Before Apple revolutionized the smartphone market with the iPhone, and before Google overran it with Android, BlackBerry phones reigned unchallenged. Everyone who had a smartphone, it seemed, owned a BlackBerry. Research In Motion (RIM) the Canadian company behind the Blackberry could do no wrong.
But recent missteps, product delays and network failures by the Canadian smartphone giant have dramatically changed this. If the many reports of RIM’s dramatic decline are to be believed, it appears that the end of the line is not too far off for RIM and BlackBerry.
In the first fiscal quarter of 2012, RIM reported far worse results than analysts expected. Its stock plummeted more than 70% in the past year, and tumbled 19% on June 29 after the company posted a quarterly loss and delayed the BlackBerry 10 operating system. The share price decline has shredded market cap. It now stands at a scant $3.81 billion, compared to over $78 billion just four years ago. The company followed up by announcing the sacking of 5,000 workers, or about one-third of its work force.
With fewer employees, less money and less market share, the future for RIM abruptly looks bleak. RIM is going to have herculean challenge surviving in the modern mobile market.
According to chief executive Thorsten Heins, RIM intends to refocus on the bread and butter of the empire – the business sector. A necessary approach, but it will not be enough. The business mobile landscape has changed since RIM’s heyday.
Companies have discovered that they can lock down employees’ smartphones from central systems far better now than they could in 2007/2008, when RIM ruled supreme. Companies no longer need RIM’s vaunted email encryption services to enforce mobile device security. Companies are also now allowing employees to bring personally-owned mobile devices in the workplace, and use those devices to access privileged company resources such as email, file servers, and databases.
Even RIM’s popular BlackBerry Messenger (BBM) service is facing major competition. Users are finding new solutions such as WhatsApp, which work across multiple smartphone platforms. WhatApp is now one of the most-downloaded applications for the iPhone and Android.
RIM may well want to go back to the enterprise, but it will find the iPhone and a plethora of Android phones waiting for it. It will also find business users with higher expectations of what their mobile devices ought to do, in and out of the office.
RIMs core strengths are no longer a point of distinction. The company is fading into smartphone irrelevance. RIM is having an increasingly challenging time persuading people to buy its devices. Its touch-screen phones have not been on par with the competition. It is struggling to attract developers to its platform. Its mobile user interface has not kept pace with the more intuitive offerings now available. Consumers, businesses and even governments are abandoning RIM for the iPhone and Android-powered devices.
The result – a collapse in average selling price (ASP) of devices and a decline in the number of RIM handsets sold. Fewer products sold together declining prices and a plummeting share price spells major disaster for any vendor.
RIM has the unenviable task of bridging the growing gulf between it and the customers that could save it. About 40 percent of the world’s 78 million BlackBerry users are corporate users. RIM’s best chances might lie in trying to persuading corporations to be patient and upgrade to newer BlackBerrys when they eventually launch. Such patience, however, does not make for prudent business.
RIM’s leadership faces a painful reality. The company has gone to battle in the consumer phone market against Apple Inc., Google, HTC and Samsung, and it has been comprehensively routed. Confidence in the company is utterly shaken. Responsible businesses have little choice but to give serious consideration to the more innovative, feature-rich mobile options that exist beyond BlackBerry.