US federal agency puts BlackBerry 10 to the test

News 13 Dec, 2012

US Immigration and Customs enforcement agency to test new BlackBerry 10, despite shunning RIM's devices in the past.

Research In Motion (RIM) said a US federal agency, which recently outlined plans to move away from BlackBerry in favor of iPhone, is to begin testing the new BlackBerry 10.

The US Immigration and Customs Enforcement agency (ICE) will begin a pilot program on RIM's new line of BlackBerry 10 smartphones and BlackBerry Enterprise Service 10 (BES 10) early next year.

The news, which comes just as shares of the embattled company rallied to their highest close in seven months, signals that RIM's BlackBerry 10 platform is gaining some traction ahead of its official launch next month.

RIM, a one-time pioneer in the smartphone industry, has lost market share in recent years to the iPhone and devices powered by Google's market-leading Android operating system, even among the business audience who once used BlackBerry devices exclusively.

Waterloo, Ontario-based RIM is now seeking to persuade both corporations and government users to stick with its smartphones, which have long been valued for their strong security features.

It promises that its new line of devices, which will be powered by the BlackBerry 10 operating system, will be both smoother and faster than previous BlackBerry phones.

RIM is betting that these new devices - to be launched on January 30 - will revive its fortunes. But that may well depend to a large extent on the response from enterprise customers, many of whom have recently begun to flee to rival platforms.

ICE is one such example. The agency, in October, announced plans to end a long relationship with RIM, stating that its now aging line-up of BlackBerry devices could "no longer meet the mobile technology needs of the agency.

At the time, ICE outlined intentions to buy iPhones for more than 17,600 employees. It is not immediately clear whether the agency plans to revisit this plan or whether its intends to use RIM's new BES 10 platform to manage both iPhones and BlackBerry devices.

A spokeswoman for the agency was not immediately able to comment on the pilot program or the agency's plans.

Shares surge

The news comes soon after yet another rally in RIM shares on Wednesday, after Eric Jackson - a long-time bear on RIM's stock - penned an opinion piece on his now bullish stance on the company.

Jackson, the founder of Ironfire Capital, in his piece, said parallels drawn by some analysts between RIM and its now-defunct rival Palm are flawed, as Palm never had the kind of installed subscriber base that RIM enjoys.

In his article, published on Wednesday on the TheStreet.com, Jackson contends that RIM's new BlackBerry 10 devices have much better odds of success than Palm's Pre device, which failed to capture a following despite positive reviews on the device and its operating system.

Jackson, who was short RIM's stock for an extended period, argues that the positive sentiment building in RIM's stock ahead of the launch of the make-or-break line of devices is unlikely to dissipate in a hurry.

This is because a large portion of RIM's 80 million subscribers are likely to upgrade to BB10 when the new devices are launched. Jackson said he now has a long position in RIM.

Shares in the company rose 5.6 per cent to close at $13.31 on the Nasdaq - their highest close since May 1. Its Toronto-listed shares rose 5.8 per cent to close at C$13.14.

The stock has more than doubled in price since September 24, when the shares were trading slightly above the $6 level in both New York and Toronto.