The official hub of The Enterprise Mobility Foundation
Want more than just blog posts? Login or Sign up for a free acount and get research, videos, slide decks and more! Join the online social network for Enterprise Mobility.

Research in Motion – The Options Now

RIM, the maker of the popular (well, historically, anyway; read on) BlackBerry line of products, and one of the firms that essentially defined mobility as we know it today, has been all over the financial news for months. The company’s stock has fallen dramatically (it was around 145 only a little more than a year ago, and it’s around 22 as of this writing, having fallen almost 19% just last Friday), and sales and more importantly market share and earnings are down. The forecast is hardly rosy, and yet the company says all is well and they’re working on it. After all, they have 67 million users worldwide and sales are growing in emerging and developing markets. The situation, though, is no longer as simple as a new product line, adjusting pricing, or any single corrective action. Rather, a fundamental shift in the dynamics of the mobile market could indeed leave RIM in the dust – but I don’t think the outlook is necessarily as dim as many Wall Street analysts posit.

RIM, of course, is synonymous with mobile e-mail and handsets with physical keyboards, and became the corporate standard for messaging over its very long history in mobility. The company was historically innovative (among the very first to build handsets in a PDA package), and the combination of a stylish (for its day) handset, BlackBerry Enterprise Server (crucial to success), and a focus on over-the-air security proved irresistible for organizations across the globe. BlackBerry, in fact, was a verb long before Google was.

But with the company clearly in decline, and few kind words from the financial types, it’s far more likely today to hear comments about the firm being toast than what strategies might in fact serve them best in a market that bears little resemblance to that of the firm’s rapid-growth days only a few years ago. They’re trying, but the Playbook tablet (really, a pretty good product) has seen disappointing sales, mostly due to a rather incomplete initial feature set, and a new BlackBerry OS isn’t exactly setting the world on fire (I’ve written before about why OSes really don’t matter today). Gee, this all looks a lot like Nokia’s current mess, doesn’t it? Being different just to be different isn’t a winning strategy.

Perhaps the biggest challenge is inertia, the narcotic-like embracing of which I see all the time among industry leaders. Analyst briefings here are rather like attending church, where questioning the gospel would be in bad form at the very least. But every time I see strong pushback when analysts ask the tough questions, well, that’s at least a pink flag for me. Failure to face reality (in this case, the iPhone and especially the Android tsunami, but also lots of challengers to BlackBerry Enterprise Server) is the problem – as they say in the investment world, past performance is no indication of future results. RIM just hasn’t been competing for a very long time.

And the latest challenge is the consumerization of IT, AKA personal liability or bring your own device (BYOD). Corporate sales are going the way of RIM as #1, so the company needs to get with the program here. But so far, they’re making, IMHO, the same mistake as Nokia – again, being different just to be different. Apple worries about entire end-to-end ecosystems (content and delivery vehicles), but without much real meat for the enterprise. RIM is the opposite – lots of enterprise features, but little consumer appeal.

But all is, again, not bleak. It’s important to keep in mind that RIM still has a huge installed based with a broad (but certainly not universal) vested interest in maintaining how things are done today. Sure, the iPhone and Android (and even Windows Phone 7) are far more sexy and enticing than BlackBerry, and perhaps even a BlackBerry based on the QNX OS, but corporate handsets, and even personal handsets used in a corporate environment, need to be all about utility and mission-specific function, not cool or sex appeal. And while the consumerization of IT/BYOD trend is clear, there’s no overnight shift going on here. RIM has time to get it right.

The prescription, though? Make needed changes in senior management (overstaying one’s welcome usually leads to this kind of result; new thinking and the jolt this delivers can be quite beneficial), think consumer in handsets, forget custom OSes (I’d suggest RIM drop QNX and lead the charge for a webOS consortium as an alternative to Android, or at least no go with a proprietary OS), enhance marketing (more management changes), open server-side products to all comers, get into mobile device management in a big way, and beef up the perennially-anemic developer program. The key is in providing end-to-end mobile solutions for enterprises (perhaps even in the SaaS domain) that really don’t want to be integrators anymore; they have neither the staffing nor the budgets for this. The trick will be in building these solutions so that they work with a large number of handsets, but just a little bit better with BlackBerry handsets. How about mobile unified communications? Sure, they’re already part of the way there with MVS. RIM has the talents and resources to build great hardware; no problems there – and, yes, physical keyboards will remain popular with many. But it’s time for a shift in focus to counter the new world that Apple and Android have built. And that means building on historical strengths up the value chain to solutions, not just cool handsets. No single firm is pursing this strategy today, and yet that is what organizations want to buy.

So opportunities for RIM do indeed exist – but will they take the bold steps required here? I think they will. In fact, I think BlackBerry will remain #3, after Android and iPhone, and making the right decisions will enable them to maintain that position for quite some time. But the operative word here is in fact time – this is a classic turnaround situation, and it’s now or never.

5 Comments

  1. Posted September 23, 2011 at 05:21 | Permalink

    Very interesting post, thanks!

    When companies buy Blackberry fleets, they’re usually doing it for the “desktop” functions of the smartphone: email, contacts, calendar… Of course the handsets are nice, but what companies like is the reliability! These basic functions work better than on any other phone!

    So why not consider it this way: RIM should shift from being a hardware manufacturer to becoming a service provider… That’s what people are buying anyway… They should be building a Blackberry application for all mobile OSs! Their revenu today is driven by BES licencing fees (not what enterprises are paying, what the mobile operators are paying every month for BES connectivity), this wouldn’t need to change.

    Does it make sense for RIM to continue to build handsets? Probably not… The market is driven by consumer needs, these volumes are bringing down the prices and RIM will soon have to face terrible truth: Blackberrys aren’t as sleek or sexyas their competitors, and yet they’re more expensive. How long are companies going to agree to pay more for handsets when all they want is a service (for which they’re already paying more)?

    Thumb up 0 Thumb down 0

    • Posted September 23, 2011 at 12:35 | Permalink

      I thought about that option, but it probably wouldn’t work in the short run – the stock would tank, since the handset business would be a writeoff – I don’t think anyone would buy it at this point. So the goal must be to build a handset that can compete with iPhone and Android, and I think they can do that. They then add features (mostly software) to those handsets that appeal to enterprise IT, and the cycle continues. RIM should at least be able to survive, although hoping for better than the #3 slot for the foreseeable future would likely prove foolish.

      Thumb up 0 Thumb down 0

  2. Posted September 23, 2011 at 12:33 | Permalink

    The two options always mentioned about what RIM should do:

    - Adopt X OS = problems solved
    - Port the BES connectivity to other OS

    These sounds great but reality is neither will equal what Blackberry is now (and a reason why they are popular with corporate IT Shops). Presently RIM controls the whole stack. Device, OS, server, infrastructre etc. In either of the mentioned cases they lack the API hooks to make many of the BES functionality transfer.

    This is likely part of the reason they bought Ubitexx, they want to provide management options for other devices but will not have the level of detail. The basic Exchange ActiveSync controls will be on other devices (that even support the EAS stacks) and BES for their own devices.

    I feel they should source out the hardware part as they are getting killed by the rate Samsung, HTC, Moto are churning out new hardware specs. RIM should focus on OS and management.

    Thumb up 1 Thumb down 0

  3. Posted November 3, 2011 at 13:56 | Permalink

    best opportunity i see with rim is to buy their stock under 5 and hold old turkey style. RIM is fierce, they will come back as soon as they get out of their own way. RIM could start producing handsets with Android OS once they check egos at the curb. Market decides if BB OS is relevant in 4 years.

    Thumb up 0 Thumb down 0

  4. Posted February 3, 2012 at 15:25 | Permalink

    They are toast. the company’s top management has been in denial for too long. Developers continue to abandon their platform by the droves. Switching to a new OS (QNS/BBx or whatever it is called today) with C++ as the programming language would further drive away current developers who use Java and J2ME to write BB Apps. Corporates are holding off writing their internal apps on BB platform. Lack of developer interest, lack of apps, lack of devices that can stand a chance against iPhone and Android devices means doom, regardless of what they have for enterprises.

    It is time to start writing their obituary. They are not coming back.

    Thumb up 0 Thumb down 0

Post a Comment

You must be logged in to post a comment.