RIM optimistic about handset market

No cut backs or revised targets for BlackBerry manufacturer

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By  George Bevir Published  January 21, 2009

BlackBerry manufacturer RIM hopes to buck the trend of shrinking profits and reduced sales afflicting many mobile phone makers, as rival manufacturers look to the top end of the market in a bid to boost flagging sales.

Khaled Kefel, RIM's general manager for the Middle East, said yesterday that he expects sales of BlackBerry smartphones to continue to perform well.

"The financial crisis is on the mind of every CEO in the world, including us," Kefel said. "But I think we are fortunate that we are in a sector where we believe there is a demand for the kinds of services and solutions that we have.

"Our strategy of opening up more markets in the world will allow us to continue to be moving in the right direction. We are very fortunate at this point we don't have any plans to reduce our work staff," Kefel said, adding that RIM had not revised any of its targets as a result of the current financial climate.

In the telecoms sector, handset manufacturers have borne the brunt of tightening credit markets, with Nokia, Sony Ericsson and Motorola issuing profit warnings and making job cuts as consumers appear reluctant to replace mid-range handsets.

Sony Ericsson's fourth quarter results for 2008, which were released at the end of last week, revealed that the manufacturer had suffered a 6% drop in quarter-on-quarter shipments, which group president Dick Komiyama attributed to a "tumultuous year" with the downturn in the world markets greatly affecting the mobile phone market, he said.

Komiyama said that 2009 would see Sony Ericsson push into the pricier, top tier of handsets after brief foray into the high-volume, low price segment of the market in 2008.

A market study by ABI Research has found that although demand for smartphones will "slow slightly" in 2009, it will still increase at increase at an average annual unit shipment rate of 19% through 2014. This is in comparison to an anticipated drop of global handset shipments of 4%-5% in 2009.

RIM shipped 6.7 million devices during the third quarter of 2008 to November 29, compared to 3.9 million in the same period in 2007, which contributed to a 66.3% rise in quarter-on-quarter revenue, which stood at US$2.78 billion for the third quarter of last year.

Analyst Geoff Blaber, of CCS Insight, said: "Apple and RIM, they are almost niche businesses in a sense as they are focused on a very high-end segment, but it's the segment that is going to see better growth prospects and healthier margins as well."

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