In the world of iOS and Android domination in the smart phone space, I am often referred to as a Luddite for my unwavering support of RIM and their Blackberry product.
I can claim a tenuous thread of objectivity having owned an iPhone 4 for the mighty tenure of 3 months, before handing it over to my wife for 4 main reasons:
- Poor battery life - I read all the blogs and did what they said, but
- The soft keyboard with which I could not make friends
- A bluetooth facility that took over a mile to negotiate with my car
- Dropped and poor quality voice calls
Admittedly, I am mainly a business user and the main demands of my phone are based upon telephone features and email.
Nevertheless, I still remain in awe at how Apple could have the word 'phone' in the name of their product, which is far from being a decent phone - I believe that Voda
fone was so-named as their product was not a real 'phone'; it didn't have wires. Hence 'fone'.
I will not be discussing the matter of the iFone 5 here, but the gears are whirring away as to what I think of how 'map-gate' has occurred. More on this another time.
So, without further ado, on to the topic of this post. Blackberry.
RIM. Oh what a tragic fall from grace. But not, in my opinion, necessarily into a rocky grave. Some say RIM and the Blackberry is heading terminally towards oblivion, but I don't think it's that straight forward.
RIM's not just about the Blackberry handset, it's the global infrastructure too - Blackberry Internet Service and Blackberry Enterprise Service. Those are just some examples of where its value/equity sits. It's also got an enormous teenage, some say cult, following - there is tremendous value in that, and in spite of the global doom-makers prophecies, these teenagers (and those with iOS and Android) will enter the workplace, and they will bring smart phone baggage with them that will continuously re-shape how we work and what we like.
I think one of two things will happen to RIM:
- Renaissance: The BB10 platform will become the miracle tonic that starts a 3-5 year return to critical mass (20-25% in 5 years would be my guess) - BB is currently about 5% (Src.: IDC)
- Acquisition: RIM is acquired outright and its value stripped and re-packaged by its new owner.
Firstly, let's be positive and look at the renaissance option.
The first critical success factor is that BB10 devices must be in stores by the end January in my opinion. Why is Q1 not good enough I hear you ask? The answer in simple - Q1 reporting must be based on at least one full month's shipping data for it to be credible. Furthermore, having already missed Christmas, anything later that January is potentially going to fall in a doldrums period (February and March).
There are a few other things that RIM needs to get right, and arguably the script is already written here:
- Battery: Battery life for the devices has got to be good.
- Build: Build-quality must be to the PlayBook standard.
- User experience: The platform experience must be unique, but support many of the characteristics that have made Android and iOS such a hit - gestures and the like.
- Developer API's: The developer aspect of the platform has got to be transformational.
Of the 4 'get-right' points, the one which is in the lap of the gods is the fourth - Developer API's. The reason for this comes down to a couple of things:
- Getting Developers to support the platform - it comes down to the old adage of being able to take the horse to water, but not being able to make it drink.
- Momentum - getting enough developers to develop sufficient applications to reach critical mass in a relatively short period of time; there's a lot of catching up to be done.
They seem to be going in the right direction, at least on paper, with a portfolio of features in the platform that should keep developers happy and hopefully bring users back to the platform. The WSJ has a good over view here
BB 10 Developer Support
There's one final area that RIM and Blackberry need to get right - ecosystem integration.
Now, I'm not suggesting that RIM develop something akin to iTunes to facilitate cross platform working, but something simpler like a hook up with Spotify (for music), Flickr (for photos) and Dropbox (for cloud storage) could provide an effective 'best of breed' strategy for building out an ecosystem. Maybe they could call it Darwin.
The other point, which I think is interesting, is the potential that RIM could license the Blackberry platform ... meaning that the likes of Huawei, Samsung and HTC could run it instead of Android based equivalents.
Just like the Titanic hit an iceberg, RIM has hit a lethal object of its own - an ambitious, innovative competition. But unlike the crew of the Titanic who didn't think to use the iceberg as a life-rafe, I wonder whether RIM can somehow use its competition as a life-line, through platform licensing.
This would create an interesting dynamic around the Blackberry handset side of RIM's business. However, as time goes on, as much as Apple probably don't like to believe it, the smart-phone space will become less about the packaging around the platform [the handset] and more about the platform itself. Manufacturers lie Karbonn (India) have it all to play for - here's one of their offerings, the
A-18, with 32GB. It costs the equivalent of £150! A 32GB iPhone 5 will cost you about £599.
Now, onto the acquisition scenario, or should I say scenarios.
There are three viable options in this space, should RIM fail in its renaissance.
- Option 1: RIM is acquired before BB10 is release. This will not happen. Nobody will make a purchase without first seeing what RIM's got under the silk cloth and the rate at which it is sold in the first full month of release.
- Option 2: An emerging player, like Huawei or Karbonn, in the handset market buys RIM and bolsters its own capability. Imagine Huawei owning RIM's global BES & BIS infrastructure; I'll leave you to ponder that one.
- Option 3: There's a fire-sale of infrastructure, platform and handset/tablet IPR and assets to a variety of bidders.
Either way, if this is the option that plays out, we will know some time in [calendar] Q2 2013. By this time, RIM will be worth something, or nothing (or less, including its debt).
The main problem that RIM faces is who would want to buy them and for what reason. There's an interesting article by BGR
here.
- From a handset perspective, everybody's fairly well sorted - I also refer back to my earlier comment about the platform, rather than the device being the key area.
- When you look at BES and BIS, with the advent of advanced IaaS and PaaS offerings, RIM's dedicated infrastructure is diminishing in its value - the fact that RIM has twice in the past 14 months shown that it's not resilient further erodes its value.
- BYOD - the bring your own device trend has a considerable undermining effect on the Blackberry Enterprise Service (BES), and there is no evidence this is slowing down.
When you look at it this way, without the subscriber numbers and a strong and devoted developer following, RIM's balance sheet looks decidedly weak.
The relatively fresh board of RIM will know this and I regard Thorsten Heins' humility and 'back to basics' attitude as laudable. His
recent address at a press conference was a good example of his measured approach to turning around this abused and neglected vessel. Stating an ambition to be number 3 has a welcoming lack of hubris, compared to the old guard at RIM.
So, what's the conclusion? Well, it really is sink or swim. For RIM, there is no middle ground. They will either succeed, but it will take 3-5 nervous years of sustained innovation, or they will hit the wall at such speed there will be nothing left.
Oh, just one more thing ... ;-)
Nokia and Windows Mobile 8. I don't think the converging nature of smart phone usage can sustain 4 platforms: iOS, Android, WM, BB. I don't think developer communities can be that cross platform.
It's between Windows Mobile and Blackberry.
I'm staying tuned ...
