BlackBerry or Bust: Does RIM Have a Second Act?

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It's not just RIM vs. Apple. As many as 20 tablet devices from Samsung, Hewlett-Packard, Dell and others will be introduced by mid-2011. "To call it a game changer is a little strong," says media analyst Mark McKechnie at Gleacher & Co. in San Francisco, about the PlayBook. "I don't see it as a consumer hit." McKechnie expects RIM will get its initial buy-in for PlayBook from corporate users, already steadfast BlackBerry customers. That's just fine with Lazaridis, the techie behind RIM. "We want to be the No. 1 solution for enterprise," says Lazaridis, a Greek Canadian born in Istanbul. "RIM's corporate customers have been asking for a BlackBerry laptop for years."

Playing defense is just not in RIM's DNA. The company may not be growing at the monster rates it enjoyed earlier this decade, but revenue increased an impressive 35%, to $15 billion, with profits of $2.5 billion in fiscal 2010. In its most recent quarter, RIM surprised Wall Street with a 58% earnings jump. But while its continued growth reflects burgeoning demand for wireless devices worldwide, the company's market share is actually declining. Part of the reason could be the new BlackBerry Torch 9800. It has not stoked the public's imagination as Apple's iPhone 4 has, leading some critics to dismiss it as an upgrade that will not add customers to RIM's subscriber base of 55 million.

That criticism stings, but it may be beside the point: in smart phones, like PCs, software is king and Google's Android has pretensions to the throne. Android overtook RIM as the No. 1 OS in the U.S. in the second quarter of 2010 as measured by new smart-phone shipments, in large part thanks to a strong marketing push by carriers such as Verizon and AT&T.; For RIM, beating competitors like Android and Nokia's popular Symbian is nearly impossible because those OS platforms are used by multiple hardware suppliers, including Sony Ericsson, Samsung, Motorola and Taiwan's HTC.

The good news is the smart-phone industry is riding a tsunami of demand. Global sales are expected to rise 55% from a year ago, to 269.6 million units in 2010, according to International Data Corp. (IDC). And by 2014 that figure is expected to rocket to a staggering 526.6 million. "In some respects, we're just beginning in North America," says Balsillie of his company's prospects on its home turf. That may sound blindly optimistic, but the smart phone's share of the market in North America is expected to jump from 37.3% to 64.7% over the next four years. Then there's the rest of the world. "The biggest opportunities will come in Europe, the Middle East and Africa," says mobility analyst Ramon Llamas at IDC.

Getting there will in part require RIM to raise its cool quotient, which circles back to the company's partnership with U2. It used to be that fans held up lighters at rock concerts; now many hold up BlackBerrys. RIM clearly understands how to communicate with a hip audience, but the real challenge will be in creating gotta-have devices it will buy. Whether Balsillie and Lazaridis are up to the challenge will determine whether RIM's CEOs become the wireless industry's equivalent of U2's Bono and the Edge, a pair of innovators who know how to stay on top of their game.

This article originally appeared in the Jan. 17, 2011 edition of TIME.

Time.com

BlackBerry or Bust: Does RIM Have a Second Act?

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