RIM to cut 2,000 jobs as iPhone market share grows

Research In Motion Ltd., maker of the BlackBerry smart phone, plans to cut 2,000 jobs, or about a tenth of its workforce, as sales slow amid market share losses to Apple's iPhone.

The reductions, across all functions, are part of a plan to "focus on areas that offer the highest growth opportunities," RIM said Monday. The job cuts will leave the Canadian company with about 17,000 employees.

RIM predicted last month that sales this quarter may drop for the first time in nine years. The company is losing market share in the United States to the iPhone and handsets running Google's Android software, in part because it hasn't introduced a major new BlackBerry model since August. Cheaper Google phones are also making inroads in Latin America, Asia and Europe, threatening the popularity of less expensive BlackBerry models like the Curve.

Monday's announcement "takes care of the expenses and they still need to focus on the revenue side," said Alkesh Shah, an analyst at Evercore Partners Inc. in New York. "They need to find a way to make consumers get excited about RIM products. At this point they haven't gotten there."

While RIM had said June 16 it would cut jobs, the figure of 2,000 "is more significant than previously suggested" by co-CEO Jim Balsillie, said Mike Abramsky, an analyst at RBC Capital Markets in Toronto, who rates RIM "sector perform."

When asked about the restructuring plan by one analyst on a June 16 conference call, Balsillie had said: "I would not call it a restructuring and I think that's just radically mischaracterizing it."

BlackBerry Developers Head For Exit

Research In Motion has been accused of failing to connect with ordinary smartphone consumers, but there's another set of personal relationships that are a liability for the company. Turns out that app developers are abandoning BlackBerry to focus their energies on where the growth is: the iPhone and Android operating systems.

Developers say that the variety of BlackBerry models and specifications make creating apps a lot of work with little payoff. One app maker says that he gets 20 times more downloads from iPhone users than BlackBerry users. Still, it's BlackBerry's anemic growth that is driving developers away, not complicated requirements. The once-dominant handsets accounted for only 13% of global smartphone sales last year, compared to 20% last year. Meanwhile Google and Apple continue to gobble up more and more market share.

It's just another round of bad news for RIM, which last week warned that its quarterly revenue could see a drop for the first time in nearly a decade. The company is in the midst of making unspecified layoffs among its 17,500-member staff.