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02 May 12 RIM CEO Bets on BlackBerry Without Keyboard

When Research In Motion Ltd. (RIM) Chief
Executive Officer Thorsten Heins unveiled a prototype of the new
BlackBerry 10 phone yesterday, it lacked a feature that has kept
legions of users loyal to the platform: a physical keyboard.

At the BlackBerry World expo in Orlando, Florida, he showed
off a sleek touch-screen device that more closely resembled an
iPhone or Android smartphone than the keypad-equipped
BlackBerrys of old. While RIM still plans to produce models with
keyboards, the demonstration was the biggest signal yet that the
company was shifting to a touch-screen world.

RIM, which is counting on its redesigned BlackBerry 10
lineup to reverse a sales slump, faces a quandary. Smartphone
users have embraced virtual keyboards, evidenced by Apple Inc. (AAPL) (AAPL)
and Google Inc. (GOOG) (GOOG) accounting for more than 80 percent of the
market. Even so, taking away RIM’s physical keypad removes a
feature that distinguishes it from the competition.

“Some will lament it, but others will embrace it,” said
Nigel Hughes, a vice president in charge of sales at Ashburn,
Virginia-based SteelCloud Inc., which builds BlackBerry-
compatible security software and hardware for customers such as
the Department of Defense. “It’s a recognition that the future
is without a keyboard.”

RIM could use a boost. Sales at the Waterloo, Ontario-based
company tumbled 25 percent last quarter, with U.S. revenue
plummeting more than 50 percent. And RIM’s share of the
smartphone subscribers shrank to 12 percent in the period,
making it a distant third in the industry, according to ComScore
Inc. Google’s Android operating system accounted for 51 percent
of the market, while Apple’s iPhone had 31 percent.

BlackBerry Storm

The iPhone’s debut in 2007, followed by Android devices a
year later, showed that users were willing to embrace phones
without a keyboard. While RIM made a foray into the touch-screen
market in 2008 with the BlackBerry Storm, most of its lineup
kept the keypads. The Storm was criticized for buggy software
and was outsold by the BlackBerry Curve and Bold models, which
both feature keyboards.

For Mousser Jerbi, a longtime BlackBerry fan, the new
prototype’s lack of a keyboard is a deal killer.

Jerbi plans to keep his current BlackBerry Bold rather than
upgrade to the touch-screen phone. The keyboard makes it easy to
tap out e-mails — something that sets the old BlackBerry apart
from a sea of iPhones and Android devices.

‘Risky’ Endeavor

Jerbi, who runs corporate sales for Groupe Tunisie Telecom,
Tunisia’s biggest wireless carrier, is skeptical the new model
will catch on with loyalists. Even the name “BlackBerry”
evokes the device’s black keys, which resemble seeds.

“Getting rid of the keyboard is risky,” said Jerbi, who
once tried switching to an iPhone, only to switch back.
“Especially for the e-mail user, the BlackBerry experience is
very good.”

RIM began releasing the prototype to developers yesterday,
saying it would be representative of the device’s hardware –
even if the final design is different. Features, such as word
prediction, will make it easy for BlackBerry fans to adjust to a
touch screen, Heins said.

Investors didn’t applaud the day’s news. RIM shares
declined (RIMM) 5.7 percent yesterday, marking their biggest drop in
almost a month. The stock has lost almost three-quarters of its
value over the past year.

Head to Head

Scrapping the physical keyboard from the initial BlackBerry
10 device will put it in closer competition with the iPhone and
Android models, such as the Samsung Galaxy S. That could be
tough for RIM, said Stephen Beck, a managing partner at the
technology consulting firm CG42 LLC in Wilton, Connecticut.

“If you’re forcing a migration to non-keyboard, you’re
going to get people asking, ‘What’s the best of breed of those
devices?’” Beck said. “Given the momentum of iPhone and
Android, that’s going to be a tough argument for RIM to win.”

Michael Clewley, director of handheld software product
management at RIM, reassured BlackBerry World attendees that the
company will eventually offer something for everyone with the
BlackBerry 10 operating system. That may include slide-out
keyboards, as well as traditional keypads.

“RIM has always had a wide range of devices,” he said
yesterday. “We’re dedicated to having a form factor that fits
your needs.”

To contact the reporter on this story:
Hugo Miller in Toronto at

To contact the editor responsible for this story:
Nick Turner at

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