Thursday, December 29, 2011

Saving RIM and BlackBerry

Once the darling of investors, RIM was riding high in 2008 with a share price of $148 and $412.5 million in profit for Q4.  Their low cost BlackBerry Pearl and Curve was impressive hits for the Canadian company with millions sold and introduced millions of people to the addictive BlackBerry Messenger (BBM). 

RIM's Strengths
Many people and companies adopted BlackBerries for their usage for its secure e-mail, comfortable QWERTY keyboard, and an easy to use UI for e-mailing.  For many it was their first smartphone and it's simple UI helped users punch out messages in no time.  Many corporate users had difficulty getting away from work now that their e-mails were available everywhere.

Eroding their own Profits
Unfortunately, the introduction of these low cost models drove the price of QWERTY keyboard smartphones and made it difficult for RIM to demand the high $499 with contract prices it had originally sold its BlackBerries reducing its profit margins.  In addition to that, competition was right around the corner with Apple and a legion of Android manufacturers.

The Competitors' Winning Formula
With the runaway success of Apple's iPhone in 2007, Google's Android smartphone operating system (OS) gravitated to a similar large touchscreen user interface (UI) and many manufacturers following suit.  Now all of RIM's competitors, Samsung, Apple, Motorola, and Nokia are all shipping sleek, large screen, simple UI devices with strong software support.  In 2010, Apple introduced a tablet powered by the same operating system as the iPhone, called the iPad.  Once again, Apple turned out a success and Google and gang follow suit with Android Honeycomb.

Moreover, Microsoft has refined with push e-mail and opened up their ActiveSync for synchronizing e-mail with Microsoft Exchange servers in the mid-2000 exposed RIM's BlackBerry Exchange Sever (BES) has an expensive push e-mail tool.  Although BES also managed devices but it saw little benefit to consumers.

RIM's Response to the Competition
RIM introduced the large screened BlackBerry Storm that failed to gain much acceptance from BlackBerry users due to numerous software bugs and loss of BlackBerry's signature keyboard.  The Storm ceased to be produced in 2010 with the Torch carrying on in 2010 with a large screen but with the addition of a slide out keyboard.  RIM also produced its own tablet to counter the iPad in 2011 with the introduction of the Playbook running a new OS called QNX.  It received harsh criticism for missing critical features such as e-mail and the highly touted Android application support.  RIM dramatically slashed prices on its Playbooks after a few quarters of poor sales.  With all these efforts, the Playbook and Blackberries failed to make any real impact on Apple's sales.

Where to go from here
With a failed Playbook, failed Storm, and ailing BlackBerry sales, RIM isn't in a good place and needs to leverage its core strengths to win back its customers.

1. Continue to drive down the cost of BlackBerries
RIM hit a sweet spot with its Curve and Pearl so it would be a good plan to keep going down market with their current BlackBerry OS to steal some of failing Nokia's bread and butter - especially in the emerging market.

2. Scale back on the Playbook and refocus it for industry use
Get Playbook working with BES so it can be managed by a company's IT department.  Build out a consulting team to help companies such as hospitals, retailers, and energy producers use tablets to increase process efficiency.  Many companies had purchased iPads but many don't know how they'll use it.

3. Accelerate the BlackBerry 10 devices and bet the entire company on it
The company is in need a halo device.  Microsoft's Windows Phone 7 has the Nokia Lumia 800, Google Android has the Galaxy Nexus, and Apple has their iPhone 4S and RIM has... the Torch?  It's not good enough against the competition.  Make a device like the Torch, a side slider, and finally a big quadcore touchscreen only phone.  And make sure the software and hardware is ready.  The market isn't going to accept a device that will require an update for promised features when all your competitors are polished and already ahead.

We all know RIM is doing #3 but I hope it realizes it needs to do more with what it has to maximize its profits.  Regardless of what RIM does, I hope they're successful for years to come.  If you have some suggestions to what RIM should do, feel free to drop a comment below.

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