Sour times for Apple and Blackberry

Profits are down at BlackBerry-maker RIM. And all's not well over at smartphone rival Apple either, as a report into Foxconn working conditions surfaces.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
It's getting tough over in the briar patch for BlackBerry. The phone-maker and tablet manufacturer made a net loss of $125m (£78m) for the three months to March 3. Quite the fall from grace when compared with its $934m profit a year earlier.

Competition from Apple in both the smartphone and tablet markets has squeezed revenues at the firm down to $4.2bn from $5.2bn last year. And Google has also been raiding the RIM fruit bowl with its market-share-snatching Android offering. These pressures have caused shipments of BlackBerry smartphones in the quarter to drop to 11.1 million, down 21% from the previous three months.

And there’s more trouble ahead for BlackBerry if Google’s $12.5bn acquisition of Motorola goes through. Once the ink is dry, Google will start manufacturing its own tablets, which will hit RIM’s Playbook right where it hurts. Some 500,000 of RIM’s iPad rival were sold in the last quarter, but at vast discounts, which bumped up losses.

But BlackBerry isn’t taking all this lying down. There’s been a full-scale shake-up at board level, with resignations from director and former co-chief executive Jim Balsillie,  and chief technology officer David Yacht. Stepping into the breach is new CEO Thorsten Heins, who plans to rejig the firm’s strategy to focus primarily on enterprise customer, not individuals: ‘We believe that BlackBerry cannot succeed if we tried to be everybody's darling and all things to all people,’ he said. ‘Therefore, we plan to build on our strength.’ And BlackBerry’s not in truly dire straits yet: the firm made a net profit of $1.2bn for the full financial year. That’s better than a loss, but less than half of its $3.4bn 2010 profit.

RIM rival Apple is not having the best week either. Foxconn, the Taiwanese company that produces parts for the technology giant’s iPhone and iPad, is back in the spotlight. The Fair Labour Association (FLA) monitoring group has sent inspectors into three of Foxconn's 13 Chinese factories to measure working conditions and pay. Its scathing report was released yesterday, citing widespread health and safety breaches, inhumane working hours, and management-dominated unions. ‘There’s this lingering sense among workers that they’re in a dangerous place,’ says Auret van Heerden, president and chief executive of the FLA.

In fairness, Apple had been trying to improve conditions at its main suppler. Pay has been pushed up twice in recent months and overtime hours have been reviewed. But with some workers at Foxconn working 11 days without a break, including 80 hours of overtime, more needs to be done.  
Nevertheless, sales of Apple’s iPhones and new iPad show no sign of abating. So RIM’s decision to refocus on its core corporate customers looks like a sensible move.

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