BLACK BERRY is a brand that created a sensation years along in mobile phone world. It was a brand, a symbol of royalty, dignity.
Research in Motion (RIM), makers of the venerable BlackBerry devices, will always be remembered as the company who liberated corporate email from the PC. In fact, you could make a compelling case that the first Blackberry’s kicked off the post PC era. They freed mobile workers from being chained to their PCs, letting them email and be productive anywhere. In fact, RIM pioneered working from anywhere at any time.
Unfortunately that may be all RIM is remembered for, as the company is battling a range of issues from waning customer interest, declining market share and fierce competition. How is it possible that a company once so dominant is now facing so many uphill battles?
The sky’s gotten even darker for RIM. The BlackBerry manufacturer is accumulating bad news and sinking even further in the stock market. After the network failure that affected global users for several days and the lost trial over the BBX brand, the Canadian company must revise its forecast moving forward.
RIM was hoping to regain its lost foothold in the smart phone market with a new, redesigned generation of Blackberries, but with a delayed launch set for some time next year, the phone maker only gives more ground to Apple and Android devices.
If you ask RIM, the delay stems from the interest of responsiveness and autonomy of smart phones. The manufacturer wants to improve with the arrival of new processors. Therefore, their Playbook tablets must also wait until the second half of next year for a makeover.
The company anticipates that it will sell only 11-12 million Blackberry’s, an enormous decrease in sales as compared to the previous year. RIM has revised its outlook for sales in the Christmas quarter, down from the 14.8 million last year to between 11 and 12 million this year.
The delay has led to a further fall in market share, leading some analysts to question the sustainability of RIM. Some investors are pushing for RIM to sell its hardware business, and opening its secure blackberry network to rival smart phones providers.
But RIM may be too late for even that. The popularity of the I phone and Android devices, as well as problems that have plagued RIM devices in recent months, leaves RIM with low sales and nearly no profits from BlackBerry sales at all.
The network, the only example of this kind between the mobile device manufacturers, has always been one of the pillars of growth of the BlackBerry. E-mail and instant messages are routed through the server and data canter of the company, which is then encoded and sent to the recipients. This is a totally secure system, which prevents the control of the content, so that many conservative governments have threatened to block services if they had not had a chance to control the communications of the BlackBerry. The main reasons behind the downfall of Blackberry Empire are as follows.
Losing ground in network services, too:
For this reason, the BlackBerry is a must for business people from around the world who consider the device a tool among the safest for sensitive business communications. If fact, in figures, the BlackBerry seems to be in steep decline (the next quarter sales are expected to decline by 26%). The decrement is not so for the network business, which would be able to generate stronger margins and recurring revenue.
Alternative network providers that offer many of the same security features as the BlackBerry enterprise network are already making inroads.
Apple App Store is at Higher Market Value than all RIM:
The app store from Apple is currently worth more than the ailing BlackBerry maker Research In Motion. The value was calculated by market analyst Brian S. Hall based on the closing price of the shares of RIM ($13.44) on the New York Stock Exchange Friday.
Apple, according to the current market capitalization price would be around $354 billion and two percent of the Apple’s revenue comes from App store, which once calculated is coming out to be about $7.08 billion. Going by RIM current share price, RIM is worth $7.04 billion.
It Lost Sight of Who Its Customers Were:
Losing sight of your core customer is one of the most dangerous things a company can do. It’s a business rule that transcends every industry. RIM, unfortunately, in an attempt to capture the more glamorous but also very finicky consumer market, failed to innovate and compete for its core customers, which were businesses.
RIM’s business was built around robust corporate solutions that included hardware, software and secure services specifically targeting the enterprise. It did this well and defended it well even against Microsoft’s continued assault through advancements in Exchange Servers and Windows Mobile.
The turning point was when RIM began chasing mainstream consumers. Not because a company can’t offer products and solutions for two completely different market segments, but because RIM’s core value and business strengths did not translate into value in consumer markets.
What consumers want is very different from what corporate customers want. RIM was positioned well to serve one and not necessarily the other. To successfully enter the consumer market RIM needed to re-invent itself specifically for that market, and that is exactly what it did not do. In short, making consumer products was not in the company’s DNA.
RIM Failed to Innovate:
When talking about the most innovative companies over the past five years, RIM rarely enters the discussion. When you dominate a market like RIM did, there is a tendency to become complacent and believe you are untouchable. However when you combine the rapid pace of technology advancements with a free market society, no company is ever really safe at the top.
A company’s ability to innovate stems directly from the culture cultivated internally. Some companies do this better than others. Apple’s fostering of a culture of innovation internally is one of the main reasons competing with it is so hard. In creating products for consumers, RIM only copied competitors.
IS THERE HOPE?
It seems very difficult at this point of time for the Blackberry to regain its charm as the android services are dominating the smart phones now. In future, Blackberry might also be a tough competitor to every other company if it focuses on the below measures.
RIM needs to change leadership at the top, regain a laser focus on its corporate and business customers, focus on innovating for the core needs of these customers and exit the consumer market entirely.
There is also talk of RIM being an acquisition target. This is another viable option for a turnaround, although one that I find less likely to happen.
Ultimately, focusing purely on enterprise customers is not as elegant or flashy as the consumer market. However it is a solid business and one that is still lucrative if done right.
Let us wish Blackberry to come with more attractive features in future…