Nokia and RIM, pioneers in wireless, seem to be on the ropes

Computerworld - Tablets and smartphones have shaken up the computing world. Their impact may be most profound for Nokia and Research In Motion (RIM), two pioneers in wireless communications that are now scrambling to adjust to relative newcomers such as Apple and Google.

Both companies are struggling against the success of smartphone and tablet rivals that include Google's Android and Apple's iPhone and iPad. Both Nokia and RIM were clearly powerhouses in mobile phones a decade ago, "seemingly bulletproof," said Jeff Kagan, an independent technology analyst.

"Success or failure [in the wireless industry] is all about hitting the right marketing, public relations and advertising cord...," Kagan said. "Nokia and RIM are struggling with that very issue."

Ramon Llamas, an analyst at IDC, said that while RIM and Nokia are the "old persons on the block, they are facing an evolution in the market that means their means and methods really need to change drastically." Just as RIM faces the need to upgrade successfully to a QNX operating system (OS) for its smartphones, Nokia must adjust as it replaces Symbian with other OSes, he said.

Two recent reports underscore how Nokia and RIM are trying to adjust, Kagan and Llamas said.

In the first report, Nokia is reportedly building a new OS codenamed "Meltimi" to be used in low-cost smartphones priced at less than $100 without subsidies. Several analysts said Meltimi is a sign that Nokia is moving away from plans to build a high-end OS for high-priced smartphones. And they said Nokia's incipient relationship with Windows Phone will do little to deliver phones to the lower-priced smartphone market that is growing fast in emerging markets.

Nokia could lead in the lower-priced segment, said Kagan, "if they don't blow it ... They should focus on what they do best: making plain cell phones and lower-end smartphones."

Llamas said Meltimi appears to be Nokia's replacement for Series 40 used in its low-cost phones. "Series 40 was not great when it first came out, and users noticed," Llamas said. "These users may be poor, but they are not dumb."

In a different report, this one regarding RIM, one analyst at Collins Stewart claimed that production of the company's PlayBook tablet had stopped -- a claim that RIM immediately called "pure fiction." Officials went on to say that RIM remains committed to the tablet market and to using the QNX OS in future products.

The company is scheduled to show developers an update to the PlayBook later this month that includes a native email client, a feature many said was sorely lacking.

Despite RIM's denials about abandoning the PlayBook, other analysts said the Collins Stewart report made sense, given the fact that RIM sold just 200,000 PlayBooks in its second quarter, well below first-quarter sales of 500,000.