Why RIM Is Not Dead Yet

by Ben Bajarin   |   January 21st, 2013

2013-01-18T161117Z_1_CBRE90H18YX00_RTROPTP_2_US-RIM-SHARESI wanted to share some of my thoughts regarding RIM prior to them having their press event next week. I know there are many who have the opinion that RIM has been circling the drain for some time now and have counted out any rebound chances the company has. While I agree that the hills they face are steep, I am not ready to write their obituary yet. These are my reasons why.

The Sheer Size of the Mobile Market

When I give our platforms and ecosystems presentations to industry executives, investors, and at other public forums, the most common question I get when I talk about other platforms than the current dominant ones, is how many platforms can the market sustain. This is an extremely valid question, but it is one that I believe is asked with a backward looking view and not a forward looking view.

If we are using the PC industry as our example, then this question makes the most sense. There was one dominant platform—Microsoft—who owned the vast majority of platform share. If we look at the size of the market as well as where it was during along both the consumer adoption path and market maturity cycle, then we can explain quite a bit about why Microsoft was dominant, but also why at a certain point in time the door was open to other players. But the most relevant point on this topic was that during Microsoft’s dominance the market was both maturing, using Windows and more relevantly the Internet as the standard, but also not that large on a global scale. The market for PCs is in the hundreds of millions (and potentially shrinking) where the market for smartphones is in the billions. With such a large market it is easy to believe that a number of platform players can and will thrive as they carve out specific segments of the market to focus on.

As we are constantly observing, the one size fits all model simply doesn’t stand up in such a large consumer market and personal preference will only become more personal and specific to the end consumer the further down the adoption and maturity process that both smartphones and tablets go.

You Never Forget Your First Love

Our mobile market intelligence data continually points out positive sentiment toward RIM and the BlackBerry devices in particular. For many mobile professionals today, and even more millennials than you would think, they cut their proverbial smartphone teeth on BlackBerry devices. I can’t tell you how many times during our smartphone interview sessions with consumers we hear the words “I sure loved my BlackBerry.” Granted much of this sentiment was founded in the love of the BB keyboard that so many used for heavy text input. I believe we are past the point of the physical keyboard being desirable for the bigger sections of the market and we are yet to see what RIM intends to do with their hardware in this area. That being said, the level of positive sentiment toward BlackBerry devices is one that I do not believe can be discounted as I have a feeling that at the very least it will lead these consumers who share this sentiment to strongly consider BlackBerry’s new devices.

A Focused Opportunity

The opportunity staring RIM in the face is not the general mass market consumer, rather it is the mobile professional. A number of my colleagues in the field of industry analysis disagree with me and think RIM should go after the low end but I disagree. I feel RIM’s potential is the higher end. Many millions of global industry professionals switched to the iPhone from RIMs devices but also many millions still use them today.

Whenever I talk with folks still using RIM devices today, they acknowledge the fact that they are not the most cutting edge devices, but also point out that they are embedded into their workflow. Something that by itself is a key understanding. Just like how many professionals and corporate workplaces have come to standardize, depend, and are extremely comfortable with Windows and Office in their productive workflow. So are many of these same professionals committed and comfortable to RIM. These devices have helped them be successful and many have not changed yet for that very reason. Even though the iPhone and iOS is penetrating the workforce in rapid numbers I still think there is an opportunity for a second platform player focusing on the mobile professional. Android has not caught on largely due to security and Windows Phone is practically non-existent from current CIO surveys I have seen.

If RIM can bring to market a more modern and competitive solution targeting these individuals, I believe they can have a successful business by focusing on value to the high end on the front of hardware, software and services. Keep in mind this market may not be massive like the mass consumer market but I do believe it is lucrative.

Competitive Hardware and Software

This is the big IF. As I stated above targeting the mobile professional is the key but this hardware has to also be appealing from a consumer standpoint because these mobile professionals are also consumers at heart. So the saying goes “if you want to compete in enterprise, you have to compete for the consumers.” Its the BYOD effect in full swing.

RIM must bring competitive hardware to market. This was the root of Palm’s downfall in my opinion. webOS was an extremely competitive platform from an OS standpoint but the hardware was years behind. If RIM makes this mistake they will certainly go the unfortunate way of Palm.

Secondly the software experience must also be competitive and I don’t just mean a plethora of apps. I am becoming increasingly convinced that a solid list of quality applications is more important than a massive quantity of applications. I find every single app store shopping experience today much too cluttered and difficult to make decisions on which app to install or buy. See my thoughts on the paradox of choice for a more clear idea of what happens when we are faced with too many choices.

I’d rather have a much more curated app experience around the core things I do or applications I care about. By focusing on the mobile professional, this becomes a bit easier. Even Apple has begun to do this and smart platforms will take notice. Apple has many app essentials or app starter kits broken out by genre. This can be games, photography, productivity, social networking, etc., but when you look at these genre specific hubs you don’t see hundreds of apps you see dozens. These are highly curated and that is the point.

I am not downplaying the value of long tail applications, but what I am pointing out is that most consumers at best use 10-12 key applications regularly. They may download way more than that but regular use is much lower. This is why I believe that other platforms can come in with a segmented play and get the couple thousand or so most popular apps but then also begin to curate quality genre specific ones to the market segment they are focused on.

Of course for RIM, or any new platform entrant, there is a chicken and the egg scenario. To attract those key applications and keep attracting quality top tier applications, you need to acquire a critical mass. There is no if you build it they will come motto here. There is only if you sell tens of millions they will come motto. This is where the channel comes in and we will certainly see how serious the network operators are about wanting more platform choice.

I look forward to RIM’s event next week and to see whether it will alter my opinion on their future.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • FalKirk

    When we look at a platform war, we expect one platform to win out. In VCR’s, Betamax lost to VHS. In records, 78′s lost to 33 and 1/3′s (although 45′s stuck around to handle singles). In PCs, everybody lost out to Windows with the Mac hanging on at the niche alternative.

    But sometimes competing standards co-exist. We have both diesel fueled cars and petrol fueled cars. We have incandescent and fluorescent light bulbs. We currently have three viable console gaming systems. When multiple platforms succeed, one usually becomes the popular option and the other(s) becomes specialist(s) – niche performers, but a distinctive and important role to play.

    If one evaluates Windows Phone 7 and the upcoming Blackberry purely on their merits, they succeed. If one evaluates them in terms of being a third and/or fourth platform, I have my doubts. Microsoft has all the experience and power and money that a computing company could have and they have not been able to get any traction with Windows Phone 7. If Microsoft can’t break into mobile as a third platform, what chance does the resource starved RIM have of breaking in as a viable fourth platform?

    • benbajarin

      It will be about solving problems for the unique audience of mobile professionals, who like iOS but acknowledge from a professional and business standpoint, that they still have problems yet to be solved.

    • http://www.tumblr.com/blog/his-divine-shadow His Shadow

      Betamax lost to VHS.

      Yet Betamax was the de facto standard for high definition professional video recording well in the 2000s. “Losing” in the consumer space has come to mean (as far as too many hysterical tech analysts go) that a product or service has been obliterated and was utterly without merit. This is not something I am accusing you of, but you know from the “Mac vs PC” meme that this is how too many analysts regard the outcome of the “OS wars”.

      We know from the continued survival of the Mac, that these are not zero sum games.

      • steve_wildstrom

        His Shadow makes the common mistake of confusing Betamax with Beta. Betamax was a consumer format. Beta (or Betacam or Beta SP) is a professional format that dominated the business until displaced by digital tape and hard drives. It’s still around, though.

  • Rich

    I agree that because of hard-core loyalty among professional users, RIM can avoid going away, and I think pursuing the high end is the right strategy for them because that’s what will attract their faithful customers.

  • Bob_Egan

    RIM has a lot of cash in the bank, low debt and a new CEO who isn’t afraid to make tough decisions and stay focused. You’re right however that RIM does face the double edge sword of enticing consumers and the business user. Increasingly (but not always) they are one and the same.

    I think, few would argue that Iphone’s and Android are consumer first, business second devices. RIM would be foolish to go down market. It was part of the reason they’ve been unwinding in the first place. They’d be far better off making best in class, elegant devices that are business first that still provide a great consumer experience and building a solid eco-system.

    • benbajarin

      Thanks for the comment Bob. I agree, I know many business and professional customers who like iOS but acknowledge that they still have unique problems that re yet to be solved. I know I am in the same boat as a mobile professional. I think there is opportunity to focus on this segment and solve some unique problems for business customers but also appeal to their consumer needs as well.

    • capnbob67

      RIM has already gone downmarket in as much as a majority of its sales are cheap Curves being sold to kids/developing world buyers who can’t afford a data plan and use BBM/txt. Without these sales numbers, RIM would already be basically a service only company.
      BYOD is taking the enterprise by storm. I have several F50 clients where the BB is disappearing amazingly rapidly. With the fall in BB device numbers, the exorbitant corporate spend on BES is looking like an unnecessary luxury…

      RIM should try to claw back whatever it can in the enterprise world but it is a declining market outside of high-security applications which is a small and inadequate niche. I don’t believe that they will be able to turn back the tide via the IT department. Many companies are aggressively moving to BYOD as a cost cutting measure and then offering highly subsidized rate plans with preferred carriers. BB will not survive in that environment. On the low-end, there is at least a growing market for connected devices with some smarts but no large data plan (see BB Curve, Nokia Asha etc.) and BB should not ignore that market either.

  • awayBBL

    The problem… in this day and age, you can’t be a one product company in telecommunications.

    While BB10 has a built-in market of anxious users that may be willing to ditch BB7, I’d imagine they’d still be reluctant to switch without a few choices available. Some like the keyboard, so unless RIM announces something besides an all touch device, some will still hang on to their old devices.

    I use a 9810 as my main device since it has a keyboard when needed, and touch when not. I won’t switch until BB10 is running on a similar device.

  • Walt French

    Unmentioned elephant in the room: people loved their keyboards NOT because the keys felt great but because BlackBerry enabled high quality, very valuable communications at a time when nobody else did.

    Today, BBs offer even higher quality, very valuable communications, but every other device you have in your pocket does pretty damn well. But BBs are way uncompetitive with all the others in features, apps, media and ease of use beyond simple messaging.

    Some individuals and especially some IT shops hate the cost and hassles of change, so will continue to buy BlackBerry. But it’s really hard at this 5-years-too-late point to see how RIM does anything other than delay the inevitable

    • FalKirk

      Excellent insight, Walt. What people loved about Blackberry was the ability to communicate from anywhere using only their phone. Today, even the lowest cost phone allows that.

      Blackberry and its keyboard was the equivalent of a high-end car before the arrival of the model-T.

  • capnbob67

    It is a tricky one for RIM. The magic 8 ball says “all signs point to NO”.

    1. The market is enormous – far larger than that for PCs… BUT in all this amazing growth, RIM has only ever been able to get to 500M users (which Android and iOS have). People may share 80% of the same base apps but what makes their devices theirs is the 20% – that is the real personalization element. Without that, a platform is less satisfying for a user and also less worthy of a 2 year commitment

    I hope RIM does survive but I doubt it… little in the article convinces me otherwise.

    • FalKirk

      “Focus on Enterprise. It is a seriously collapsing market.” – capnbob67

      Good observation. I don’t think people realize how different today’s markets are from the one’s that we saw in the eighties and nineties. With the PC, businesses made the bulk of the purchases, therefore IT was the most important decision maker and consumers simply purchased the computer that they used at work.

      No more. I believe it’s been estimated that only 15% of today’s mobile purchases are made by IT. A strategy that focuses on winning in Enterprise first and consumer second is a strategy doomed to fail.

      • Rich

        John, I have to disagree in part. Remember that Microsoft is strong in the enterprise with products like Office, Dynamics CRM, and SQL Server. MS is dominant in that area and can be expected to remain so, independently of how much they’re missing the target in mobile.

        • capnbob

          Office is a large cash cow to be sure but Dynamics is small beer in CRM terms and SQL Server is a popular but niche IT product. MS can stay strong in these irrelevancies but it will be of no account as Apple adds more profit per quarter than MS makes revenue from all these marginal products. MS enterprise revenues are stagnant annuities. They won’t go bankrupt but they won’t grow like their consumer focused competitors will.

  • http://twitter.com/M_Gauche James King

    I think RIM has the capability to make a substantial comeback. The combination of QNX and TAT allows for an OS with the robustness and user experience that significantly exceeds current offerings. I’ve been keeping up with BB10 development and, IMO, it already exceeds Android in power, flexibility and user experience. The fact that it is also the most secure mobile platform by a long shot helps as well.

    I think what many people aren’t factoring is user fatigue with the current offerings. iOS is not developing at a particularly rapid pace and there are only so many ways Android can be packaged. Having seen BB10 in action along with numerous screenshots of the UI, it looks fresh and advanced. I’m of the mindset that most people purchase Android devices on price, so I think if RIM can offer the Z10 and X10 at competitive prices, people may decide to go with the fresh face.

    One factor being underestimated is that BB10 is truly an advanced platform. While webOS’s UI was state of the art, its reliance on web technologies made the platform very sluggish. However, QNX is extremely mature and robust and arguably more technologically sophisticated than iOS and Android. Its speed, multitasking and resource management will be far and away superior to the incumbents. I think people are going to be blown away when they see it in action.

    RIM seems to have really tried to create an integrated platform that offers superior options, from the developers to the consumers. I’m impressed with Heins leadership … he seems to have crafted a speed boat from a sinking ship. I’m excited to see how the market responds to BB10.

    • FalKirk

      “I think what many people aren’t factoring is user fatigue with the current offerings.”

      I definitely don’t think user fatigue is a factor. The iPhone is only 6 years old and most other offerings are newer. And most of the smartphone users are new to smartphones – their not fatigued by operating systems that they only became acquainted with in the past one or two years.

      • http://twitter.com/M_Gauche James King

        Obviously I can only speak for myself but I’m not pleased with the lack of diversity in smartphone operating systems. Neither Android, Windows Phone nor iOS particularly satisfies me at this point. I’m looking forward to the new offerings from RIM, Jolla and Ubuntu. I particularly like the QNX underpinnings and security of BB10 but Ubuntu seems really interesting as well.

        Maybe I’m generalizing but I think there are quite a few smartphone early adopters who are looking for something new; that’s a pretty sizable population. The need for comprehensive ecosystems will likely ensure that there are no more than three major players in the market but I’m hoping something fresh starts to get some mindshare.

        • capnbob

          If you can’t tell how outside the mainstream market you are by even being able to spell Ubuntu or Jolla you may be living In a (high tech) cave ;-)
          Only nerds are looking for something new. At best, normal people may look for something better and none of the jonnycomelatelys would satisfy that criterion for the vast majority of users.

          • http://twitter.com/M_Gauche James King

            I’m a fan of simplicity and user experience and I tend to think those things are universal. I’ve been pretty good at picking trends and popular products over the years so I don’t think I’m particularly detached from the mainstream. The Next Big Thing almost always comes from the fringe so I like to keep an eye out on the edges. The mass market tends to be the late adopters.

            It isn’t about what’s new but about what’s best. I think there is room for improvement in the smartphone experience and I’m hoping companies will continue to push the state-of-the-art. It’s a bit jaded to think that the current state of mobile is the best we can do.

            I’m a nerd but I also used to box and own guns as well. I don’t live in a box and like to think outside of them as well on occasion ;) There’s never any harm in wanting better products.

          • capnbob67

            Let’s meet back every 6 months or year and test your predictive power. I have no doubt that these other options will still be nowhere. Anything good they produce will be copied (which is its own benefit) and they will gain no meaningful market traction. Smartphones is a big boy game and none of these players have the wherewithal to succeed. If Samsung takes on any of these and commits its 10x everyone else marketing budget (instead of on Android), I’ll reconsider this.

            By definition the next big thing will not a touchscreen smartphone – that is the current big thing. BB10/Ubuntu/Jolla are just following the existing trend and tweaking. NBT may be wearable, additional device (watch + smartphone) etc. but not another touchscreen OS. Also, the mainstream are by definition the bulk middle adopters on the bell curve, not the late ones. Mainstream adoption is what makes a device successful not early adopters.

          • http://twitter.com/M_Gauche James King

            “By definition the next big thing will not a touchscreen smartphone – that is the current big thing.” – capnbob67

            I disagree with this point because software is constantly evolving. We haven’t scratched the surface of what software can do when it comes to changing the user experience. The iPhone couldn’t do a fraction of what could be done with Windows Mobile but the software and user experience made it seem light-years ahead.

            “Also, the mainstream are by definition the bulk middle adopters on the bell curve, not the late ones.” – capnbob67

            They are later than the early adopters for certain. This is mostly a semantical point. My main point was that by the time the mass market accepts a new technology it has already passed through a crucible of early users. These are the people who are most aware of technology and are generally FAR ahead of the mass market when it comes to identifying the next big thing.

            “Mainstream adoption is what makes a device successful not early adopters.” – capnbob67

            Its a symbiosis and pretty much a semantical point. I can easily argue the point that it is impossible for a product to succeed without early adopters.

          • JJ2oo

            Early adopters tend to get things wrong most of the time, they tend to choose things that don’t make it. Still that dosn’t matter, you say your a nerd and if that all the market RIM can get then they are dead, just like Palm. And everything points to that being the only demo interested in them.

        • DayDreamer

          ‘User Fatigue’ really? That indicates a need for new stimulie. Basing
          opinions of a UI on screenshots indicates hope over reason when in comes
          to reality. That indicates a certain mindset and age. Simply put your no ones target demo. Your not evan an early adopter. You will be disapointed. Sorry.

          • http://twitter.com/M_Gauche James King

            No, it indicates “fatigue” with the current user experiences due to inconsistencies. A great deal of science is performed to determine the optimal methods for user interaction when it comes to user interfaces and the major smartphone UIs fall very short.

            When I evaluate a technology, I do it objectively. My apologies if I am not sufficiently narrow-minded enough for you. I’m sure it’s good for your ego to be so certain about something but it indicates a certain mindset and age. As for not being anyone’s target demo, you’re definitely wrong about that … I’m willing to spend money on BB10 if the platform performs. That puts me in the best demographic of all … someone actually willing to spend money on a product in which I’m interested.

            To address a few of your pettier points:

            I can only work with the information I have, which are (numerous) videos of BB10′s UI and performance and screenshots. But I guess those things are posted for no reason?

            Nah, I won’t be disappointed. I don’t invest my ego in things like this. You on the other hand may want a hanky if RIM indeed makes a rebound.

            By the way, it’s spelled “even.” Sorry ;)

    • jfutral

      “I think RIM has the capability to make a substantial comeback”

      What is your definition of substantial? For a few years I was in your camp thinking it was too soon to count RIM out. This past year I’m inclined to think it is too late. Although I do think the consumer market is far more fickle than the enterprise. I really don’t think it would take much for even a new comer to change the smartphone market share landscape.

      Even though I lean toward postmodernism, this is where the Modern notion of waging war with tradition helps a company that is not afraid of destroying their past, strategically of course. That’s what Apple does well. They are not afraid of coming out with something that makes what they had before irrelevant. That’s why I think MS should go full bore with RT. Does RIM have a similar capacity?

      Joe

      • http://twitter.com/M_Gauche James King

        After seeing BB10, I’d say that RIM is at least trying. BB10 is familiar but radically different technologically than what RIM was offering. RIM seems to have tried to significantly overhaul every aspect of their software ecosystem … for instance, it went from having the most archaic software development tools to now having arguably the best and most versatile. I’m actually very astonished at the changes that its made in such a relatively short time frame. I’m not saying RIM will win, but I don’t think it will be from lack of effort or originality.