RIM selling more phones, but competition remains tough

Research In Motion (RIM) shipped a record number of devices in its fiscal first quarter, but analysts remain concerned about its long-term ability to compete against its smartphone rivals.

The Canadian firm sold 11.2 million BlackBerrys in the three months ending in May, up 43 per cent on the same period last year, and reported share earnings of $1.36 narrowly ahead of the $1.34 expected.

However, revenues failed to meet expectations, with the reported $4.24 billion down on the forecast average of $4.355 billion though it was significantly stronger than last year's figure of $3.42 billion.

And while RIM added another 4.9 million subscribers during the quarter, the average selling price of the BlackBerry fell from $311 to $299 as RIM fought to compete in an increasingly competitive market.

During the company's earnings call yesterday, co-chief executive Jim Balsillie sought to allay those fears by pointing to two new handsets set to appear in North American markets by the end of the current quarter or just into the next, saying these could bolster its market position even if both revenues and average selling price were affected negatively.

Balsillie described the new devices as being a "quantum leap" ahead of anything else currently on the smartphone market, commenting that he "couldn't feel better" about the company's prospects.

The RIM executive singled out the company's performance in the UK as particularly impressive, saying O2 deserved special praise for how it had helped promote the BlackBerry brand.

The BlackBerry App World, meanwhile, is now generating more than a million downloads a day, according to Balsillie, and revealed the next major update would offer carrier and credit card billing.

However, BlackBerry's long-established stranglehold on the business phone market faces growing competition from the likes of HTC and Apple's newly launched iPhone 4.

Over the last quarter, Research in Motion's shares have broadly fallen in line with the tech-heavy NASDAQ index, losing 20 per cent of their value. Apple's shares, on the other hand, continue to outperform the market.