It used to be that smartphone users were either a BlackBerry devotee or an iOS idolater. Then along came a bevy of new Android-based smartphones, as well as enterprise IT departments rushing en masse to support their top executives’ favorite devices, many of which were Droids and iPhones. The situation created a consumer/enterprise divide that OEMs from Motorola to Apple are still trying to rectify.
To put it delicately, Research In Motion (RIM) over the past 24 months has had to reassess its approach. Perhaps more accurate would be to say that RIM is a company that is, by necessity, in the process of reinventing itself.
In the wake of this year’s BlackBerry World, the consensus on the company’s strategy seems to be that there is no consensus. Some say the company has stagnated, releasing antiquated devices to an audience that has already been wooed by 4-inch Super AMOLED touchscreens and vast application libraries. These people see a stiff OEM that has long catered to the suit and is now being strangled by the tie.
On the other hand, some say RIM is a company that has never failed to serve its devoted base and continues to do just that. The BlackBerry has as staunch a following as the iPhone, they argue, and while a play to address the consumer is probably unavoidable, RIM must protect the BlackBerry’s status as the device of choice for business users at all costs.
Of course, extreme minorities exist on both sides of the debate. Some predict impending irreversible doom for RIM. Others expect a resurgence and inevitable return to the glory of old.
THE STARK FACTS
One look at RIM’s most recent revised guidance, and the immediate effect it had on the company’s stock, reveals a deepening uneasiness on the part of investors and analysts. In the wake of lowering its forecasted diluted earnings per share for the first quarter from a range of $1.47-$1.55 to $1.30-$1.37, the company’s stock dropped almost 13 percent.
At the time of this writing, RIM’s stock price was lingering right around $43.33, in contrast to its 52-week high of just over $70 per share. To be fair, RIM has shown it can bounce back from such setbacks. The company rocketed to that $70 high from it 52-week low in September 2010 of $43.17.
According to the latest numbers from IDC, RIM controlled 14 percent of total smartphone market share in the first quarter of 2011. That’s down from 19.1 percent in the same quarter of 2010. Shipments increased from 10.6 million in the first quarter of 2010 to 13.9 million in the first quarter of 2011.
Taken as a whole, it’s not the prettiest of pictures but certainly nowhere near as dire as the situation in which Motorola found itself as it struggled to find its soul after the iPhone came along and made the RAZR look about as cutting edge as a rotary dial telephone. RIM undoubtedly has its work cut out for it, but it does have at least a few things going for it.
MIXED SIGNALS
While the BlackBerry may still maintain its place atop the enterprise pedestal as a bastion of quality and security, RIM is not above making big mistakes. The company’s first attempts to address the consumer market probably can be traced back to the original BlackBerry Storm, which turned out be the perfect storm of best intentions, which in the end paved the road to massive return rate for that device.
The company continues to make passes at the consumer market, each a bit more sophisticated and better executed, but RIM is still a company that daily appears more like it’s searching for a new identity.
Look at its recent spate of announcements. BlackBerry Balance, announced just last week at BlackBerry World, gives enterprise users the flexibility of being able to switch between personal and business environments. The PlayBook looks a lot like a consumer-focused media tablet but is inextricably linked to its enterprise-focused brethren, the BlackBerry smartphone, for 3G connectivity and email. Then there’s the company’s continuing adherence to its standard form factor, as was evidenced with the most recent Bold devices, both touchscreen devices, but still no too much of a stretch from previous devices.
There are times recently when the BlackBerry looks like its unsure whether it’s ready to party or stay late at the office, shuffling papers.
SOUL SEARCHING
Al Hilwa, program director for application development software research for IDC, says he’s not as pessimistic as some about RIM’s recent changes. In fact, he sees the company’s willingness to try new things as encouraging. “I think the best way to summarize them is that they’re a company in transition,” Hilwa says, “and you have to assess them upon that basis.”
Hilwa describes RIM’s PlayBook in terms of an experiment, giving the company points for “stepping outside its comfort zone.” He says that RIM is probably still thinking through its first tablet device and will undoubtedly be updating and adding features with future software updates.
“The Playbook experiment will get fixed as the device will get software updates over the next few months. The current state of the Playbook has gotten some rough reviews, but I think it is important to step back and think through what is happening here,” he says.
A lack of apps, you say? While admitting that RIM might have jumped the gun on releasing the PlayBook, Hilwa says RIM is actually doing an admirable job in facilitating development for the device. He says RIM is inviting as many development tools as possible on to its platform, including Flash, Java, C/C++, Android and game frameworks.
“This is really a universal application platform” he says, referring to the PlayBook’s QNX platform. “It truly has the potential to become the first open tablet platform.” Add to that the company’s promised virtual Android app player and you just might have a promising, BlackBerry-friendly slate.
So how does Hilwa view RIM’s progress in the consumer market? He says it’s important to refrain from drawing one very familiar comparison. “Apple, which obviously wasn’t an enterprise product when it was released, set a standard. No one believes that what Apple did is replicable. It’s not wise to set them up as an example,” Hilwa says, adding that RIM isn’t the only company that has had to scramble to deal with the many smartphone options available to consumers today.
PLATFORM-AGNOSTIC DEVICE MANAGEMENT
Samir Sakpal, program manager for the North American mobile & wireless group at Frost & Sullivan, says that RIM made the right move with its acquisition of Ubitexx, a mobile device management company that will eventually allow the company to provide platform-agnostic support on the BES.
Sakpal says that with IT departments now securely supporting so many devices other than BlackBerry, it’s imperative that RIM maintain its position for secure mobile device management. “Apart from the device business, I think BES has been the frontrunner for RIM, especially during its heyday and highly-competitive times,” Sakpal says.
Sakpal acknowledges that a platform-agnostic BES is a trade-off, which ultimately could lead to a few less devices shipped, but he stresses that there’s enough other options out there for device management that RIM just couldn’t drop the ball on this one.
“I think RIM’s timing is pretty good,” Sapkal says. “It definitely understands that it might start to lose subscriptions on the BES, not just here but globally.”
RIM is finally taking on some challenges deferred, and he’s optimistic about the way in which it’s tackling those challenges. Innovations like BlackBerry Balance, while long overdue, can only further solidify the company’s base, he says. Far from being aimed at the consumer market, Sapkal says that the ability for enterprise users to securely use their company-provided devices for personal tasks can only act to retain users who might otherwise be tempted by a Droid or an iPhone.
WILDCARDS
RIM has always been an enterprise-focused business and now the market demands that its devices act like and compete with wholly consumer-oriented entities. It’s a tough road for any company to readjust its smartphone strategy. The market moves so fast that at times it must feel a little like trying to build a raft while you’re already drowning in Class 5 rapids. RIM isn’t the only one that’s had to build that raft.
Microsoft is floating along at least reasonably well with Windows Phone 7. Nokia is in the midst of a major upheaval right now, also reorganizing around WP7. Samsung is probably the golden child at succeeding in the consumer smartphone market. The company’s mobile device business, in conjunction with its display unit, managed to buoy the first-quarter earnings. What’s interesting to note is that it did so on the back of a line of devices that are so closely modeled after the iPhone, Apple is actually suing Samsung for patent violations.
If RIM’s track record of innovation is any indication, it won’t have to follow Apple in lockstep. Aside from selling phones, RIM’s objectives are in stark contrast to Apple’s and it shipped at least 13 million devices this past quarter that will likely end up in as many hands who prefer BlackBerry over anything else. They want a BlackBerry. Whether they’ll want a PlayBook remains to be seen.
To be sure, RIM isn’t going anywhere anytime soon. Hilwa describes RIM as a company with “a lot of balls in the air.” The next 12 months, he says, are going to be critical. “What we’re seeing is a company that’s not used to some of the new things that they’re doing, but I think they’re going to pull it together in the next six to 12 months.”
