Partners: BlackBerry 10 Delay Could Be 'Lethal' For RIM

Research In Motion said Thursday it is delaying the launch of its upcoming BlackBerry 10 software, a move partners believe could prompt even more of its customer base to jump ship to Android and iOS devices.

RIM CEO Thorsten Heins made the announcement on a first-quarter earnings call with investors, during which he also reported the company’s net loss of $518 million for the three-month period. Heins said RIM has found the development of BlackBerry 10 to be more "challenging and time-consuming than expected."

"The schedule we were working toward, which would have the first BlackBerry 10 smartphones in the market this calendar year, is no longer realistic," he said.

[Related: RIM Discontinues 16-GB BlackBerry PlayBook ]

BlackBerry 10, RIM’s next-generation mobile OS, was poised to breathe new and much-needed life into BlackBerry smartphones with the introduction of touch keyboards, a more robust app offering, and a new camera. Originally, it was slated to launch this fall.

For RIM partners, the delay of BlackBerry 10 means convincing customers to stay with BlackBerry -- an already daunting task as Android and iOS adoption continues to soar -- will become even more of a challenge.

"I do not know if my clients will wait until next year for BlackBerry 10," said Steven Kantorowitz, president of CelPro Associates, a New York-based RIM partner and solution provider, specializing in mobility. "A lot of them were sitting around for the fall. They waited for the [BlackBerry] PlayBook, and the iPad was the killer tablet. Who knows what kind of great new devices will be out between now and 2013 that will make BlackBerry 10 obsolete."

Robby Hill, owner of HillSouth, a Florence, S.C.-based RIM solution provider, also sees a shrinking BlackBerry customer base that is gravitating more and more toward the iPhone.

"As a partner, we are still with RIM, but no one is buying what they're selling. Our largest RIM customer has just decided to move all their employees to iPhones," Hill said. "Once that's done, they will surely disconnect their RIM servers."

Hill himself, as a BlackBerry user, is disappointed in the BlackBerry 10 delay, particularly because it pushes out the availability of 4G-ready BlackBerrys.

"I would consider myself their [RIM’s] biggest fan, personally, but waiting years for a new phone is just not in my plans. Holding out until the end of this calendar year seemed like an eternity already," he said. "Personally, if iPhone had a 4G model, I probably would have already left them. RIM can't ignore the 4G market by delaying the release of hardware into 2013. Another year of only selling 3G phones will have end users and carriers reconsidering any investments in RIM products as a company that offers old technologies."

NEXT: Partners Respond To Rumors Of RIM Split

David Felton, RIM partner and owner of Connecticut-based solution provider Canaan Technology, also said BlackBerrys are accounting for an increasingly small portion of his business and that the delay of BlackBerry 10 will position RIM to lose even more users to Apple and Google.

"Honestly, it does not impact us in anyway. Blackberry has been inconsequential to our business for almost two years now," he said. "As far as the company goes, I’d say [the delay] was a lethal decision. My guess is they do not have the resources in talent or money to stay on schedule, so they push out the date, which, in reality, just makes RIM more irrelevant."

In the days leading up to RIM’s first-quarter earnings release, reports emerged suggesting the struggling BlackBerry maker is considering a move that would split the business in two. According to the London-based Sunday Times, RIM is allegedly looking to separate its services division from its hardware division, and then sell the latter off.

For Felton, RIM’s services division, which encompasses its BlackBerry Enterprise Server (BES) licenses, was always the most lucrative BlackBerry product for his business. Losing the hardware unit, he said, wouldn’t necessarily deal a major blow to him as a partner.

"I believe it would help my businesses, as the handset side of things is not only commodity, but too much trouble to deal with when I can simply redirect end users to the local Verizon or T-Mobile store," he said. "We made our money in the past selling the server and the BES Software/licenses. The phones were always thought of as loss leaders."

Rick Jordan, director of mobility sales and strategic alliances at Tenet Computer Group, a Toronto, Ontario-based solution provider and RIM partner, also believes RIM’s service offerings, particularly those centered on its BES and Mobile Fusion mobile device management platform, would still hold value regardless of the hardware unit.

"If you look at RIM from a security standpoint, they are on top. I mean, they have the BlackBerry Enterprise Server and Mobile Fusion for mobile device management," Jordan told CRN. "They have a lot of incredible technology they just need, what I think from an ISV perceptive… they need an ecosystem to make sure all that kind of falls into place."

NEXT: RIM Loyal To Providers

CelPro Associates’ Kantorowitz sells both BlackBerry hardware and offers technical support and services centered around BES. Business is still being generated from both models, and Kantorowitz said he has actually noticed a spike in the number of technical support renewals from his BES clients over the past year.

As the head of a big BlackBerry shop, he also said he will continue to value his partnership with RIM, despite the wave of reports and speculation regarding its future.

"A lot of people who have worked with RIM are rooting for them. They have always been good to the people who sell their product," Kantorowitz said. "Unlike Apple, who nickel and dime and make it a privilege to allow you to sell it, RIM recognizes that their partners have been with them from the very beginning. We’re loyal to them, they’re loyal to us, and they’ve always allowed us to make a profit."

PUBLISHED JUNE 29, 2012