Shares in Waterloo, Ont.-based Research in Motion fell sharply Friday after analysts at investment bank Morgan Stanley predicted the BlackBerry maker would lose market share.

RIM shares closed down $1.48, or 2.8 per cent, at 51.00 on the Toronto Stock Exchange.

RIM 3-month chart

Ehud Gelblum and Kimberley Watkins predicted in a note to investors that RIM's share will fall from 16 per cent to 13.1 per cent this year and that the share price will fall to $47.

They blamed threats by countries including the United Arab Emirates, India and Lebanon to shut down BlackBerry services over concerns their encrypted transmissions make it difficult to monitor traffic by terrorists and criminals.

The analysts also cited growing competition from Apple's iPhone and Google's Android-based smartphones, as well as what they said were tepid sales of RIM's new touch-screen phone, the Torch.

Challenges increase

Technology analyst Neeraj Monga agreed competitors have begun to increasingly challenge RIM.

"RIM is at a bit of a crossroads because it's in a business where competitors have caught on to its game," said Monga, who's with Toronto-based Veritas Investment Research.

"It was the initiator, it had the first-mover advantage and it is no longer the smartphone company that it used to be," said Monga.

Anil Doradla, an analyst with William Blair and Co. in Chicago, said RIM is still a leader among business users but the pace of change in the consumer market is much faster.

"Right now in the consumer space, when they come out with a product in the blink of an eye they have to be ready to build the next product," he said.

In RIM's case, it puts together the whole smartphone, everything from the operating system to the hardware to how the radio works, and that takes time, Doradla said.

With files from The Canadian Press