It’s Officially Over for RIM

I like to try and remain optimistic about companies because I realize that true innovation can often trump market trends and be a catalyst for growth. But since the the beginning of the year, I have been observing a growing list of evidence showing that RIMs time may be officially up.

The first bit of data came from a dozen or so different CIO interviews where more than 80% of the CIOs interviewed stated they were actively moving away from RIM and their enterprise server solutions. Many didn’t emphasize this point but 2012 was a contract year for more than 60% of RIMs enterprise server accounts. These contracts are generally done in two year increments and a majority came up for renewal in 2012. What many of these CIO interviews I read indicated was that most of those were not renewed.

In fact this downward trend may have been started when Good Technology launched their service which allowed BlackBerry server and the push email solution to go to other devices, namely Windows Mobile and Palm OS at the time. This way if a business was running on BlackBerry Server other non-RIM devices could access the service. In fact one of my business mentors, who was then at Kleiner Perkins, made the point that RIMs days may be numbered using the Good solution as an indicator. Even in those days, before the iPhone, enterprises saw the need to support a number of devices and not just one.

The other data point has been conversations I’ve been having with insiders in the telco space. From those conversations, and from casual conversations I’ve had with telco execs, it became clear that RIMs latest devices were among the lowest selling smartphones, even being surpassed by Windows Phone. The bottom line is the BlackBerry devices are suffering a negative momentum.

Today, in their earnings, RIM stated the following:

RIM said it sold 6.8 million phones overall versus 7.8 million last year. That includes older models. In the conference call, it said about 2.7 million new devices were Blackberry 10 models.

RIMs YoY decline continues and is dropping extremely fast. Given RIMs focus on enterprise sales, the seasonal boosts that come in Q4 has not benefitted RIM in years and I strongly doubt it will this year.

As much as I tried to remain positive for RIM it is time to officially say it is over. BlackBerry like Windows Phone needs time to be successful. There is a dominant duopoly of Android and iOS and I see nothing in the works that will change that anytime soon. RIM does not have the cash or the patience with investors to stick it out until a small, yet doubtful, opening appears to make a go at it. Microsoft does have the cash and the ability to be patient and wait for their market opportunity, should it arise.

An interesting thought exercise for RIM is a question raised by Ben Evans this morning on his blog after the RIM announcement. He stated:

It’s also interesting to ponder what would have happened if both companies had swallowed their pride and gone with Android, or even forked Android. I don’t actually think Blackberry would be in a better position, but Nokia might have been.

This is an interesting question and I agree with him that I don’t think going Android would have saved RIM. Nokia could definitely have faired better but what I think is fascinating about Android is that by committing to Google there is no guarantee of success. With a host of failed Android devices on the market, it proves that simply going Android is not the answer. All of this points out how very difficult it is to compete in the most cut throat business of telecommunications.

It is only a matter of time now for RIM and the real question is who does their exit from the landscape benefit most. I believe it benefits Apple the most and Windows Phone second.