BlackBerry Maker RIM To Build Cheaper Phones

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BlackBerry maker Research In Motion, a major Marvell customer, is shifting significant resources to “entry-level smartphones” according to one of its major suppliers.

Chip maker Marvell had a tough time in the quarter that ended January 29, with revenue down 6% (to $901 million) and net income down 13% (to $223 million) from the previous quarter — that’s despite the Christmas season, which is usually peak time for smartphone sales. The company’s shares dropped more than 11% on the news.

According to Marketwatch, CEO Sehat Sutardja blamed the results on a switch by one of Marvell’s customers toward building low-cost, low-margin smartphones — a market that Marvell does not supply. That customer is widely understood to be RIM.

RIM is facing pressure from lower priced smartphones that run Google’s Android operating system. Android basically came out of nowhere in 2010 and surpassed RIM’s global market share. RIM grew in absolute numbers, but fell to number three behind Android and leader Symbian (Nokia), according to Gartner.

RIM may also be trying to capitalise on chaos at Nokia, which recently announced plans to switch its smartphone platform from Symbian to Windows Phone 7 over the next couple of years. Nokia sells a lot of inexpensive Symbian-based smartphones around the world, so perhaps RIM is looking at that market for expansion.

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