Is RIM's BlackBerry Going the Way of the Dinosaur?

Research in Motion Ltd.'s (NASDAQ: RIMM) BlackBerry line of smart phones are set to go the way of the Sega Dreamcast as rivals continue to gain ground and take the spotlight away from the once dominant name in the industry.

Yes, RIM does still own the top spot in smart phone market share in the U.S. with 36 percent of total units sold in the first quarter of this year, but that does not look as good when in the same quarter of 2009, RIM held a 50 percent market share, according to research from NPD Group.

The company also released data last week showing that it missed forecasts for adding new subscribers last quarter, pushing the stock down 10 percent the following day, despite bringing in nearly 5 million new customers in the period.

Perhaps it is the way that the smart phones from BlackBerry are being distributed by its wireless partners in the U.S., including AT&T Inc. (NASDAQ: T), Sprint Nextel Corp. (NYSE: S) and Verizon (NYSE: VZ).

BlackBerry devices have become a buy-one-get-one free special at wireless retailers that are attempting to draw in new customers to the space. It is unlikely that the iPhone from Apple Inc. (NASDAQ: AAPL) will ever see this type of pricing.

Perhaps it is the turnover that will eventually spell disaster for RIM.

Last week, 1.7 million people picked up the new iPhone 4, which in reality isn't an enormous leap forward from previous models to this point and the vast majority of those sold were to customers who already own earlier addition of the product.

Why is this? It is due to the demographic that the iPhone appeals to, a consumer sector that is always needing to be on the cutting edge to have what's hot and new.

So Apple can just keep releasing the same phone with a few new features every year giving it a new title, and as long as it keeps making a status symbol, there will be lines down the street to pick it up.

Apple also has the potential to siphon a great number of BlackBerry users on the Verizon network, if the company does in fact end its senseless exclusive agreement with AT&T in January. The last thing RIM wants to see is Apple spreading its massive presence to another carrier in the U.S.

Apple aside, there may be an even greater threat to RIM, and that is Google's (NASDAQ: GOOG) Android operating system, which seems to be popping up on phones all over the place. The Android product line now includes the well received, Incredible, Eris, Droid, Droid X, and Sprint's first 4G offering the Evo.

In the first quarter of 2010, the Android operating system shot past Apple to the No. 2 spot in U.S. smart phone sales, holding 28 percent of the market share.

BlackBerry's are quality devices, good for business and most offer a physical keyboard that some users refuse to give up, even as touch screens become increasingly responsive. But the Dreamcast was quality too, but no one bought it either following Sega's success in future generations.

RIM believes that it owns the business world and that may be the case, at least for now. But the business world is a lot smaller than the entire population. A consumer doesn't have to be a CEO to own a smart phone anymore and the average wireless customer will hold an iPhone or Android device in one hand and use the other to put a BlackBerry back on the shelf.

As the wireless market enters the fourth-generation, and smart phones gain steam, those who don't appeal to the masses will be crushed and those who gain the status of "must have" will flourish.

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