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December 26, 2012

As Sales Drop, RIM Cuts Subscriber Service Fees

By Ashok Bindra, TMCnet Contributor

With sales quickly declining in emerging markets, the Waterloo, Ontario-based BlackBerry maker Research In Motion (RIM) is facing pressure from carriers to cut subscriber service fees. In fact, per a Bloomberg (News - Alert) report, on December 21st the company’s stock price dipped the most it had in more than four years.

With iPhones outselling Blackberry’s, and with RIM’s new devices set to use much more data, the advantages are disappearing, according to Avi Silver, a Credit Agricole Securities analyst, reports Bloomberg. “RIM’s high-margin services revenue stream is slated to come under significant pressure as operators push back on sharing data revenue,” noted Silver.

This pushback from carriers comes with BlackBerry’s (News - Alert) demand slowing down in emerging markets like India, while consumers in the West wait for the new BlackBerry 10 phones, which are expected to go on sale in February, this according to Bloomberg reporter Hugo Miller.

 According to a December 21st company filing, sales of RIM Smartphone’s in the U.S., U.K. and Canada have dropped by 53 percent last quarter from last year. Similarly, revenue from the rest of the world including markets like Nigeria and Indonesia, where BlackBerry is the No. 1 ranked Smartphone, fell 44 percent to $1.78 billion. The report also shows that RIM does not provide any further breakdowns of country or regional sales.

Research firm IDC’s data suggests that RIM is expected to finish 2012 with a 4.7 percent share of the global market, compared with almost 90 percent for Apple (News - Alert) and Google combined.

More than 150 carriers are now testing BlackBerry 10 Smartphone’s, which RIM intends to debut at the end of next month in six cities worldwide, reports Bloomberg. However, the report indicates that major carriers are reluctant to discuss its negotiations with RIM over service fees. However, RIM said it will give details on the new fees when BlackBerry 10 services are introduced.

Edited by Carlos Olivera
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