Sell Research In Motion Now

by | Apr 17, 2011 | Current Affairs, Defend & Extend, In the Swamp, In the Whirlpool, Innovation, Leadership, Lock-in, Web/Tech


Research in Motion pioneered the smartphone business.  While Motorola, Samsung and others thought the answer to market growth was making ever cheaper mobile phones, RIM figured out that corporations wanted to put phones in employee hands, control usage cost, while also securely offering email distribution and texting.  Blackberry handsets and servers met user needs while providing IT departments with everything they needed. 

This success formula was a winner, driving tremendous growth for RIM.  People joke about their “crackberry” connecting them to their company 24×7, but it was a tremendous productivity enhancer.  RIM produced a consistent string of growing revenues and earnings, meeting or exceeding projections.  RIM still dominates the “enterprise” smartphone business.  The overwhelming majority of mobile phones issued by companies are still Blackberries.

“RIM’s CEO is Annoyed that People Don’t Appreciate Our Profits” headlined Silicon Alley Insider.  He can’t understand why the stock languishes, despite meeting financial projections.  When challenged about whether or not RIM is as secure as it claims, “RIM CEO Abruptly Ends an Interview After Getting Annoyed About Security Questons” (SAI).

That the CEO is annoyed is the first of two reasons you need to sell RIMM now.  If you are waiting for a recovery to old highs, forget about it.  Won’t happen. Can’t happen.

The mobile phone/smartphone market has taken an enormous shift.  Apple’s iPhone introduced the “app” phenomenon – allowing smartphone users to do a plethora of things on their devices that aren’t possible on a Blackberry.  If we just count apps, as a baseline, iPhone users can do some 350,000 things that Blackberry users cannot.  Additionally, iPhones – and increasingly Android phones – are simply a lot easier to use, with bigger touch screens, more built-in functionality and easier user navigation. 

As charted in my last column, RIM has only about 5% the apps of iPhone.  And less than 10% the apps of Android.  Even Microsoft will soon provide more apps than Blackberry.  But the CEO of RIM is stuck – defending his company and its success formula – rather than aggressively migrating the company into new products.  He’s hoping all those company employees, including execs, now carrying 2 phones – their corporate Blackberry and personal iPhone – will keep doing that.   

He’s letting the re-invention gap between RIMM and Apple/Google widen with every passing quarter.  While no other provider offers the “enterprise solution” of RIM, increasingly the gap between the usability of new solutions and RIM is widening.  It won’t be long before users won’t put up with having 2 phones – and the loser will clearly be RIM

And it won’t be long before people completely stop carrying laptops as well. Rather quickly we are seeing a market shift to tablets.  Into this market RIMM launched its Playbook product last week.  And that’s the second reason you need to sell RIMM.

We all know the iPad has been a remarkable success.  To date, nobody has developed a tablet that users, or reviewers, find comparable.  Unfortunately, RIM launched its Playbook tablet to entirely consistent reviews, such as “The Playbook: Blackberry’s ‘Unfinished’ Product” headlined at TheWeek.com.  The Playbook simply isn’t comparable to an iPad – and doesn’t look like it ever will be.

Most concerning, to use a Playbook you must also have a Blackberry.  Playbook relies on the Blackberry to provide connectivity – via Bluetooth.  In other words, RIM is trying to keep customers locked-in to Blackberries, using Playbook to defend and extend the original company product.  Playbook doesn’t even look like it’s ever intended to be a stand-alone winner.  And that’s a really bad strategy.

RIM sees Playbook is seen as an extension of the Blackberry product line; the first in a transition to a new operating system for all products.  Not a product designed to compete heads-up against other tablets.  It lacks apps, it lacks its own connectivity, it has a smaller screen, and it doesn’t have the intuitive interface.  Basically, it’s an effort to try and keep Blackberry users on Blackberries – an effort to defend and extend the original success formula.

When markets shift it is absolutely critical competitors shift with them.  Xerox invented desktop publishing at its PARC facility, but tried to defend xerography and lost the new market to Apple.  Kodak invented digital cameras, but tried to defend the film business and lost the new market to Japanese competitors.  When the CEO tries to defend and extend the old success formula after a market shifts only bad things happen.  When new products are extensions of old products, while competitors are bringing out game changers, the world only becomes uglier and uglier for the stuck, old-line competitor. 

The analysts are right.  RIM has no future growth.  Companies are already switching  into iPhones, iPads and Androids.  Simultaneously, Microsoft will pour billions into helping Nokia push Windows 7 phones and future tablets the next 2 years, and that will be targeted right at “enterprise users” which are RIM’s “core.”  Microsoft will spend far more resources than RIM could ever match trying to defend its “installed base.”  RIMM is stuck fighting to keep current users, while the market growth is elsewhere, and those emerging competitors are quickly going to hollow out RIM’s market. 

There’s simply no way RIM can increase its value.  Time to sell.

Update 4/20/2011 Goldman Sachs Survey Results – CIO intention to adopt Tablets by Operating System provider:

CIO Tablet intentions by Brand 1-2011
Published in SiliconAlleyInsider.com

 

Far too Little, Far too Late – RIM Playbook

by | Oct 5, 2010 | Current Affairs, Defend & Extend, In the Swamp, Innovation, Leadership, Lock-in, Web/Tech


Summary:

  • Research in Motion has launched a tablet, competing with the iPad
  • But the Playbook does not have the app base that iPad has developed
  • RIM's focus on its "core" IT customer, without spending enough energy focusing on Apple and other competitors, it missed the shift in mobile device user needs
  • Now companies, like Abbott, are starting to roll out iPads to field personnel
  • RIM's future is in jeopardy as the market shifts away from its products
  • You cannot expect your customer to tell you how to develop your product, you have to watch competitors and move quickly to address emerging market needs

Research in Motion has launched a new tablet called Playbook to compete with the Apple iPad.  But will it succeed?  According to SeekingAlpha.com "Playbook Fails to Boost Research in Motion Price Targets." Most analysts do not think the Playbook has much chance of pushing up the market cap at RIM – and except for home town Canadian analysts the overall expectation for RIM is grim.  I certainly agree with the emerging consensus that RIM's future is looking bleak.

Research in Motion was the company that first introduced most of us to smartphones.  The Blackberry, often provided by the employer, was the first mobile product that allowed people do email, look at attachments and eventually text – all without a PC.  Most executives and field-oriented employees loved them, and over a few years Blackberries became completely common.  It looked like RIM had pioneered a new market it would dominate, with its servers squarely ensconced in IT departments and corporate users without option as to what smartphone they would use.

But Apple performed an end-run, getting CEOs to use the iPhone.  People increasingly found they needed a personal mobile phone as well as the corporate phone – because they did not want to use the Blackberry for personal use. But they didn't pick Blackberries.  Instead they started buying the more stylish, easier to use and loaded with apps iPhone. Apple didn't court the "enterprise" customer – so they weren't even on the radar screen at RIM.  But sales were exploding.

Like most companies that focus on their core customers, RIM didn't see the market shift coming.  RIM kept talking to the IT department. Much like IBM did in the 1980s when it dropped PCs in favor of supporting mainframes – because their core data center customers said the PC had no future.  RIM was carefully listening to its customer – but missing an enormous market shift toward usability and apps.  RIM expected its customers to tell them what would be needed in the future – but instead it was the competition that was showing the way.

Now RIM is far, far behind.  Where Apple has 300,000 apps, and Android has over 120,000, RIM doesn't even have 10,000.  RIM's problem isn't a device issue.  RIM has missed the shift to mobile computing and missed understanding the unmet user needs.  According to Crain's Chicago Business "Chicago CEOs embrace the iPad." Several critical users – and CEOs are always critical – have already committed to using the iPad and enjoying their news subscriptions and other applications.  According to the article, Abbott, which has provided Blackberries to thousands of employees, is now beginning to roll out iPads to field personnel.  RIM's Playbook may be a fine piece of hardware, but it offers far too little in the direction of helping people discard PCs as they migrate to cloud architectures and much smaller, easier to use devices such as tablets.

RIM followed the ballyhooed advice of listening to its core customer.  But such behavior caused it to miss the shift in its own marketplace toward greater extended use of mobile devices.  RIM should have paid more attention to what competitors Apple and Android were doing – and started building out its app environment years ago.  RIM should have been first with a tablet – not late.  And RIM should have led the movement toward digital publishing – rather than letting Amazon take the lead (Kindle) with Apple close behind.  Creating valuable mobility is what the leading company with "motion" in its name should have done.  Instead of merely providing the answers to requests from core IT department customers. Now RIM has no chance of catching up with competitors.