RIM offers biggest clients incentives to adopt BB10

TORONTO Fri Dec 7, 2012 3:00am IST

Research In Motion CEO Thorsten Heins discusses features of the Blackberry 10 during his keynote address during the Blackberry Jam Americas in San Jose, California September 25, 2012. REUTERS/Robert Galbraith/Files

Research In Motion CEO Thorsten Heins discusses features of the Blackberry 10 during his keynote address during the Blackberry Jam Americas in San Jose, California September 25, 2012.

Credit: Reuters/Robert Galbraith/Files

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TORONTO (Reuters) - Research In Motion Ltd RIMM.O RIM.TO on Thursday outlined a program of incentives to encourage its biggest customers to run its soon-to-launch line of BlackBerry 10 devices, seeking to persuade corporations and government users to stick with its secure smartphones.

RIM is betting that the devices, to be launched on January 30, will revive its fortunes. That will depend to a large extent on the response from RIM's enterprise customers -- the business users who value BlackBerry's strong security features.

Waterloo, Ontario-based RIM, once a smartphone pioneer, has bled market share to Apple Inc's (AAPL.O) iPhone and devices powered by Google's (GOOG.O) market-leading Android operating system, even among the business customers who once used BlackBerry exclusively.

RIM says its new devices will be faster and smoother than previous BlackBerry phones and will have a large catalog of apps, which are crucial to the success of any new line of smartphones.

It now plans to phase in a BlackBerry 10 Ready Program for enterprise customers, initially offering online training and webcasts, and then providing free trade-ups of licenses and services.

"We will be aggressively reaching out to our customers to make sure they are aware of this program," said Bryan Lee, senior director of enterprise at RIM. "We see this as really the linchpin for helping our customers to transition to BB10."

Early adoption of BlackBerry 10 by government and corporate clients will go a long way in easing the concerns of both RIM's clients and investors. Many fear that a lackluster market reception to BB10 could seal RIM's fate.

RIM, which does not say what percentage of its business comes from the enterprise customers, said its online training and webcast series are already in place. Trade-ups, including free upgrades on the licenses for BB10 operating system, will be available ahead of the January 30 launch.

Evercore Partners analyst Mark McKechnie said RIM's step-by-step program to woo enterprise customers was a positive move, though it highlights the challenges RIM faces.

"We are encouraged with an 'all out' marketing campaign with the right incentives to motivate enterprises to upgrade," he said in a note to clients. "Our take is that this will remove a roadblock for those already planning to upgrade, but likely won't push too many who prefer to wait."

McKechnie, who has an "equal-weight" rating on RIM's stock, said the move is unlikely to tempt back customers who have already abandoned the BlackBerry in favor of iPhones and Android devices. RIM offers support for the rival devices, but needs corporates to update to Blackberry Enterprise Service 10 so they can power and run BB10 devices on their networks.


RIM's Lee said he sees tremendous excitement from enterprise customers who want to use the new platform, but he would not speculate on how many would be ready to transition to the new platform come launch day.

RIM said last month that its BlackBerry Enterprise Server 10, which runs the devices on corporate networks, is in beta testing with around 20 key government agencies and corporates.

Feedback on the BB10 devices and platform has been largely positive from both carriers and developers. Financial analysts remain divided.

Some have upgraded their ratings and targets on RIM's share price in anticipation of a successful launch of BB10, while others believe the new platform has little chance of succeeding.

TD Securities analyst Scott Penner on Wednesday raised his price target on RIM to $12 from $9.50, but said RIM still faces significant hurdles.

RIM's stock has surged over the last two months from multi-year lows around $6 as the launch date for the new devices nears. The stock is still more than 90 percent below the 2008 all-time high around $148.

The latest TSX data indicates that short positions in RIM shares have fallen dramatically in the last two weeks. The total short positions in RIM, a bet that the stock price will fall, on the TSX fell to 15.2 million as of November 30, down from 20.6 million in the prior two weeks.

RIM shares slipped 0.4 percent to $11.89 on the Nasdaq on Thursday. The Toronto-listed shares ended down 0.3 percent at C$11.81. (Reporting by Euan Rocha; Editing by Jeremy Laurence, Janet Guttsman and Leslie Adler)


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