RIM BlackBerry 10 prototype fails to wow investors

ORLANDO, Florida Wed May 2, 2012 4:50am IST

1 of 2. Research in Motion Chief Executive Officer Thorsten Heins speaks at the BlackBerry World event in Orlando May 1, 2012 .

Credit: Reuters/David Manning

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ORLANDO, Florida (Reuters) - Research In Motion Ltd RIM.TO gave developers a glimpse at its next-generation BlackBerry 10 smartphone on Tuesday and a set of software tools to create flashy apps to run on its new operating system, but investors were unimpressed and RIM's shares tumbled.

At RIM's annual BlackBerry World conference in Orlando, new CEO Thorsten Heins took center stage to unveil a prototype of the devices RIM expects to launch later this year. The BlackBerry 10 devices will navigate with fewer keystrokes than the legacy smartphones, relying on swipe gestures and word suggestions.

"We wanted a user paradigm that is easy and fast," Heins said, demonstrating how information from documents, emails, calendars, and address books could slide in and out from the screen's edges. "It's all about making things flow."

Colin Gillis, an analyst at BGC Partners, said Heins' presentation only served as a reminder of the tough road the company has ahead as it prepares for the make-or-break BlackBerry 10 launch.

RIM knows consumers won't buy its new phones or tablets unless developers get excited about the platform and create a wealth of apps to operate on it. A dearth of apps for the legacy BlackBerry is one of the big reasons RIM has suffered huge market-share losses to Apple Inc (AAPL.O) and Google Inc's (GOOG.O) Android in recent years.

As a consequence, shares of the BlackBerry maker have dropped about 70 percent over the past 12 months. On Tuesday, RIM closed down 5.8 percent at C$13.31 in trading on the Toronto Stock Exchange.

"The bulls have disappeared from the scene as far as RIM is concerned," said David Cockfield, managing director and portfolio manager at Northland Wealth Management. "There is no investor confidence in RIM at all. It will have to do something fairly spectacular to turn things around."

STARTING FROM SCRATCH

To regain its stride, RIM is essentially starting from scratch. Few of the apps available for its existing smartphones will work on the new platform, and the legacy BlackBerry won't be able to run apps created for the new platform.

Based on an operating system called QNX that's compatible with numerous open-source coding languages, BlackBerry 10 is a major break with RIM's legacy operating software, a proprietary system that turned off developers.

The prototype device that RIM handed out to developers has no physical keyboard, unlike most BlackBerry models. Known as Alpha Dev, it looks like a smaller version of RIM's PlayBook tablet, complete with a touch-sensitive frame that a user can swipe to call up a menu.

While RIM says the hardware it eventually launches will bear little resemblance to the prototype, apps built for the Alpha Dev's 4.2 inch screen will allow for a "very seamless transition" to BlackBerry 10 devices, said Christopher Smith, vice-president for application platform and tools.

As for the software toolkits, they are designed to simplify the task for app developers and independent content producers.

One of them is Cascades - a toolkit from The Astonishing Tribe, a Swedish user interface company RIM bought in 2010. It helps create apps that are rich in graphics. Developers can simply select an effect with a touch and have it written directly into their program.

QUICKER DEVELOPMENT PROCESS

RIM said it was already working with some partners to ensure content and apps are available when the devices are launched.

Among them are Endomondo, which specializes in apps to promote physical fitness; PixelMags, an mobile magazine newsstand; Poynt PYN.V, a local search engine; and Wikitude, whose apps superimpose information over camera images.

Gameloft is working to bring 11 games to the new platform, including a puzzle game called "Shark Dash" and a more complex game called "N.O.V.A 3: Near Orbit Vanguard Alliance."

"RIM has got it right with the BlackBerry 10 platform," said Adam Linford from Truphone, which offers local calling and data rates while its customers are roaming. "The platform's support for open-source components flattens the learning curve, enabling us to build a new application quickly and cost effectively."

YAWNING APP GAP

Impressing developers is crucial for RIM, which has expanded beyond its traditional strength in providing mobile email to office workers, only to struggle against the more consumer-friendly iPhone from Apple and the slew of devices that make use of the Android platform.

Waterloo, Ontario-based RIM has around 15,000 apps for its PlayBook tablet and 70,000 apps for its smartphones or the tablet, compared with 200,000 iPad apps, and half a million for the iPhone.

A recent survey from Appcelerator and IDC showed less than 16 percent of developers were "very interested" in creating programs for RIM, compared with 90 percent for Apple and 80 percent for Android.

Earlier on Tuesday, research firm IDC said that RIM's share of the global smartphone market had slipped to 6.7 percent in the first quarter, from 13.6 percent a year earlier.

(Reporting by Alastair Sharp; Editing by Frank McGurty)

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