RIM and Nokia: Can they survive against Apple and Google?

Moderated by Jason Hiner | June 18, 2012 -- 07:00 GMT (00:00 PDT)

Summary: Canada's Research in Motion and Finland's Nokia once owned significant pieces of the global handset market. What are their prospects now?

Matthew Miller

Matthew Miller

Yes

or

No

Jason Perlow

Jason Perlow

Best Argument: No

The Rebuttal

  • Great Debate Moderator

    Thanks for joining us!

    Miller and Perlow will post their closing arguments tomorrow and I will declare a winner on Thursday. Between now and then, don't forget to cast your vote and jump into the discussion to post your thoughts on this topic.

    Posted by Jason Hiner

  • Great Debate Moderator

    Acquisition targets?

    Could one or both of these companies become acquisition targets in the near future? If so, who are the most likely suitors?

    Posted by Jason Hiner

    Both could and maybe even both by Microsoft

    If Microsoft continues with Windows Phone over the long term, then they could pick up Nokia and have them be their only WP manufacturer. They could still differentiate from Apple with a broader lineup of hardware and a different ecosystem that competes with the Apple ecosystem. You will always have rabid anti-Apple and anti-Microsoft people so having a competing ecosystem works well for at least two companies. It is even possible that Microsoft could purchase RIM and make an attempt to rule the enterprise mobile space by offering a couple of solutions to companies and government entitities. I don't think RIM would continue to make hardware or an OS since Windows Phone is superior, but they could be purchased to provide the back end services.

    Matthew Miller

    I am for Yes

    Nokia must shed weight, and RIM is worth more in pieces

    Both companies are prime acquisition targets but Nokia is a much less messy acquisition than RIM, as it can likely be devoured whole and the value proposition may make sense for a Chinese computer manufacturer looking to assert themselves as a smartphone power in North America and the EMEA. However, Nokia's capitalization is currently twice that of RIM's, so it's a much more pricey proposition. It may take longer (a few years) for Nokia to be an attractive acquisition target as it sheds more and more staff and other excess baggage. RIM certainly has a number of assets of value, which includes a large array of patents, their handset design and manufacturing, the BES data communications network and NOCs and the QNX operating system itself. The problem is coming up with someone who would want to own all of these things, not just one or two of them. RIM may be worth more money in pieces than it as as whole company, which leads to the logical conclusion that the company is going to be sold of Nortel-style. The patents can go to just about anyone. QNX may be of value to an automotive, aerospace of telecom equipment company (such as a Cisco) because it is an RTOS. The secure data communications network for BES may or may not be of value to a company like Microsoft or even Google. The value of the company's handset design and manufacturing is questionable, although it might be synergistic with someone like Lenovo looking to attract the "executive" style consumer.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    What else does Nokia have going for it?

    Beyond what we've already talked about, what else does Nokia have going for it that could keep it around for at least a couple more years?

    Posted by Jason Hiner

    Series 40 and unique designs

    Nokia's Series 40 still remains a part of the company's lineup and while it is not a very profitable part on a per device basis, the global reach can keep Nokia going for a couple more years provided they continue to scale down the company size. There are still Nokia fans, but I think even that community is falling away as Nokia replaces old leadership and the Finnish legacy with Microsoft people and those from outside of Finland. People in the US mostly forgot about Nokia years ago when their free feature phones stopped being as useful as they were replaced by low cost smartphones. Nokia has been made to create cool devices in the past and the Lumia 800 is one heck of a gorgeous device. More sleek devices like this are needed to show that Android is too much of the same.

    Matthew Miller

    I am for Yes

    Pureview and developing markets

    Nokia's situation is dire, but they do have some incredible photographic technology which they have developed with Pureview which could allow the company to distinguish itself from the rest of the pack as the prosumer shutterbug's phone of choice. Alternatively, it could also license this technology to other smartphone vendors. Nokia also has penetration and leadership in developing markets with inexpensive GSM feature phones, which arguably is a declining business but still has at least 3 to 5 years of life left in it.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    What else does RIM have going for it?

    Beyond what we've already talked about, what else does RIM have going for it that could keep it around for at least a couple more years?

    Posted by Jason Hiner

    Slow moving agencies and fresh OS

    Government agencies and large corporations move slowly and that plays to RIM's advantage as they get BB OS 10 out into the hands of consumers. Their strong security and IT management functionality will continue to appeal to the enterprise market and people will still be issued BlackBerry devices for a couple of years. This is a tough question for me to answer. In the past I would have said BBM is why some people carry their BlackBerry even when it is beat and old. However, when I went to a Bold 9900 last year I found very few of my friends and associates using BBM and it was not a vital service for me. There are many other global options out there and as more and more consumers move to iOS and Android with entry into the workplace BBM because less vital. Hardware QWERTY keyboards also appeal to fewer and fewer people while other aspects of smartphone hardware and software (great cameras, social networking integration, cloud storage) are better on competing platforms. We have only seen glimpses of OS 10, but since I have used QNX on a PlayBook quite a bit as well I think there is real potential here for the OS to appeal to a lot of folks. RIM has a solid name in the industry and if they can bring a slick OS with great hardware and security then they could have a real winner on their hands.

    Matthew Miller

    I am for Yes

    I'm coming up empty.

    I'm struggling to come up with an answer to that question beyond the obvious asset liquidation options a la Nortel or a miraculous comeback with BlackBerry 10. And I'm sure JP Morgan and RBC who have been tasked with finding these options for RIM are scratching their heads as well.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    RIM as an enterprise software company?

    With BYOD taking off, could RIM survive as an enterprise software company that uses its BES service to securely connect any device to the corporate network? If so, why do you think RIM hasn't pursued this strategy sooner?

    Posted by Jason Hiner

    Sure, but they need to support iOS and Android

    I think RIM could remain a company, much smaller though, and provide BES to customers because it is still a vital service to many customers. Then again, those same corporate customers are likely still running Windows XP and are just slower to change. Over time, those customers may move to Exchange if BES cannot be integrated into iOS and Android platforms. I don't think this is a viable solution unless you have these two mobile operating systems on board. RIM may not have gone this route yet because Apple and Google still see RIM as a competitor in the smartphone market and are not yet ready to support BES on their platforms.

    Matthew Miller

    I am for Yes

    Not a beach ball's chance in Waterloo in February.

    I believe that a Not Invented Here mentality and a highly protective desire to keep their own smartphone business viable has prevented them from taking leadership in BYOD and competitors' devices from participating on the BES network. I find it very unlikely that RIM can maintain independence by shedding the handset/tablet business and simply exist as a messaging infrastructure provider. If that is all that remains of the company, it is more than likely it will be owned/maintained by a third party due to government interests, much like Iridium was kept going after the company went Chapter 11. But that's called being kept on life support, not a vibrant living company.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    Will Microsoft prop up Nokia?

    Just as Nokia is now solely dependent on Microsoft for its smartphone platform, Microsoft is equally dependent on Nokia for its mobile business since most of the other hardware makers have abandoned or ignored Windows Phone. That being the case, is Microsoft destined to prop up Nokia for at least the next 18-24 months?

    Posted by Jason Hiner

    Maybe, but Nokia could help out Microsoft too

    Yes. Samsung is riding the Android wave and could easily give up making Windows Phone devices and probably be even more profitable. HTC is struggling to compete with Samsung on Android, but hasn't done much to innovate at all with Windows Phone. Nokia is much more focused on Windows Phone, they have to be now that they dropped all other smartphone platforms, and I can see them becoming the sole manufacturer of Windows Phones in the future. It is not the most comfortable place to be for Nokia though since Windows Phone is more of a loss leader for Microsoft and they could give it up at any time and contine to be successful with Windows and Office while it would mean a certain end to Nokia. Nokia could get involved and help out Microsoft with their Surface products in the future, especially if Microsoft owned Nokia. Microsoft tends to spend beyond what makes sense at times so I can see them supporting Nokia for a couple of years even if Nokia continues to fumble along waiting for Windows Phone to catch hold in the market.

    Matthew Miller

    I am for Yes

    The Surface curve ball

    I might have answered this question differently had the company not just launched the Suface tablets yesterday. Nokia is currently Microsoft's flagship smartphone vendor, but Redmond could just as easily go the Surface route and sell their own smartphones (a la Google Nexus) instead of partnering with or buying Nokia outright. My gut instinct is that Microsoft has their hands full with the Surface tablets, the Windows 8 launch and has already has a full plate of technology products to sell, and needs Nokia to sink or swim on its own merits. However, I also would not discount the possibility of a company like Samsung warming up to Microsoft and producing much sexier Windows Phone Apollo handsets in 2013, and taking its place as their premier smartphone vendor or even the contract manufacturer for a Surface phone.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    RIM's PlayBook distraction

    RIM spent much of 2011 focused on bringing its BlackBerry PlayBook tablet to market, while its primary business -- smartphones -- fell behind Apple and Android. With the PlayBook now on life support, it is fair to say that the tablet distraction has nearly wrecked the company's chances in the device market? If the company hadn't gotten sidetracked on a tablet, how much better shape might it be in right now?

    Posted by Jason Hiner

    PlayBook wasn't the problem, it was leadership

    The PlayBook is a nice piece of hardware, but it needed the 2.0 OS at launch (not over a year later) to compete with the iPad and have any chance at success. I don't think the PlayBook was enough of a distraction to cause the troubles RIM is in now. The PlayBook did not seem to consume that many resources, otherwise maybe it would have launched without a requirement for a BB smartphone. I think their troubles were caused mainly by a lack of unified direction and leadership and, similar to Nokia, a lack of acknowledging they had to take immediate action to compete with iOS and Android. People love their own creations, but you also cannot put your head in the sand and hope that your product succeeds as the market swiftly changes. They have new leadership now and with a fresh OS coming later this year as long as they stay focused and on track they can hopefully maintain more than 5% prior to launching their new OS and then taking off again.

    Matthew Miller

    I am for Yes

    QNX was essential. The PlayBook was a knee-jerk.

    While there are a number of reasons why I still like the PlayBook, it was a bad idea for RIM to knee-jerk a tablet product into development and so soon after the iPad was released. QNX certainly was a necessary purchase in order to refresh the company's OS technology, but the efforts could have been applied towards smartphones instead. RIM would still be dealing with many of the same problems as the PlayBook in regards to software development issues, but the time to market would not have been as rushed, as key functionality such as email and PIM would have been made a priority and a QNX smartphone product would not have been released without those features working out of the box.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    Nokia's bet on Windows Phone

    When Nokia decided to switch to Windows Phone as its smartphone platform in 2011, it looked like a bold move that could reverse its long, slow decline. However, it ended up alienating much of its existing customer base and failed to attract new customers since Windows Phone hasn't been able to win users against iPhone and Android. Is it too early to call the Windows Phone deal an unmitigated failure?

    Posted by Jason Hiner

    Too early to call, but I want MeeGo back

    Nokia could have stuck with Symbian and kept its existing base around for years, maybe longer than what we are seeing now, but they had to do something at some point to attract new customers. Windows Phone seemed like a great choice with a solid ecosystem and a willing partner in Microsoft. I think, and hope, Microsoft is in it for the long haul, but they have not been as vocal as they were in the past and this concerns me a bit. Other than Smoked by Windows Phone promotions I see very little marketing of Windows Phone from Microsoft. I think Windows 8 has the potential to give Windows Phone 8 a lift and after seeing the Microsoft Surface announcement yesterday I am encouraged by the possibilities. I thoroughly enjoy my Nokia N9 running MeeGo and wish that Nokia would have continued to support and develop this platform. Like webOS it offers a fresh user interface and seemed to be gaining developer attention before Nokia killed it off. I think it could have bridged the gap between Nokia's long time fans and new customers with just a few select new devices and continued application development and am sad that it was never given a fair chance.

    Matthew Miller

    I am for Yes

    The right call, but discovered their cancer too late.

    I believe that Nokia made the right call with Windows Phone, but just as it is imperative to intervene with a cancer early on in its development, Nokia should have been much more proactive with their transition, which would have enabled them get their next-generation products out the door faster. Their brief flirtation with a custom Linux OS (MeeGo) instead of using a licensed product such as Windows Phone or Android was also an unnecessary distraction as well.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    The disadvantages

    What are the biggest disadvantages of Nokia and BlackBerry products versus Android and iPhone?

    Posted by Jason Hiner

    Apps are still lacking

    Even though we now see over 100,000 apps on the Windows Phone Marketplace, I still think there are enough key applications missing that keep people from moving to Windows Phone. As I have written many times, I generally find Windows Phone a better OS for me than Android and iOS. iOS now bores me and unless you use Ice Cream Sandwich I think Android is too fragmented. WP is slick, fast, and exciting and for new smartphone users it is easy to pick up and learn. RIM is really not even in the application game and BlackBerry App World is not an enjoyable experience to me. Apps still have too many menus and the limited display sizes drive me crazy after using large beautiful displays on other devices. Software keyboards have gotten excellent and I think there is very little need for a physical QWERTY keyboard any longer. I agree with Jason that BB is no longer sought out by the crowd for curb appeal, but there is no reason that the Lumia devices cannot be thought of as sexy devices.

    Matthew Miller

    I am for Yes

    Not Enough Apps and Limited Sex Appeal

    For Nokia and BlackBerry, I would have to point towards a significantly smaller application base, although the problem is much more severe for RIM. There is also a basic sex appeal issue that of the two firms, RIM seems to have had the most difficult time with compared it its rivals. Nokia traditionally has made very flashy products, so they are much more suited to adapt to the consumerization environment that has been created by Apple with their iOS products and Google's OEMs.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    Products

    How about the product question? Are Nokia and RIM releasing inferior products or have they just been outmarketed by Apple and Google?

    Posted by Jason Hiner

    Hardware is fine, but no marketing hurts

    Nokia's current Lumia WP lineup is fairly solid and IMHO better quality than most Android devices. They had better Symbian devices in the past and I have seen quality control issues, especially with the Lumia 900, that appear to be a result of rushing products to market to try to compete in the space. Windows Phone just cannot seem to gain any traction and some of that seems to be a result of Microsoft's limited marketing (similar to their non-existent Zune efforts) and lack of wireless carrier support (I don't think WP can succeed without Verizon even though Apple was able to do it just with AT&T for a long time.) People who use WP generally really enjoy the experience so I am baffled at times while Nokia and WP are not doing better. RIM hasn't released any new products for some time and won't until BB OS 10 so they are really hurting when it comes to sales. Their last round of BB 7 devices was actually pretty decent, but when their premier keyboard device ends up with worse battery life than previous models there is something wrong at RIM. There is lots of promise with OS 10, but RIM needs to make sure to get products into consumers hands before the end of 2012.

    Matthew Miller

    I am for Yes

    Inferior products for RIM, Inferior supply chain manipulation for Nokia.

    I think at least in RIM's case, the company absolutely has been releasing inferior products to that of their competition. The PlayBook, while having excellent hardware, was marred with problems related to basic software functionality during its initial release cycle in 2011. The PlayBook OS developer environment (which is essentially identical to the one used on the upcoming BB OS 10) is crude compared to what exists for iOS or Android and has taken a long time to manifest in its entirety. And the existing BlackBerry 7 products are technologically inferior in just about every way imaginable from the rest of competition. Nokia has arguably released a very good phone with the Lumia 900, but the gestation period of creating a product as a result of their Microsoft partnership has been elephantine, so they have had to subsist primarily on their Symbian revenues which have been in heavy decline. We also know that Nokia's Bill of Materials (BOM) for the Lumia 900 is somewhat higher than Apple's iPhone 4S, which is a more powerful device and is sold with a much higher profit margin. Considering that the Lumia has to be heavily carrier subsidized at $99, this is a recipe for losing a great deal of money.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    Starting with a definition...

    First, let's define what we mean by "survive." I think what we're talking about here is whether Nokia and Research in Motion will remain independent companies and will continue to produce viable smartphones with at least about 10% global market share over the next couple years. You agree? Anything to add or clarify?

    Posted by Jason Hiner

    10% is fair in today's mobile space

    I think that is a fair definition for survival even though Palm and Microsoft have "survived" in the past with much less than 10% for years. Given today's competitive market though I think you need 10% or else you are really just hanging around and if you left no one would really care. It is good to clarify this now because RIM could "survive" as a software and services vendor if BB 10 doesn't go well for them or if they can't make it that far. Nokia is a phone manufacturer who has failed in most services over the years, with the exception of Nokia Maps. Is it survival for Nokia if they just become the sole manufacturer of Windows Phones?

    Matthew Miller

    I am for Yes

    They must remain mostly intact.

    I agree. But to add to this, I would also say that both companies would have to remain intact with most of their existing assets and remaining employees, not not just be a shell of their former existence.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    The current state of things

    Next, let's sum up where Nokia and RIM are currently. Both companies have been reeling so far in 2012 with disappointing financial reports to Wall Street and mass layoffs. Are these two companies in real danger of collapsing financially, or are their troubles being blown out of proportion?

    Posted by Jason Hiner

    I think danger is real and imminent

    Just last week Nokia announces plant closures, layoffs of up to 10,000 people, cutting spending for R&D, and more. These 10,000 losses are in addition to losses from last year (4,000) and earlier this year (3,500) so while reductions in personnel are often needed to reduce costs and focus strategies, losses of this magnitude (total of these three losses is about 25% of Nokia) are signs of serious trouble. They also made major changes in leadership, letting go some long time Nokia employees so that only four of 15 leaders from the previous Nokia CEO's term remain in positions of leadership. Nokia's stock fell 18 percent, the lowest since 1996, following these announcements and their market value fell to just $8.6 billion (6.8 billion Euros) which is down from a peak of more than 300 billion Euros in 2000. This is an incredible loss while the smartphone market has taken off and Apple has shown extreme profitability from iOS. A continued drop in sales could indeed result in Nokia running out of cash so I don't think it is out of proportion at all and is very concerning. RIM is in dire condition too with continued revenue losses (down 19% from last quarter) and falling smartphone shipments (down 21% last quarter). However, I think RIM has a stronger base than Nokia with about 77 million subscribers that include many government and large corporate entities who are slow to change and appreciate the security and IT control of the BB OS. RIM had a cash total of $2.1 billion at the beginning of March, which was up $610 million from the prior quarter. RIM's current market value is just $5.6 billion which again is horrible compared to their high in mid-2008 of nearly $80 billion. They haven't fallen as far as Nokia, but the trend is not good and they are also in survival mode at this time.

    Matthew Miller

    I am for Yes

    A very real chance of collapse.

    These are both very real indications of impending financial collapse for both of these firms. Nokia has approximately 5 billion euro in reserves, but many analysts estimate that could be burned through in approximately one year with their current expenses, so the company is going to have to enact far more severe austerity measures than it has in place now. This could include a much larger round of layoffs reducing the company's size from its 124,000 employees to a much more manageable number. RIM is in a somewhat better position as it has approximately $2B in cash and is a much smaller company than Nokia with only about 14,500 employees. However, the run rate on paying for salaries and operations of their datacenter/network infrastructure and committing manufacturing resources and components to their new BB 10 products could eat that up relatively quickly, especially if the new smartphones do not succeed and they have to write off inventory as they did with the PlayBook.

    Jason Perlow

    I am for No

  • Great Debate Moderator

    Mic check

    Are both of today's debaters online and ready to square off?

    Posted by Jason Hiner

    Here and ready to roll

    Bring it on Jason and Jason :)

    Matthew Miller

    I am for Yes

    En garde!

    Ready.

    Jason Perlow

    I am for No

Talkback

20 comments
Log in or register to join the discussion
  • RIM should survive

    While I hope Nokia dies a painful firey death, for throwing their users "under the Microsoft bus"
    Jumpin Jack Flash
    Reply 7 Votes I'm Undecided
    • Nokia has already died

      Nokia has already died, it is now the New Nokia - 30000 employees less, and parts of the business sold off and services closed/winding down. Thanks to Elop, this New Nokia is 100% reliant on Microsoft, so this New Nokia will survive because of Microsoft's market share dominance.
      I hope RIM doesn't sell out to anyone.
      root12
      Reply 2 Votes I'm Undecided
      • Nokia fine, RIM RIP

        RIM is already RIP, it has nothing to save it, Nokia does, and I know plenty who have bought back in to Nokia after years without them, including myself thanks to the Windows Phone handshake.
        simmomelb
        Reply 4 Votes I'm Undecided
  • Nokia will survive

    The New Nokia will survive because it has sold out to Microsoft. The old Nokia, the pre-Elop-Nokia is gone. I hope RIM can survive without selling out to anyone else. It is also no coincidence that neither Nokia nor RIM is a US company. Nokia has already sold out to a US company, will RIM do so too? If so, there will only 3 mobile OS's by 3 US companies of any significance, iOS, Android, Windows. A change from only just 3 yrs ago.
    root12
    Reply 6 Votes I'm Undecided
    • Some of the old Nokia dug am undersea tunnel and escaped to Jolla!

      Maemo/MeeGo is where Nokia was going (as a replacement for Symbian) and where Nokia would have gone if the shill from Microsoft hadn't arrived to burn the corporation to the ground.

      But now, many of the old Maemo/MeeGo folks have set up shop as Jolla and they claim they'll have their first phone out by the end of the year; here's wishing them luck!

      And with regard to the debate, I'm not sure I understand the question: what exactly constitutes survival? I don't believe either company will exist much longer as a free-standing entity, but they'll both survive as captives of some other entities. With RIM, it will probably be an outright acquisition. With Nokia, well, they may just continue to be infiltrated by Microsofties to the point where all the milk is going to Redmond even if Microsoft never outright buys the cow.

      I guess that's a "No".
      Atlant
      Reply 1 Vote I'm Undecided
      • Intel's money

        Nokia should have taken Intel's money. They are desperate for an 'in' to the mobile marketplace*, and they were already a key Nokia partner as they throw their Moblin mobile technology into the Maemo bucket that spawned MeeGo.

        *irony is 10 years ago the top mobile processor was the Intel Xscale ARM, as seen in iPaq's and Axim's across the world, and they flogged it to Marvell to push x86 mobile.
        neil.postlethwaite
        Reply Vote I'm Undecided
    • I find it strange that....

      both RIM and Nokia are non-US based tech companies who were at the top of their game. Would this happen if they were both American companies? But I also think that Europe and Canada also need to step up and save their baby by BUYING more of said mobile devices. Why the fcuk would you want to be DEPENDENT on US tech companies -- with all the NDAA/SOPA Police State mentality going on by sociopathic US politicians -- when it's economy is in decline?? Better to eat your own dog food. No??
      maxtheitpro
      Reply 1 Vote I'm Undecided
      • Ok....

        If you had any common sense you would know that the US economy is doing better than Europes is right now and you'd also know that Canada and the US are so similar you cant even tell when you leave one and enter the other, its like england and wales... And our politicians arent all crazy
        Jack Patterson
        Reply Vote I'm Undecided
        • And I am for yes...

          I admire both companies
          Jack Patterson
          Reply Vote I'm Undecided
  • Correction:

    The real question is can they and Apple survive against Microsoft?

    ZuneResurection.blogspot.com
    Ballmerfeld
    Reply Vote I'm Undecided