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RIM turns to BlackBerry loyals in business community for new phones

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TORONTO - They call them the BlackBerry loyals: longtime smartphone users who have clung to their aging Curve and Bold models through the most turbulent days of the company.

In the coming months, Research In Motion (TSX:RIM) is certainly going to need them.

Despite what some critics suggest, there are still plenty of smartphone users around the world who sport BlackBerrys. In fact, there's about 80 million of them according to RIM's most recent quarterly subscriber numbers.

Among them are millions of enterprise customers, mostly employees at government, corporate and private businesses who were handed a BlackBerry by their employer. Together, they were the BlackBerry users who helped the device become a symbol of mobile communications innovation, and kept the company relatively stable as its share of the consumer market tumbled in North America and Europe.

It's a factor that RIM hasn't ignored in preparation for the unveiling of its new smartphones on Wednesday, though the battle to keep enterprise customers won't be easy.

Competition for the highly lucrative corporate smartphone market has heated up, and while RIM has maintained a stronghold on it for years, other smartphone companies are seeing an opportunity.

Last week, an investment wing of Samsung Group — the leading Android smartphone maker — announced a "strategic investment'' in Toronto-based Fixmo Inc., a software maker that specializes in data and device security.

Apple Inc. executives also made a point of emphasizing the popularity of their iPad tablet with major banks and government agencies. The iPhone has also gained traction in the enterprise market, they said on the company's earnings call last week.

"The other vendors do smell blood in the water a little bit here, and they know that RIM is vulnerable," said Zeus Kerravala, telecom equipment analyst at ZK Research in Boston.

"What was once RIM's anchor business is showing signs of cracks."

A number of factors helped the BlackBerry remain triumphant in the business sphere over the past several years.

The simplicity and security of RIM's network structure has generally kept corporate IT desks satisfied, but a combination of service outages and the growing trend of bring-your-own-device to work has left the BlackBerry vulnerable to its competitors.

"I heard more negative backlash from chief information officers and IT leaders about RIM last year than I did in maybe the last 10 years combined," said Kerravala.

One of the BlackBerry's greatest strengths is its design. In the business community, the Bold model is championed for being small, sleek and sturdy. But when BlackBerry loyals talk about why they've held onto the phone, the conversation almost always shifts to its physical keypad.

"It's got that professional feel," said Kriss Stallabrass, a longtime BlackBerry user who works as a cruise manager in the Netherlands.

"I don't know how to explain it, but when (I've got) my BlackBerry out, I'm working. I have an iPhone for personal use and for me it's like a toy. I don't game on my BlackBerry."

Almost accidentally, the BlackBerry has cornered a segment of the market that prefers a tactile smartphone experience akin to working on a computer.

"My office is now saying, 'We'd prefer you get an iPhone,' because they like the way it interfaces with the network," said Daphne Burt, manager of artistic planning at the National Arts Centre Orchestra in Ottawa.

"But I'm holding onto my 'Berry still. I don't know why I'm so attached to that keyboard, but I am."

Not everyone is happy though. Since the launch of the iPhone in 2007 the touchscreen market has skyrocketed in popularity and now comprises the majority of smartphone users. In response, the BlackBerry is treading into territory that its executives once swore it never would by creating a full touchscreen phone that will be a priority over the keypad version.

The new BlackBerrys will arrive in stores first with a touchscreen device expected sometime over the next six weeks. RIM will then release an updated physical keypad design a few weeks later. The official dates will be announced on Wednesday.

The staggered launch has been a sticking point for some analysts who are concerned about those loyal fans who stuck it out for the keypad version. Many of the users who would prefer touchscreen have already switched to a competitor, they suggest.

"It's indicative to us of the missteps that RIM has made so far," said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

"To have all these delays and still have to stagger the launch between the keyboard and the non-keyboard is, to us, far more indicative of the fact that they've really, to some degree, lost their way and are kind of scrambling to play catchup."

But in the enterprise world change is often at a snail's pace, which could give RIM an opportunity. The BlackBerry is still used by more than 1 million government clients in North America, and at 90 per cent of Fortune 500 companies, according to RIM's own data.

And while RIM has lost contracts with major corporations like Halliburton and a number of government agencies, the company has managed to convince others to stick with the BlackBerry, even when they were planning to abandon ship.

In December, RIM announced that the U.S. Immigration and Customs Enforcement was joining a pilot project for its new operating system, an about-face from a decision from the agency weeks earlier to end its contract with the BlackBerry maker.

Many of the features on the new smartphones are angled towards the business customer, including its BlackBerry Balance technology, which allows a single phone to operate as both a business and personal device entirely separate from each other.

Business customers also have options if they don't want the new BlackBerry. Last week, RIM announced it has opened up its secure enterprise service to other smartphones like the iPhone and Android devices for the first time in its history.

And 1,600 businesses have registered for a program designed to prepare companies for the launch of the operating system.

To help drum up enthusiasm, RIM will launch an international enterprise roadshow on Feb. 4 to meet with major customers for a hands-on demonstration of the new BlackBerrys and the operating system.

On Monday, RIM announced that the rebranded application store — now called BlackBerry World — will include movies that will be available the same day they are released on DVD and current TV shows a day after they're broadcast.

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