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BlackBerry Outlook Gloomy as Competition Grows

After years of turning in stellar earnings reports, Jim Balsillie, the combative and energetic CEO of BlackBerry-maker Research in Motion (RIMM), was forced to do some backpedaling on the company’s conference call for its most recent quarterly results.

Though RIM increased its revenues by 18 percent from the same period one year ago, and its earnings per share by 41 percent, that still disappointed Wall Street. RIM’s shares have tumbled more than 7 percent today, as investors cast a wary eye on competitive pressures that suddenly cast Research In Motion’s future into doubt.

Those pressures were underlined by a new smartphone brand-loyalty survey from Crowd Science, which showed that nearly 40 percent of BlackBerry users would switch to the iPhone, given the chance. One-third would choose a device running on the Android operating system. In addition, there have been persistent rumors that Verizon, tiring of persistently high return rates, will drop the BlackBerry Storm.

Briefly put, a question that would have seemed inconceivable only a year ago now seems highly pertinent: Will the BlackBerry, once a must-have workhorse and status symbol for millions of corporate executives (and wannabes), be able to survive in the new era of the iPhone, Android, and other deluxe smartphones?

Research in Motion made a strategic decision a long time ago that is now coming back to haunt it. Like the iPhone, the BlackBerry runs on a closed, proprietary operating system. In the case of Apple (AAPL), the iPhone’s runaway popularity, and the appeal of applications sold through its App Store (not to mention the glowing early reviews of the new iPad), have made that a moot point. App developers are clamoring for attention and downloads on the iPhone.

While RIM has taken a few steps to open up the BlackBerry to outside developers, the BlackBerry remains what it‘s been since RIM’s two-way pager was upgraded in 2002: a very effective, and mostly reliable, device for voice calls and e-mail, connecting with a powerful back-end server in the corporate data center. While Balsillie’s engineers and designers have unveiled a series of sleeker, updated models over the last few years, the BlackBerry still does a couple of things very well. That’s no longer enough.

And while Balsillie crowed over the upcoming lineup of new BlackBerry models – “If you saw the road map, you’d be blown away,” he told the press and analysts on the earnings call March 31 – it’s not clear that RIM will ever be able to regain the cachet it lost when the iPhone made its huge first splash in January 2007.

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