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Addressing Market Shifts or Why RIM is not down and out just yet

by Saeed Khan

If you’ve read anything about Blackberry maker Research in Motion (RIM) lately, it’s likely that the news has not been good.

Whether it was the underwhelming response to their Playbook tablet, the abruptly ended BBC interview by Co-CEO Mike Lazaridis, or the recent drops in RIM’s stock price, negative news seems to have a death grip on the company.

People are looking at the growth of iOS (Apple) and Android based phones, with RIM dropping to a distant 3rd in market share.

But in all of this doom and gloom, it’s too early to count RIM out,  and there are real lessons to learn about dealing with shifting markets and new competition against established players.

First, let me say that while I’m a big fan of RIM for a number of reasons, I don’t have any financial stake in RIM.  Second, I don’t have any “inside” information that I’m sharing. This post is an outside-in view of RIM, trying to look past all the noise in the news channels, and analyse the situation from a Product Manager’s viewpoint.

The market has changed

I remember when the first colour Blackberry’s were introduced. Wow. Nice screens and they got rid of the thumbwheel and replaced it with the trackball, which later became a small trackpad.  Those seemed like big changes for RIM.  But to state the obvious, Apple completely upended the game with smart phones, and for a while, RIM seems to have been caught snoozing.

RIM’s initial forays into more “iPhone”-like touchscreen phones were the Storm and the Torch. Neither met with major success. They were simply me-too products when compared to the iPhone, and poor ones at that.

But RIM is not simply a handset company. RIM provides infrastructure to both carriers and enterprises. For carriers, RIM provides billing services, secure and efficient email and data transmission, and device management services. For enterprises, RIM provides the Blackberry Enterprise Server (BES) for provisioning and managing the devices.

These are clear differentiators when compared to the iPhone or Android devices. They are why both carriers and enterprise IT favour the RIM devices. And these are the likely reasons why RIM did not react more quickly to the threat of consumer-oriented touch-based smart phones like the iPhone.

Battleships turn slowly

But RIM is changing, and while it may not be clear to all, the Playbook tablet is key to RIM’s transformation.

Sure, people are complaining about the Playbook, the lack of apps and email integration etc. But RIM is not in the tablet business. They’ll definitely sell their share of tablets, though nowhere close to what Apple with sell.

The reason that the Playbook is important is because it, and more specifically the QNX operating system it runs will be the foundation of the next generation of Blackberrys. This fact was announced last fall, though it seems little attention has been paid to it by the broader press.

In short, the Playbook is the lab, before the new Blackberry factory gets into gear. This is a critical point to keep in mind.  For established companies like RIM, change will rarely happen rapidly, given the technology, systems, processes, contracts and other business issues to deal with.

But then, are RIM’s customers demanding change overnight? How fast can RIM’s customers, mostly enterprises, consume any change? And at what cost? Would they trade off speed of delivery vs. stability, security and management? And if so, why?

These are some of the important question to ask when addressing significant market shifts.  And once you have the answers, a strategy can be put into place to manage the change.

The road ahead

There are still many challenges ahead for RIM.

  • They definitely need to get their new QNX based Blackberrys out soon, ideally in 2011 and NOT 2012.
  • They need to create, educate and grow a thriving 3rd party development community.
  • They need to acquire (or seriously partner with) mobile application or cloud service companies to provide differentiated capabilities for enterprise and business users
  • They need to provide incentives to existing customers who move to the new QNX Blackberrys vs. losing them to iPhone/Android handsets.
  • They need to show the market and investors that they are still an innovative company that can deliver rock solid products.

While the market will give Apple slack for things like AntennaGate, or taking a very long time to ship a white iPhone, it’s unlikely the same grace will be given to RIM. Let’s face it, Jim Balsillie is no Steve Jobs.

So, even though the market for smart phones has shifted, and forced RIM into a defensive position, it’s clear they have a plan and are executing on it. Given the storms RIM has weathered in the past, if history is any indicator, RIM will make the shift from old to new platform, despite the doom and gloom predicted by many pundits. It may never be as sexy as Apple, but then who is? But in the end, there is nothing wrong with a profitable, $20 Billion dollar company. 🙂


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