The BlackBerry Disadvantage

I AM CANADIAN!

For those of you who didn’t know, I am a very proud Canadian (and, incidentally, a Kick Ass Canadian to boot) so it pains me to hear the way some in the mobile and technology community roast our largest technology company, Research In Motion – you know, the guys that pioneered the whole email wherever I go thing.

I’m really not one to defend RIM either – they have had a number of missteps along the way that have caught them on their heels but they are still #2 in active devices and, quarter after quarter, they consistently grow their user base. This industry is different from when they invented the BlackBerry and they are absolutely at a disadvantage when it comes to the competition but not entirely because of their hardware or operating system or the terrible mobile web experience.

The sole provider

RIM sells BlackBerry’s and soon, RIM will sell their tablet, the Playbook. RIM sells their BES platform and CALs for their BES platform. That’s it. Roughly all of their revenue comes from hardware sales, software licenses and premium support agreements (with some gravy from AppWorld). Give or take, that’s it. That is their disadvantage.

Apple was born from PCs, has a line of successful laptops, owns the MP3 market, has sold 50 million iPhones and 17 million iPads. Apple generates $1 billion per quarter from iTunes and $3+ billion in retail revenue from their stores.

Microsoft has multiple billion dollar products from Windows to Office to Servers and databases to games and consoles – just to name a few.

Google is the worlds largest and most successful search engine and advertising company with a reach into every household on the Internet.

The difference is in the difference

The advantage these other companies have is that mobile – hardware and software – is not their sole source of income. They are in a position where the other lines of business can offset their mobile initiatives until they become profitable. In essence they have time and play money.

RIM made the move from enterprise to consumer and it worked for them and, with their move into the tablet space with the QNX operating system, they are starting to diversify and that can only help. Relying on a single product line for all their revenue for so long has been to their disadvantage and they are finally realizing that in order to compete with companies whose revenue is spread across multiple products or businesses they need to do the same.

Netbooks and beyond

There is one rumour that I’ve heard in the past number of days that RIM is looking at building out additional hardware, bolstered by their recent QNX and TAT acquisitions. This makes sense if they are to continue to compete with the likes of Apple, Microsoft and Google – they need to generate revenue with other products by creating additional value to their current install base – this is not rocket science and there are lots of companies where the BlackBerry is embedded. My only wish would be that they innovate and not do what they’ve done so many times since the iPhone was released – duplicate.

I’m not as down on RIM as other analysts. Writing them off seems premature. They just don’t have the years behind them an Apple or Microsoft do – both from a product and organizational standpoint. Think of this stage as RIM’s awkward adolescence and whether they grow out of the blemishes is entirely up to the leadership, vision and execution.

I never said it would be easy…

About the author

Rob Woodbridge

I'm Rob, the founder of UNTETHER.tv and I've spent 14 years immersed in the mobile and pervasive computing world. During this great time I've helped some of the most innovative companies grow their business through mobile. If you are in need of a mobile business advisor or coach, connect with me here to get things rolling.

  • Pingback: Quora()

  • JLX

    While RIM has fallen behind, I also have faith that they will get back up to speed. Not blind faith, it’s their many recent acquisitions that lead me to believe they do see the situation clearly and are buying up the expertise to address their shortcomings:. Look at all their recent purchases:

    Their browser sucks – They buy Torch.

    Their image of boring/business vs. funky/consumer – They buy TAT

    Their OS is dated – They buy QNX

    Their lack of applications – They bring staples like Viigo and DataViz (Docs2Go) in-house.

    Limited developer support – Their new TabletOS (QNX) supports FLEX/AIR as well as WebWorks to tap into a large installed base of existing developers as well as the Java & C++ guys. Not to mention giving away free Playbooks to bait early tablet devs.

    They’re also continuing to further establish themselves international markets where iOS/Android don’t have nearly the presence they do in America.

    So, as I see it, they’re making the right moves. Writing them off is just giving in to media hype and short sighted IMHO. However, their biggest challenge isn’t WHAT, it’s WHEN! It feels to me like their turning a battleship that’s drifted off course – they don’t turn on a dime. This stuff takes time and unfortunately RIM doesn’t exactly have a reputation for being particularly speedy.

    Here’s hoping the fire they seem to have wisely lit under their own ass is hot enough 😉

    Just my $0.02.

  • Interesting post Rob, I like your take on the situation. From an end user’s perspective, the disadvantage that you say RIM has could actually be seen as an advantage.

    As a user I would prefer to use a smartphone where the maker of the software and hardware is fully focused on mobile, rather than having their true focus elsewhere. Apple seems pretty focused on iOS, but can the same be said of Microsoft with Windows Phone 7 and Google with Android? If either Microsoft or Google’s main business lines run into trouble, they are likely going to shift resources from mobile to Microsoft Windows/Office and to Google Search and leave their mobile operations to wither.

    At least with RIM the product they are selling is the phone/services to the consumer/enterprise. Google on the other hand is more interested in selling the user to advertisers. Knowing the company that builds and supports your smartphone is fully invested in the product line is comforting and instills confidence that they have your best interests in mind.

  • Hi Will – thanks for your comments on this. You are spot on with regards to Google. When your whole incentive to sell phones is to be a provider of advertising (as is the case for Google) you run the risk of not servicing the client needs if they are in conflict of the advertising needs.

    Android is so splintered at this point that they are on the Windows Mobile path that Microsoft went down before they retooled. Plus, who do you call at Google to get answers about Android? However, the fact they have a revenue stream that really has no limit, they do have an advantage over RIM and seem to be focused squarely on mobile.

    When it comes to Apple and Microsoft – there is no doubt they are focused on mobile but the point is they are not (currently) relying on it for all their revenue. This gives them a “cushion” to make mistakes that RIM might not have.

    I see RIM moving down this path – multiple revenue streams – which is great. Diversification will allow them to tap into markets they currently can’t and should help expand their phone market as well.

  • I hope you are right about RIM getting into more devices with the QNX/Tablet OS/TAT teams, I can’t wait to get a PlayBook.

  • Rob, I think new hardware is one avenue. I wrote before on this.(http://blogs.picpacwrack.net/2011/02/does-rim-have-innovators-dilemma.html). In short RIM has tremendous leverage that is under used, mainly relationships with Carriers around the world. They also have an extreme understanding of security beyond email. And last they also understand optimisation like no one else. All the above I believe are ways to diversify. They could sell security to enterprise for mobile platforms, look at Juniper’s latest acquisition. With their optimisation know-how, RIM is like the japanese car manufacturers with their small cars before the oil crisis of the 70ies. Bandwidth requirements are going through the roof, I believe RIM has magic it can resell there. It’s about building the BU and going to market, they have assets to diversify beyond the handsets.

  • Pingback: Will RIM’s rebranding lead to a quicker acquisition? | UNTETHER.tv()

/* ]]> */