A fascinating blog post by Michael Mace expounding on where issues lie at Research in Motion (RIM, the manufacturer of Blackberry devices):
Business Week has joined a large and distinguished group of experts taking jabs at RIM. Morgan Stanley recently downgraded RIM’s stock, saying it’s going to lose share faster than previously expected (link). Gartner reported that Android had passed BlackBerry to become the most popular smartphone OS in the US (link). And CNET said RIM is about to be kicked out of the enterprise market (link).
I’ve been getting very tired of the criticisms of RIM, because most of them seem superficial and some are petty. Yes, Android is doing well, but neither RIM nor Apple is giving away its operating system, so it was close to inevitable that Android would eventually get the unit lead. It’s the default choice for most smartphone companies, so of course it moves a lot of units in aggregate. But there is room in the market for several mobile platforms to succeed. The companies Android is hurting most are Microsoft, Access, and others that were hoping to sell mobile operating systems.
The author makes some great points throughout and has some impressive charts showing how RIM is in decline. Well worth reading the whole article – this section seems to sum up RIM’s issue very clearly:
This one’s a little disquieting as well. Five years ago, RIM was getting .7 new subscribers for every BlackBerry sold. In other words, most of its sales were to new users. Today, RIM is getting .37 more subscribers per BlackBerry sold, and that figure is at an all-time low. To put it another way, RIM now has to sell more than two and a half devices to get one more subscriber. Either RIM is selling most of its units to its installed base, or it is having to bring in a lot of new customers to replace those who are leaving for other devices. My guess is it’s a mix of both.
However, a few paragraphs jumped out at me for an altogether different reason:
Yes, RIM’s not good at sexy marketing, but it has always been that way. People have been predicting its imminent doom for as long as I can remember (do you recall when Microsoft Exchange was supposed to destroy it?). My guess is that the folks at RIM are shaking their heads at all of the bad press and assuming it will once again blow over in a quarter or two.
In my opinion, RIM’s real problems center around two big issues: its market is saturating, and it seems to have lost the ability to create great products.
To keep a platform viable, you need to focus on two tasks: Keep the customer base loyal, and add adjacent product categories.
On the other hand, if these customers and developers drift away, there’s virtually no way you can grow something else fast enough to offset their loss. The trick here is that the supporter base for a computing platform is like a herd of cattle. They move as a group. When the herd is contented, it tends to stay in one place. But if the herd gets restless, even a small disturbance can cause a stampede in which they all run away at once.
Poor marketing, saturated market and customers/developers drifting away.
So what does Michael think RIM should do? Well you’ll have to read his post to get that, but his closing paragraphs again chime with me…
As the founders of the company, Jim Balsillie and Mike Lazaridis could probably pull this off without losing their jobs. And I know they have the courage to make big changes. But I doubt they can see the need, or especially the urgency. Their current processes and business practices got them to $15 billion in revenue; why should they change now? It’s much more prudent to focus on making the numbers for next quarter.
That’s probably just what RIM will do. And if it does, that’s why the company will probably eventually fail.