BlackBerry ready to make a comeback after hiatus in smartphone market

The Canada-based company unveils its BlackBerry 10 operating system and handsets in what some see as its last, best chance to remain a major player in an already competitive sector that is nevertheless attracting new entrants.

RIM boomed as the maker of "crackberries," a nickname stemming from the addiction the phones engendered, but it risks becoming a footnote in a market led by Apple's iPhone and rivals who use Google's Android operating system.

"The importance of this launch cannot be overstated," said Ramon Llamas, an analyst at the research firm IDC. "There's going to be a lot of work that needs to be done to earn back respect."

RIM, whose stock is at about one-eighth of its valuation in 2008, said it plans to "significantly" increase its marketing budget for the BlackBerry 10 launch, and there will be events in New York and five other global cities.

The company website home page depicts a sleek black device against a black background, alongside the words: "The Blackberry Experience. Re-designed. Re-engineered. Re-invented."

RIM is touting the system as a big change in smartphone technology.

"This is an entirely new operating system," said company spokesman Nick Manning. "We think it's the first entirely new mobile operating system in about five years."

More than 150 carriers worldwide have been testing the new platform, and RIM has given more than 8,000 prototypes to application developers.

BlackBerry 10 devices will be offered in an all-touchscreen version as well as in a model that keeps a physical keyboard.

RIM says the system will break new ground by creating a user space that allows customers to flip between applications seamlessly and without first passing through a home page, to boost efficiency and multitasking.

This feature has caused real "excitement" as RIM has met with carriers around the world, RIM chief executive Thorsten Heins told analysts on a December earnings conference call.

Another key asset of BlackBerry 10 is what RIM dubbed the "BlackBerry balance," a system that allows users to separate professional communications and applications from music, photographs and other personal items.

Such an option means that if a user changes job, his or her former company can disable the device's corporate side without affecting personal data.

BlackBerry, which until a few years ago was the dominant smartphone, has seen its market share slip to under five percent last year, surveys show.

Gartner analyst Phillip Redman said RIM still has a strong constituency of business users who prefer its hard keyboard and its reputation for strong network security.

While Redman doesn't think the BlackBerry 10 will surpass Apple's iPhone or Android products, the device "has great comeback potential," he wrote in a recent blog entry.

But the market is also getting more competitive with new Android devices, and RIM will be competing with Microsoft's Windows Phone for third place, and such conditions leave some analysts doubtful about the company's prospects.

RIM has already undertaken a significant downsizing, cutting about 5,000 staff from the 17,000 workers it employed last May, making further job cuts difficult to envision if the BlackBerry 10 fails to generate huge sales.

Analysts also expressed reservations about RIM's loss of service fees. Whereas the company's older devices were routed into RIM's network for which the company charged, the new service won't keep users on RIM's network.

That removes a key revenue stream, though RIM will also offer its software platform for rival devices.

"We don't buy the hype," Citi analyst Jim Suva said in a research note, pointing out that rivals such as China's Huawei are also entering the market.

"We remain skeptical of how the company can compensate for the highly profitable service streams as it materially and structurally shifts lower with the coming BB10 products, which will derive lower rates going forward."

Sterne, Agee & Leach analyst Shaw Wu noted that many of the high-end customers to which RIM is marketing have already migrated to other devices.