Android sales continue to erode RIM’s once-dominant position on the biggest U.S. carrier. And with the lackluster reception of Blackberry 6 and an uncertain migration to their new QNX OS, 2011 isn’t looking like a banner year for RIM.
It must have been interesting to be in Verizon Wireless’s C-Suite during the first month of Android sales last year. Up until that point, Blackberry (RIMM) all but owned Verizon’s smartphone business. But AT&T (T) was seeing incredible success with the iPhone and Blackberries weren’t going to cut it for competing with Apple’s (AAPL) runaway success. If Verizon (VZ) was going to continue to be competitive in the smartphone industry, it would have to do something significant.
Google and Verizon cut a deal in the latter part of 2009 to put some new flagship Android-powered phones with the Android 2 OS on the carrier’s lineup. Verizon ran the first heavy ad campaign that directly attacked the weaknesses of the iPhone.
Droid entered the lineup in October/November of 2009 and, according to this graph from ITG investment research, everything changed:
Almost instantly, Blackberry’s share of Verizon’s smartphone market split in half. Motorola’s Droid and, to a lesser extent, HTC’s Droid Eris made an immediate impact. By the beginning of 2010, Android phones from Motorola (MOT) and HTC made up the majority of Verizon’s smartphone sales. Palm entered the fray and had some limited success in the Spring, but Palm’s (HPQ) sales completely deteriorated during the course of the year.
In May and June, Verizon added a third Android vendor, LG, with the Alley slider, a low-cost smartphone that eventually gained a quarter of the carrier’s smartphone share over the summer. Then Samsung launched the Fascinate, which showed some success in the crowded lineup.
By the end of November, RIM’s share had fallen below 20% on Verizon and it looks like it will continue to head south. As if things couldn’t get any worse for RIM, Verizon just launched the Droid Pro by Motorola, a device squarely aimed at Blackberry users and their beloved profile keyboard format.
If RIM can somehow get off the mat after that blow, 2011 will likely open with the release of the iPhone on Verizon. iPhone is even more significant because Apple’s iOS is becoming strongly entrenched in businesses once dominated by Blackberry.
I wouldn’t be surprised to see Blackberry fall below 10% of Verizon’s smartphone sales before winter is over. If so, that would be one heck of an end to a year in which Blackberry started with an overwhelming majority of smartphone sales on Verizon. With the lackluster reception of Blackberry 6 and an uncertain migration to their new QNX OS, 2011 isn’t looking like a banner year for RIM.
