Entry into consumer markets could undermine RIM prospects

Research in Motion (RIMM) made the decision to move beyond its traditional strength in the business market to try to capture consumer smartphone buyers. The reason for the decision was simple. Because of the size of the consumer market, RIM could expand its top line quickly. It turns out the the move has unintended consequences and they were not good.

According toThe Wall Street Journal, sales to consumers are hitting RIM margins and could badly hurt its profits. The paper writes that "these efforts eat into gross profit margins, which have fallen to 40 percent from about 50 percent in the last six months."