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Old 22nd December 2012, 06:31   #1
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Default RIM loses subscribers

It looks like the end of the world today only applies to the troubled mobile phone outfit RIM.

Reuters has reported that the company, which had been hoping to move to a new plane of existence in January with its new Blackberry 10, might not survive that long. Shares fell more than 10 percent after the company reported the first ever decline in its subscriber numbers.

This is bad news because it means that RIM will have to build these numbers up again when the new hardware comes out, which will be a lot harder.

RIM's answer to the problem has also alarmed shareholders. It plans to alter its service revenue model, which might pressure the high-margin business that accounts for about a third of RIM's sales.

To make matters worse, RIM did not give the world any details regarding the economics of these changes. This puts a big question mark over the company's primary way of making money.

RIM Chief Executive Thorsten Heins told analysts and investors on a conference call that subscribers who need services like advanced security will pay for them, while those who do not use such services will generate much lower to no service revenue.

The announcement also snatched defeat from the jaws of victory. RIM's shares had been going up over optimism about the new phone. Its numbers appeared alright, and shareholders might have overlooked the failing subscriber base. RIM said it shipped 6.9 million smartphones in the quarter, even as its subscriber base fell to about 79 million in the quarter from about 80 million in the period ended 1 September. Changing the subscriber system is an unnecessary worry.
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