RIM: Divide (Yourself) and Conquer
A few years back I wrote an analysis piece on RIM (BlackBerry’s parent company) titled "Standing on the RIM (And Staring into the Abyss)" where I talked about the challenges facing what was then the US’s major supplier of smartphones. At that time I pointed to the challenges RIM faced from upstarts like Apple and Android both in the enterprise and consumer markets, the latter of which had grown to 60% of RIM’s sales. Consumer sales still dominate at BlackBerry, and they saw their market leadership surpassed by Android last year. Research firm comScore published their US smartphone market shares for the first quarter with RIM in second place with a 27.1% market share (down 4.5 percentage points from December) falling behind Android’s 34.7% and just ahead of Apple’s 25.5% share.
I spent most of last week at BlackBerry World, RIM’s annual industry event, and despite what you may have been reading in the trade press the company is far from dead. They are indeed challenged as the Friday before the event opened, RIM’s stock tumbled more than 13% to $49.16 on revised sales forecasts, and analysts at Jefferies & Co lowered their rating two notches to "underperform".
The company made several important announcements at the event, as you might expect, including a couple that were truly surprising that pointed to a new direction in the company. They also focused considerable attention on the recently introduced PlayBook tablet, and previewed several of the new TV ads that use the tagline “Powerful, Portable, PlayBook.”
The keynotes by co-CEOs Jim Balsillie and Mike Lazaridis were upbeat, and Mr. Lazaridis kept coming back to the term “uncompromising” to describe RIM’s products, and the PlayBook in particular; it was also a not very subtle dig at Apple’s continued refusal to support Flash on the iPAD.
Make no mistake about it, RIM is still a powerhouse with 17,500 employees worldwide and selling through 550 carriers in 170 countries. They have scale, resources, and amazing depth, but they can’t seem to shake the market perception that they are “stodgy.” That’s going to take a serious marketing push, and the chief marketing office, Keith Pardy, left the company “for personal reasons” in March after a two-year stint and on the eve of the PlayBook launch; he has not been replaced as yet.
Last Friday, Roger Baxter was appointed VP of brand and marketing communications replacing Paul Kalbfleisch whose title had been VP of brand creativity.
Announcements Evolutionary and Strategic
At the show RIM announced a successor for the high end Bold 9700 dubbed the Bold 9900 (there is also a 9930 for CDMA networks); those devices will ship this summer with the next generation BlackBerry 7.0 operating system. The new version is thinner and slightly wider allowing for a bigger keyboard. The form factor is similar to the current Bold (i.e. display over keyboard), but the big change is the display is now a touch screen. A 1.2 GHz processor in conjunction with the new operating system gives the touch screen excellent performance for pinch, stretch, and all of the familiar touch screen gymnastics. The have also included Near-Field Communications (NFC), but not LTE or WiMAX opting instead for the lower speed HSPA+ and EVDO Rev A.
There were a couple of surprising announcements that indicate a change in the mindset at RIM. First was the acquisition of Munich-based mobile device management (MDM) company ubitexx GmbH, whose product will now be integrated with the BlackBerry Enterprise Server (BES). Most importantly the ubitexx addition will allow BES customers to manage Apple iOS and Android-based devices along with BlackBerry’s through a “single pane of glass”. This is a major change for RIM (and one that many of us had been calling for) and signals that they realize there are other smartphones out there so if they are going to be an “enterprise mobility” company they should be looking at how to make money off those non-BlackBerry deployments. Of course this also puts them in competition with the other MDM vendors (and RIM partners) like AirWatch, Sybase, MobileIron, and Zenprise.
The other signs that RIM is starting to “get” the new dynamics of the market are products like BlackBerry Balance and BES Express, both supporting Bring Your Own Device (BYOD) initiatives. Recognizing that the corporate-responsible model for smartphone acquisition is no longer the rule in many organizations, BlackBerry Balance allows enterprises to manage and support corporate use (including remote wipe when an employee leaves) while leaving the rest of the data untouched. It allows the use of personal and business apps without compromising security and includes features to preclude forwarding corporate emails to personal accounts, blocking third-party applications access to corporate contacts and calendar entries, and other key security measures. The BES Express is essentially a lighter-duty BES (e.g. 75 versus 550+ security policies) for managing individual liable BlackBerry’s that works with personal as well as corporate data plans.
These initiatives may sound like “BlackBerry-lite,” but they are a major reversal of direction for a company that seemed to have been living in the past and counting on corporate-liable plans and “enhancing the BlackBerry experience” while ignoring the fact Rome was burning around them. I talked to a number of BlackBerry execs privately, and while they are frustrated that there message isn’t getting through; in short, they have “gotten the religion.”
When “Two” is Better Than “One”
All of this is important to enterprise users as RIM remains the only major smartphone vendor with a core focus on enterprise mobility. However, that focus seems to be diluted by the need to stay viable in the consumer business. For my money, RIM’s best move would be to split into two companies (or at least two major divisions) and focus on the consumer and enterprise markets separately. They would still have to decide how to address the dual-use model, but there are simply too many differences between the two segments to allow you to craft a single message that touches all the bases.
Conclusion
The new Bold 9900 a is good upgrade for BlackBerry loyalists, but RIM has always done well with users who favor good qwerty keyboards. Also the PlayBook runs like a racehorse, and will become an even more potent option this summer when they fill some of the embarrassing software gaps; they also plan additions that will make it useful to non-BlackBerry smartphones . They really need a refresh in the Torch touch screen line to keep up with iOS and Android.
The good news is that RIM seems to be coming to grips with the new realities, and they don’t intend to be a second tier player in the business they helped create. The key will be execution and they need to address marketing first and foremost. They’ve taken some important steps in opening up regarding non-BlackBerry devices, but they have to come to grips with how to deal with the differences between the consumer and enterprise segments. RIM faces some major challenges and Messrs Balsillie and Lazaridis may need to take some bold steps to get them back on track.