story to attract the first batch of developers, he said.
RIM fell 2.7 percent to $55.44 on the Nasdaq stock market. Its Toronto-listed shares fell 4 percent to C$56.75. AT&T shares rose 5 cents to $26.64.
(Reporting by Sinead Carew in New York and Frank McGurty in
Toronto, Additional reporting by Matt Lynley, Writing by
Ritsuko Ando; Editing by Frank McGurty)