RIM’s Future On the Edge

Research In Motion had a tough 2011 and faces bigger challenges in 2012. The company’s BlackBerry device was the iconic smartphone for much of the last decade, at one point commanding almost 50 percent of the U.S. smartphone market and nicknamed “CrackBerry" because of its heavy use among users. It was unquestionably the smartphone standard for corporate America. However, as corporations have embraced the flashier iPhone and Android devices, and consumers increasingly use their smartphones for more than just email and voice calls, the limitations of the BlackBerry devices – and failed attempts at comparable devices – have pushed RIM to a distant third in terms of U.S. market share, and is falling fast.

The BlackBerry became the dominant smartphone in 2007, when its market share surpassed that of the previous market leader, Palm. Even with the introduction of the iPhone later that year, RIM continued to gain market share, and still made up 44 percent of smartphone sales in 2009 – far more than Apple’s 24 percent or Android’s nine percent. The tide turned in 2010 when RIM devices made up only 25 percent of U.S. smartphone sales, and continued to decline, falling to just 10 percent of sales over the first three quarters of 2011. RIM’s struggles were compounded by the decisive failure of its tablet, the PlayBook, and a highly publicized, multiday outage of its messaging and email services, which cut at the core of the RIM’s value proposition of security and reliability.

As a result of its terrible showing in 2011, the company, once worth over $70B, now has a market cap of under $9B. Set on finding new direction, RIM recently instituted a dramatic change in leadership, and appointed Thorsten Heins the new CEO. Heins insists that a dramatic change within RIM is not necessary, but that BlackBerry must look beyond its traditional corporate customers, saying, "I want us to have a bit more of an ear towards the consumer market, understand trends, and not just do what the Street is telling you." As a company that made its reputation in the enterprise market, this seems a fairly dramatic shift. The only evidence so far as to how this strategy may fare is an unofficial campaign that presents four animated superheroes that make up the “Bold Team."  Granted, this is not an “official" ad campaign, but it seems a weak start and has been (rightfully) lambasted for being out of touch; not only does this seem to target much younger consumers, who are certainly not going to give up the rich media experience of an Apple or Android device for the practical functionality of a BlackBerry, but the name references the BlackBerry Bold, which is thoroughly outdated. 

BlackBerry’s limited capability has been its downfall. Out of the gate, the iPhone and Android devices performed seemingly non business critical functions – like mapping and Web browsing – far better than the BlackBerry, but were regarded as weaker in core business-related functionality. However, as customers were exposed to these secondary functions they realized how useful they were to doing business; a map with traffic tells you if you need to leave early for a meeting, and a good Web browser allows you to read the latest news when you have down time. Furthermore, the countless applications that are now available on the iPhone and Android platform enable the phones to do specialized business functions that the BlackBerry could not. Over time, more business applications have emerged in the Apple and Android marketplaces, bypassing BlackBerry functionality. RIM is banking on the BlackBerry 10 to be its salvation, but it is currently not slated for release until late this year, which means many months of dwindling sales and diminishing relevance, and topped off by an iPhone 5 release. I agree with the viewpoint among some analysts that it may be too little, too late. One thing is certain: If it does not offer real advantages to business customers that make it stand out from the more consumer-focused competitors and their growing libraries of business applications, it will not stand a chance. 

Fedor Smith is president of ATLANTIC-ACM , a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for ATLANTIC-ACM, where he oversees proprietary projects as well as the firm's Carrier Report Card series, which serves as the telecommunications industry's principle source of benchmarking tools.