RIM used to be the king of smartphones, and now it is clearly struggling. According to comScore, RIM’s US market share has dropped to 24.7% (down 4.2% from February) while Google now has 38.1% and Apple 26.6%. Before 2007, neither Apple nor Google were even in the phone business. Why are others succeeding when RIM is not?
The answer to “what happened to RIM?” is often “the iPhone.” While there is some truth to that, I don’t think the answer is quite that simple. I believe that RIM missed several important changes in the industry and that is why they are way behind the competition now. Let’s take a look at these changes.
Mobile bandwidth became cheap. One of RIM’s initial advantages was that BlackBerries are very stingy with bandwidth. This was important during their rise because mobile bandwidth was quite expensive and quite slow. When 3G networks and relatively inexpensive data plans became widely available users began to expect full Internet experiences on their phones including web pages, rich content, audio, video, and apps. RIM was very hesitant to add 3G and wifi to BlackBerries for a long time because they just thought it wasn’t necessary. The believed their platform was so efficient with bandwidth that 3G and wifi weren’t necessary. That may true if you’re only reading email and text messages, but when people wanted rich content BlackBerries weren’t able to deliver. iPhone and Android did deliver.
Lesson: Faster is always better.
User experience became important. This is where iPhone comes in. As much as it is becoming cliche, the iPhone really did change expectations for how to use a mobile phone. BlackBerries are functional, but as soon as all phones were able to message and access the web, user experience became an important differentiator. Apple proved that touch displays are what users want, and five years later RIM has still not been able to execute on that. They tried with the Storm and Torch, but instead of building a compelling touch interface they just added touch support to their existing interface. This was very unpopular with users expecting more. Even the upcoming BlackBerry OS 7 is still the same OS with a touch layer added. Microsoft, in a similar situation with Windows Mobile 6, started over and created an all new OS with Windows Phone 7. Palm dumped their PalmOS platform for webOS. RIM is working at bringing their QNX platform to market which should be more in line with modern systems, but that won’t be available until 2012. Hopefully it won’t be too late by then. Keep in mind that by time they ship a QNX phone iOS 5, Android 4 (aka Ice Cream Sandwich), and Windows Phone “Mango” will all have been on the market for months.
Lesson: You have to be able let old technology go to move ahead.
IT attitudes on devices softens. BlackBerry has been much loved in the enterprise because of their security and the strong control BES gave to IT departments. It seems that RIM was relying on this as a cash cow but didn’t do anything to protect their future. While they waited, Microsoft Exchange support was built into iOS and Android. BlackBerry’s advantage disappeared. Also, corporate IT is changing its views on locking down devices and letting users provide their own phones. When consumers get to choose their device, BlackBerry loses. Assuming IT’s control of device selection became a mistake.
Lesson: Review your core business assumptions as they may not be valid anymore.
A thriving app store became required. Having one killer app (BBM) is not good enough anymore. Apple’s and Google’s app stores have exploded to hundreds of thousands of apps within a few years. RIM opened their “App World” and currently has about 25,000 apps. Microsoft’s Windows MarketPlace for Windows Phone just crossed 25,000 and has not been open for a year. Others have thrived where RIM has not. There are several reasons for this.
- First of all, it is difficult to develop for BlackBerry. The tools are not very good. The APIs are weak. They have a horrible fragmentation problem (many devices with different form factors and they are currently supporting three different versions of their OS (5, 6, and 7)) which makes testing a nightmare.
- Second, because of the poor tools, the apps quality suffer. In the now famous open letter to RIM, a RIM executive even says “There is no polite way to say this, but it’s true — BlackBerry smartphone apps suck.”
- Third, as RIM declines in market share it makes committing resources to BlackBerry a difficult decision to justify. Microsoft and HP are paying developers to port to Windows Phone and webOS. RIM may have to do something similar.
- Last, RIM is not doing anything to encourage developers. Microsoft recognizes that a large app pool is critical for a smartphone ecosystem and is paying developers to port to Windows Phone. RIM needs to pump life into their app market.
Lesson: Invest in your developers – they make your platform more valuable.
Flash doesn’t matter. I guess the jury is still out on this, but RIM is betting big on Adobe Flash to be their development environment for their QNX devices (the Playbook and upcoming smartphones) and I think that’s a mistake. Adobe still hasn’t proven that Flash can work reliably on mobile devices. Flash on Android and webOS is slow, buggy, and crashes often. I would expect that Flash doesn’t help battery life either. (Flash on MacOS X has been shown to reduce battery life.) On the other hand, Apple has proven that you can sell a lot of Internet devices without Flash support.
Lesson: Own your core technology so you can control it.
That’s a lot of problems! Can RIM bounce back? I think RIM can be a successful smartphone company. (Really!) They have resources, money, and engineering talent. To succeed they need the vision to know how use them and the ability to execute quickly. Those are management problems. Time is running out though. Getting users of other platforms to switch is very hard, and the pool of users without a smartphone is shrinking quickly. According to Nielsen, 38% of American mobile subscribers are already smartphone users.
Even if RIM hits a home run with their QNX devices, I don’t think they will ever enjoy the market share they used to have. Those days are gone. There is too much strong competition out there now. That doesn’t mean they can’t have a profitable business though, just a smaller one.