I really hate to see powerhouse handset makers decline so markedly. Once leaders in the smart phone movement, both RIM and Nokia are struggling right now. While intense competition from Apple’s iPhone and the glut of Android phones have certainly taken a toll on both, I can’t help but think that these companies may have been their own worst enemy.

RIM’s Trials

RIM may be the best example of a company that was number one in the smart-phone game but lost it over the past five years. Its BlackBerry was the phone to have with its secure push e-mail feature and great texting keyboard. In fact, it’s still the phone of choice for enterprise and IT departments.

Yet today, most users would rather have an iPhone or an Android device. Who can blame them? The momentum shifted to larger touchscreens that everyone longed for while RIM stuck to its standard small screen and prominent keyboard. RIM eventually announced the touchscreen BlackBerry Touch, but the market pretty much panned it.

On top of that, RIM produced one of the least desirable tablets, the PlayBook. Granted, everyone’s tablet falls well behind Apple’s iPad in sales. Yet the PlayBook had some quirky features. Besides its small 7-in. screen, the need to tether the PlayBook to a BlackBerry phone for e-mail was a killer knockout factor.

It probably made sense to RIM, but not to the general marketplace. Whether RIM will fix this remains to be seen, but the damage is done. On top of that, RIM’s recent e-mail network crashes haven’t helped the company’s image either.

RIM continues to lose market share in smart phones, and its stock has dropped more than 70% this year down into the $15 range. Holders of large chunks of RIM stock are screaming “crisis” and demanding action.

Most of these cries focus on the unusual shared management structure made up of Mike Lazaridis and Jim Balsille. These guys have had an amazing run, but maybe it’s time for a change.

Can RIM be saved? I think so, but timing is urgent. RIM is a major acquisition target right now, and that could fix things quickly. RIM also has some new products in the pipeline that have now been delayed to next year. These products might use the QNX operating system (OS) that’s used on the PlayBook. Let’s hope it’s soon enough to save a real icon.

Nokia’s Tribulations

Another basket case is Nokia. Okay, maybe that’s too strong a statement. I like Nokia. It’s a great cell-phone company and still the handset volume leader worldwide—but not in smart phones. Nokia is in a distant third place in smart phones after all the Android phones collectively.

Nokia was one of the first companies with a full-featured smart phone. It just wasn’t available in the U.S. It also was very expensive. It was popular in Europe, but U.S. carriers didn’t seem interested in it. So, smart-phone leadership shifted to Apple and the Google Anrdoid crowd.

Part of the decline of the Nokia smart phones was the fault of the Symbian OS. It was once the worldwide mobile OS leader, but that changed too as the technology moved forward to touchscreens and other advanced features.

On a more positive note, Nokia is fixing its problems. It brought in new leadership like ex-Microsoft exec Stephen Elop. It also has revamped and restaffed its management. On top of that, Nokia has put the Symbian aside, at least for the U.S. market, and has selected Microsoft’s Windows Mobile OS platform for the future.

Nokia recently announced its first phone for the U.S. market. Designated the Lumina 710, it uses Micorsoft’s Windows Mobile 7.5 or Mango OS. From what I have heard, the user interface is a real winner. It is not only different but also very attractive and easy to use. More Windows phones are in the works, and hopefully there will be more deals with U.S. carriers.

The Lumina works on T-Mobile’s HSPA network and is expected to be available after January 11. A higher-end model, the Lumina 800, will also be available in the U.S. next year. Maybe a tablet is in the works too. Nokia could make an excellent comeback. I wish it well.

Around The Industry

Other companies have had their problems. Motorola once was king of the handsets with its Razr model, right before the iPhone. But then it went into decline and never did produce a really competitive smart phone.

Then, Motorola spun off the handset division, forming Motorola Mobility and adding new leadership. The result was very competitive smart-phone models like the Droid Razr and Droid Bionic. The Xoom tablet also has been moderately successful. Finally, the big event was Google’s purchase of Motorola Mobility this year—not a bad recovery at all.

All companies go through cycles of innovation, growth, and peaking followed by maturity and decline. It is a universal pattern, and it’s bound to happen quickly to any company competing in the white-hot smart-phone market.

Change and innovation are the norm in this arena. If you aren’t on top of it, your best product could get knocked out anytime. The public is constantly asking, “What have you done for me lately?”

A cool product today may be the dog of tomorrow—except for those Apple products. Or so it seems. Will anyone ever top Apple in the smart-phone market? Some have come close, but I doubt any company will in the near future. After all, we’ll get the Long-Term Evolution (LTE) iPhone5 in 2013, won’t we?

Anyway, I wish all of these companies in decline a speedy recovery and a very successful new year.