It has not been a good year (or three) for Research In Motion. Last week, to focus on the most recent missteps first, RIM’s core BlackBerry service catastrophically collapsed in Europe, parts of the Middle East, and Africa. Friday, RIM’s CEO Mike Lazaridis issued a pretty personal apology for the error. Yesterday RIM compensated its users for the service failure with $100 worth of apps. Today, RIM’s developer conference begins. Clearly RIM needs to get itself properly in motion and heading in the right direction. Otherwise, a Nokia-like fate awaits the company.
Before peering ahead, let’s refresh what has happened so far. When I got my first edition BlackBerry, it meant that at a critical time when the company I was working for was approaching an IPO, I had an amazingly reliable way to communicate with my office on the move, access my data, and it enabled my then-CEO to email me at 7 a.m., knowing I’d get the email, then call me at 9 a.m. and check on progress. It’s not a joke to say BlackBerrys changed enterprise communications forever. The design of the phones themselves, with a large-ish landscape screen perched atop a physical thumb-friendly(ish) QWERTY keypad and its thumb-dial and icons UI were all part of the success, layered on top of a secure network that meant your communications were safe from prying eyes.
But that was then and this, sadly for RIM, is now. The communications world, unlike RIM, has actually been in motion and has evolved, leaving RIM’s business model looking a little archaic. Chief culprit for putting BlackBerrys in the shadow is the iPhone, of course. Apple’s design was so game-changing, so unusual that it bemused many on its arrival (including Steve Ballmer)…but it has totally altered how consumers think about smartphones. And after iPhone came Android, which swept the smartphone market like a storm, with a thousand slightly different touchscreen-only and keyboard/touchscreen smartphones with capabilities and apps that left BlackBerrys looking crushed.
Yes, RIM’s embraced touchscreens, squeezing its design meme and layering touch utility atop its aging OS core, but it has fluffed its efforts to such an extent it’s trying a whole new tack by buying in an externally developed OS called QNX. It’s a huge gamble, and it’s not rushed to pull this feat off, either–with QNX still en route on phones, and murmurs that it’s not necessarily going to work as smoothly as RIM had hoped. It will arrive on the first real “next generation” BlackBerry devices in 2012, five years after the original iPhone leapfrogged much of RIM’s technology. If QNX is to work, it needs to be smart, new, and come with the support of thousands of app developers–which is why this week’s conference is key.
RIM also flirted with a tablet PC, inspired no doubt by the billions of dollars Apple made, the fact the market was new, and headlines like “enterprise users adopt iPad.” Alas, the PlayBook was flawed, not supporting email at launch, meaning RIM’s core enterprise offering was absent from a device it hoped would rival the iPad and leverage the RIM brand to appeal to an enterprise audience. Its sales are less than stellar.
And then there’s the question of last week’s outage–a technical flaw that isn’t an unknown one: It centered around a switch in its server infrastructure, a simple gate that helps the network know where to shuttle traffic to. But because RIM’s model is all about using its own private infrastructure, shuttling encrypted emails and messages between security-sensitive customers over its own wires rather than the generic Internet, it caused a big problem. Traffic built up, causing other systems to bend and break under the load (which is why the outages eventually spread to the Americas). RIM’s backup systems didn’t work, worsening things.
RIM didn’t say much about the problems at first, attracting customer ire, then CEO Mike Lazaridis made an unusual apology, using YouTube to present a personal message acknowledging the company’s technical and communicative errors–and promising better performance. The technical hitch was fixed, but not before it spurred headlines like this one: “Forget the $100 million: BlackBerry Outage Will Send Users Flocking to iPhone, Android.”
That’s a problem, potentially of epic proportions. Because at least one survey reported, before Apple revealed the iPhone 4S, that close to 50% of BlackBerry owners quizzed were considering a switch to the iPhone 5–and this has nothing to do with the service outage last week, which you may argue would dial up those numbers just a bit. We don’t think half of RIM’s BlackBerry-owning userbase will flee to the iPhone or an Android unit, though–that kind of transition will take time, because on the whole people will want to make up their mind and may be tied into lengthy cell phone carrier contracts (or be trapped by a purchase decision made by their company). But there are undeniable newer, snazzier attractions to be found outside of RIM’s model.
There are three things RIM can do to pivot its way out of a declining market share, which, by one recent tally, is down to 19.7 percent. It could radically change its management style, which could involve a change of top management. Co-CEOs Lazaridis and Jim Balsillie have often been criticized for their entrenched thinking, and the sequence of mistakes last week–culminating in the apologetic gift of apps (an odd choice as compensation, but let’s face it, a simple and thought-free one for RIM to carry out)–on top of dropping the ball on touchscreen smartphones and the lackluster PlayBook affair, could be the straw that broke the corporate camel’s back. Key RIM investors are already making noises in this direction. By ousting the management, and inserting more dynamic, flexibly minded and tech-savvy folk in their place, RIM stands a chance of taking its very successful core technology into the future in an innovative way.
Then there’s the matter of design. RIM’s initial BlackBerry format was unusual and groundbreaking, and the format shaped how the phones were made to look and feel. But technology has leapfrogged this model, and touchscreen interfaces are now de rigeur. RIM’s touchscreen efforts, however, lack sparkle or originality–something the original BlackBerry possessed. By finding a fresh, stronger design idea and sticking with it, RIM could retain that sensation of an iconic device while embracing newer technology.
Finally, let’s talk software. QNX is taking too long, and while RIM’s App World has had its degree of success–surpassing the one billion app download boundary in July–it’s no comparison to Apple’s effort, which has earned a pretty penny from the margin it charges on paid apps. And while RIM really needs to be enticing its cadre of app writers to churn out top-quality content that’ll appeal to enterprise users, the average Joe and the hordes of teens who are addicted to BBM, it also needs to push itself to develop a killer app or two of its own. That’s because Apple’s now got iMessage, a free SMS-like rival to BBM, and its new iPhone 4S has the world abuzz with the personal assistant powers of Siri (an enterprise-pleasing system that RIM has no answer to). Google’s Voice system is getting ever more powerful, and Android Ice Cream Sandwich is out soon–bringing UI advances and tighter integration with strong Google offerings like voice search, Goggles, and Gmail. RIM needs to innovate wholly new and appealing systems of its own to rival or surpass these.
[Image: Flickr user skewgee]