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Strategy and analysis about mobile, smartphones, tablets and connected experiences

RIM’s Woes: Create smartphone communicators (FaceBerry?), do not copy others’ playbooks

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BlackBerry-maker RIM is struggling following some terrible recent results. It’s now under pressure to hasten the launch of next generation BlackBerry smartphones.

RIM must resist and instead execute better.

The most shocking part of those results was the performance of the PlayBook tablet. Just 200,000 shipped in its second quarter on sale, under half the 500,000 in its first quarter.  This has scared observers as the PlayBook is RIM’s first next generation product of many in a major product transition that will transform RIM’s entire range. The PlayBook is built on the same QNX OS foundation that will power future BlackBerry smartphones.

The PlayBook’s failure clearly demonstrates why speed of delivery, at the expense of quality execution, is the wrong strategy for RIM now despite the pressure:

  • The Playbook attempted to go head to head with the iPad by focusing on a media-centric experience, with Flash support, video output to a TV set and elegant multitasking. This diversification spread RIM’s R&D efforts too thin for a company attempting to do three major things: defend its core markets; evolve its old product range; as well as building a completely new set of products using QNX OS.
  • RIM failed to appeal to its existing communication-centric customers. For corporates, the PlayBook lacked integration with BES and any native email capability. For young consumers, typically Curve owners, the PlayBook lacked BlackBerry Messenger.

The drop in RIM’s overall device shipments isn’t surprising and shouldn’t lead to a change in strategy. While quarterly device shipments were 10.6 million, down 1.5 million from the equivalent quarter in 2010, they were 2.3 million higher than the same quarter in 2009. RIM remains profitable. In the circumstances, given the complete product portfolio-wide transition that RIM’s largest customers — operators and enterprises — know is about to happen this is a pretty good holding action.

RIM is about to start a major product transition from smartphones based on an evolution of the original BlackBerry software to the new QNX phone operating system that also powers the PlayBook tablet. These kinds of product transitions are hard to do, are always risky, and always threaten to undercut sales of old generation products. Analogous product switches show how hard it is to do:

  • Nokia’s decision to switch to Windows Phone 7 as its smartphone OS, from Symbian, has led to a horrific fall in handset shipments: from 109 million to 72 million in a single quarter. Nokia’s shipments were down 35% year on year.
  • Apple sunk enormous resources into porting Mac OS classic from 680xx chips to PowerPC in 1992-4 and their next generation Copland operating system stagnated and was finally cancelled. Eventually Apple bought Next and built OS X from that foundation instead.
  • Apple’s OS X first launched in 2000 but without key features such as DVD playback. Only with the release of Panther in 2003 was the system both feature complete and delivering optimised performance.
  • Palm’s next generation WebOS struggled to establish itself from the launch in 2009. The company lacked the resources to develop the system fast enough and was bought by HP in Spring 2010. Last month HP cancelled all WebOS hardware. Palm’s original successor to its classic OS, the Access Linux Platform failed even to get that far.
  • IBM’s successor to the original PC system, DOS, failed. OS/2 was cancelled in the mid 1990s despite the backing of one of the largest companies in the world.

RIM’s Strategy Must Play to BlackBerry Strengths, Not Mimic Someone Else’s Playbook

If RIM is to stay in the smartphone market there are two lines of analysis to pursue to build a solid strategy:

  • Look at where RIM’s existing products are strong and look to fortify, extend and improve those areas.
  • Seek to counter competitors by delivering strong product features where those rivals are weak.

In both analyses, RIM’s expertise in communication is a clear differentiator:

  • BlackBerry remains the key smartphone used by young consumers. In the UK, 37% of smartphone users aged 12-24 have a BlackBerry (Source: Ofcom). This dwarfs all other smartphone brands. Among this group, it’s BlackBerry Messenger that remains the major draw and one where no rival smartphone platform has a widely adopted equivalent, although Apple’s iMessage aspires to do it in iOS version 5. Android and Windows Phone owners must rely on third party apps like Whatsup to try to replicate the BBM experience.
  • Android, iOS and Windows Phone all deliver barely good enough communication features. They’re certainly not best in class. Android delivers an uneven email experience for all those not using Gmail and has haphazard social network integration that depends on each OEM’s custom software UI. iOS has weak social network integration combined with a sub-par calendaring experience. Windows Phone has the potential to deliver the most integrated communication experience of any but has weak third party support which Microsoft needs to tie in the numerous other communication sites.

Bottom Line: Communication. Communication. Communication.

No one buys a smartphone for a best in class phone experience: Dumb phones deliver better battery life, usually better signal reception, and often a better phone app with more features and less extraneous buttons.

But every smartphone owner uses their phone as a major communication tool and almost every smartphone owner cares about how well their phone makes phone calls. Other smartphone makers have become distracted by apps, Internet and media and left this mass mass mobile market for communication poorly served. Nokia has even forgotten the rather wonderful “Communicator” branding in its rush to do music, maps, video, photography, games, apps and anything but communication features.

Apps and media are a much harder marketing battleground in which to fight and one where, unlike communication, RIM faces an uphill battle against rivals with much stronger starting points and a reputation for outstanding developer support. The PlayBook shows this problem. Microsoft’s vast spending around Windows Phone show how even a vast software firm is struggling to compete with Apple on apps. RIM can’t excel here, instead it needs to make sure next generation BlackBerry models are good enough.

Instead, RIM has a tremendous opportunity to build the best smartphone for communicating with friends, colleagues and customers bar none and truly differentiate.

Written by Ian Fogg

September 22, 2011 at 2:39 pm

8 Responses

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  1. Good points, well made!

    I’m not a fan of BlackBerries myself – I find them unbearably clunky – so I don’t understand the allure of BBM – but it’s definitely there.

    But saying that, I moved from the labouring, starting-to-feel-very-clunky Symbian S60 v2 to Android and it’s like a revelation. But on the other hand, I don’t like my HTC Desire HD’s hardware very much. On-screen text entry is /painful/, the battery life is woeful & it’s a pain to use one-handed. I really miss the hardware of my E90 Communicator.

    I really feel that if Nokia and RIM just try to copy the iPhone and Android-style hardware – large touchscreen phones – that they are attacking their enemy right where the enemy is strongest, which is, strategically speaking, insanely foolish. Nokia doesn’t even have unique software to differentiate it any more.

    I’ve been impressed by QNX since their single-floppy Internet-access demo disk in the late 1990s. I’ve not played with a Playbook but the software looks and sounds gorgeous, a world away from the BlackBerry OS.

    If RIM can produce – and innovate with – keyboard-driven touchscreen handsets with the features of the BlackBerry but the polish of the Playbook OS, it could be onto a winner. I might even consider switching myself.

    But right now, I want a Nokia Communicator running Android. The spec of a modern HTC in the E90′s casing, with an internal-only touchscreen, please!

    lproven

    September 22, 2011 at 4:48 pm

    • I really feel that if Nokia and RIM just try to copy the iPhone and Android-style hardware – large touchscreen phones – that they are attacking their enemy right where the enemy is strongest, which is, strategically speaking, insanely foolish

      The TouchPad is a great example of that. As an iPad competitor, it was deservedly blown out of the water. As a micro-netbook to appeal to people like me, with no app-store lockin and easy access to software running open protocols, it’s superb. (Hint: making devices to appeal to me is not a way to succeed in the marketplace.)

      RIM is rapidly becoming the Microsoft of the mobile market: it shifts volume because corporate buyers issue it to other people, not because people choose it.

      RogerBW

      September 22, 2011 at 5:27 pm

      • RIM is rapidly becoming the Microsoft of the mobile market: it shifts volume because corporate buyers issue it to other people, not because people choose it.

        In the enterprise, yes this is broadly right. People often have to use what they’re given. Although even here Android and iOS are threatening RIM.

        In the consumer market, it’s not true, especially among those young BBM-using, Curve-toting, teens and twenty-somethings. See the stats from my original post on the massive adoption among that demographic. For them, there’s a twin appeal of BlackBerry being significantly lower cost than the iPhone and the lock-in of communicating with friends using the proprietary BBM. Android lacks the former problem, of course, so even here RIM is under pressure.

        Ian Fogg

        September 23, 2011 at 10:44 am

    • If RIM can produce – and innovate with – keyboard-driven touchscreen handsets with the features of the BlackBerry but the polish of the Playbook OS, it could be onto a winner. I might even consider switching myself.

      But right now, I want a Nokia Communicator running Android. The spec of a modern HTC in the E90′s casing, with an internal-only touchscreen, please!

      There’s absolutely an opportunity for that form factor for RIM. Android device makers have largely given up that design in Europe. HTC’s efforts — the Desire Z and Cha Cha — have been pretty half-hearted. Both Motorola and LG have built some good sideways slider qwerty Androids, but they’ve been aimed at the North American market.

      Handset makers have to convince European carriers that that design has appeal in Europe. RIM is well-placed to be the OEM that succeeds in persuading European operators due to their heritage.

      Ian Fogg

      September 23, 2011 at 10:49 am

  2. There are three types of people who buy a blackberry, and I fall into all of them:
    - business person who wants push email
    - bbm addict
    - techie who likes keyboarded devices

    You’re right that noone buys a phone to be a phone anymore (if they did, they’d pick up a drug dealer phone for a tenner…). Blackberries lack a lot of apps, but they get the core functionality I want in a smartphone absolutely spot on, which is to say it’s smooth and unbuggy as an interface and has twitter integrated properly. Other things like search are quite timesaving, but ultimately you get a blackberry because you want a blackberry and they’re a fairly narrowly focused device on the three markets I listed above.

    Playbook is interesting, I own one. I’m ambivalent on the email thing, because by pairing my crackberry with my playbook, I read my email and then when I unpair, my email is gone and not readable by anyone who should pick up my playbook (making it ideal for leaving around the office without a screen lock, or indeed for sharing a few across an office, should the muse be there for a company). The actual device is pretty damn good and it’s pretty intuitive to use — more than I’ve ever felt the ipad to be. Fundamentally the problems with the device are development related. RIM only released the AIR SDK for playbook, so you have to use adobe AIR to develop apps for it (well, now you have webworks which allows you to use html5, but it still sits on AIR underneath). There’s been mooting about providing java and c++ SDKs, which would allow a much broader range of more powerful apps to be ported to the playbook and would mean some pretty damn cool things could be achieved, but as yet they’re still ‘nearly out’ (they never did get back to me about my application to try the C++ SDK)

    Moving to QNX is a move that will save RIM, but they need to sort the SDK stuff out first. They also need to come up with some compatibility system so that old blackberry apps will just work on the new QNX based phones.

    Separately, RIM also needs to get with the times and realise that you can’t charge 25 quid a month to integrate exchange email. Not everyone who uses exchange is a business that can justify the cost, and frankly it’s taking the piss to charge so much. And they need to smoothen up the experience of their twitter client.

    • Agree. QNX is vital for RIM’s future. Without it, RIM will just be managing the decline of the BlackBerry and average sales revenue per device will continue to fall.

      The app story is important. RIM needs to improve the developer options for QNX but they are caught between multiple routes:
      1. Encourage the creation of designed-for-QNX apps that are tailored to RIM’s devices.
      2. Help old BlackBerry apps work. I think this is less important: Theses apps won’t look or sound great on the new devices and there really aren’t that many really wonderful existing BlackBerry apps.
      3. Leverage compatibility with other devices. RIM aims to support Android apps on QNX. This will boost app numbers but not quality.

      This isn’t an easy choice for RIM. The truth is RIM are too small to do just #1 and executing on #2 or #3 will reduce the number of app developers creating tailored for RIM apps.

      This is why I don’t think RIM can excel on apps. They need to be “good enough” on apps and then differentiate in other areas — such as communication — where they are strong compared with their competitors.

      Ian Fogg

      September 26, 2011 at 7:38 pm

  3. [...] has to differentiate elsewhere with content, experience and business models. Otherwise it will suffer the same fate as RIM’s [...]

  4. [...] has to differentiate elsewhere with content, experience and business models. Otherwise it will suffer the same fate as RIM’s [...]


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