Does BlackBerry still have juice? The 10 magic tricks RIM must pull off to survive

Or risk being a footnote in mobile history in the 'Apple and Android scalps' section...
Written by Natasha Lomas, Contributor

Or risk being a footnote in mobile history in the 'Apple and Android scalps' section...

Are RIM's best years behind it? Once the apple of the business user's eye, the BlackBerry maker has struggled to adapt to mobile's new world order. After RIM's shares took a battering earlier this week - and the company cut its sales forecast for the PlayBook - silicon.com's Natasha Lomas weighs up the challenges that lie ahead for the company.

1 - Managing the difficult switch from its legacy BlackBerry OS to a new platform
RIM's BlackBerry OS has been showing its age for years. Even before the launch of the iPhone, the writing was on the wall for a software platform designed and built at a time when the 'email phone' was a revolutionary concept - and true mobile computers were more sci-fi than reality.

As far back as 2006, analysts were heard proclaiming BlackBerry hardware needed to shape up or lose out to more fully featured rivals.

BlackBerry OS 6

The BlackBerry OS is showing its age - RIM needs to get touch- not Qwerty-centric fast in order to keep upImage: RIM

"RIM's challenge is the software that powers the BlackBerry phones is old and is increasingly uncompetitive with Android and iPhone particularly," Ian Fogg, independent telecoms analyst, told silicon.com.

"The issue for RIM is the future. They can't keep going with the current BlackBerry OS - they need to transition, to switch to something new, something modern, something that supports apps, delivers a much better internet experience, that's much more media-centric and much, much more modern to be competitive in 2012, 2013 and beyond."

RIM's BlackBerrys may have been great email devices but email - and phone - pretty much summed up the feature set on offer, and the mobile world has moved on spectacularly since the birth of the iPhone and Google's Android platforms. Switching from its legacy OS is going to mean serious upheaval for RIM - and therein lies the risk. RIM needs to build a compelling mobile user experience on top of an all-new OS - QNX - and do it in record time, all while keeping existing BlackBerry users happy and loyal.

There is also the thorny question of what to do about backwards compatibility with the installed base of BlackBerry users. "They risk losing compatibility with all of their installed base if they don't execute well," said Fogg.

"This is a critical year," Roberta Cozza, principal analyst at Gartner, said. "The loyal BlackBerry users know there's going to be new devices based on a new platform so we might see them either wait if they're really loyal, or unfortunately go with the other platforms."

And in such a crowded and competitive mobile marketplace, the ability to gain a new generation of BlackBerry users can't be guaranteed.

2 - Designing a compelling user experience with touch-centric design at its core
RIM's DNA spells the letters QWERTY. Physical keyboards were great in the age of email phones but can look outdated in an era of touchscreen smartphones. The BlackBerry OS was designed to function in...

...a non-touch environment - navigation was all about the thumb wheel, since scrolling through emails was how a BlackBerry user spent their time. Web-browsing, apps, consuming rich media content - none of this stuff was even dreamed of. As the mobile market has evolved, and networks have been upgraded to carry more data, RIM has been adding more functionality to its platform in an attempt to compete with more fully featured rivals. At its core, however, the OS was never designed to be so smart or so touch-centric.

"They tried the full touch which was a big, big trend in the market but unfortunately they didn't manage to deliver that. This was an issue around their UI, and also their own platform that was really built to support Qwerty input rather than touch," Gartner's Cozza said.

RIM: What are the risks facing the BlackBerry maker?

Can RIM come up with a juicy new BlackBerry OS to battle Android and Apple?Photo: Vibrant Spirit

Thus far, RIM has failed to design a compelling user experience that can exceed or even keep up with its rivals - and it will need to do that if it wants to compete with the master design craftsmanship of Apple and the innovation engine of Android. RIM is not only new to this touchy-feely game, it's weighed down with legacy baggage - the worst of all worlds.

"As a piece of software, [RIM's new OS] QNX is very sound," Tony Cripps, analyst at Ovum, said. "It's very good at utilising resources that are available to it - it's not wasteful. It's probably ideally suited to this kind of job but [the success of the platform] all depends on what's done on the user experience end of it and whether that catches the attention."

"The core technology they have in QNX is very competitive," independent analyst Fogg added. "But the core technology alone is not sufficient. They've got to build that end-to-end RIM experience that everyone expects, to make it seamless not just on the device but on the network and in the enterprise. That means they've got to build all these different things on top of that core technology platform and that's their challenge."

"They will really have to come up with something pretty unique and innovative," added Gartner's Cozza.

3 - Building a new ecosystem, enlisting developers to its cause, and doing it all before other ecosystems become entrenched
As Microsoft CEO Steve Ballmer so famously declaimed, developers, developers, developers: mobile is an ecosystem play these days - it's all about the apps and the developers. Without developers there are no apps, and without apps there is no ecosystem.

RIM has nurtured a business-focused developer ecosystem around its BlackBerry OS but it will need to build a new ecosystem to support the upcoming QNX-based platform. Doing so is going to be an uphill struggle, as competing platforms such as iOS and Android are streets ahead in this department. Just having a good platform without a strong ecosystem is not enough - as Palm's webOS has shown.

"Even after launching the new platform, because webOS requires completely new apps to be written for it, Palm hasn't been able to leverage its history of third-party developer support - they've had to start afresh, and that's a risky thing to do. That's the sort of position RIM is in," said Fogg.

RIM will need to rally developers to its...

...banner and persuade them it can give them the tools and support they need to build great apps. Up until now, RIM hasn't been able to deliver for developers. The number of apps on its App World marketplace trail far behind Apple's App Store and the Android Market.

Most recently RIM announced it would be encouraging developers to port Android apps across to BlackBerry App World to try to bulk out the number of apps available for its PlayBook tablet - hardly a vote of confidence in its own developer ecosystem.

"One of the problems that RIM is kind of setting itself up for a little bit is a similar thing to what happened previously with Nokia - it begins to support too many flavours of application development for third parties to know what the best way ahead is," Ovum's Cripps said.

"The migration to QNX should have been done some time ago," added Gartner's Cozza. "Now they are late, they have to build a whole community of developers around QNX and I'm not sure if that will be enough for them to still be within the top players or just become a niche player."

"They've been late to respond to this ecosystem-driven market [but] they need to be quick. They are already in a dangerous situation because the other ecosystems unfortunately are entrenching in the consumer market very rapidly - we can already see that in North America."

"We have seen the first [QNX] tools being delivered to the developers, but it's just the first stage. They have to learn how to manage the new community around QNX. It takes time to get a platform to a good level of maturity."

4 - Innovating faster and doing so even as the pace of mobile innovation accelerates
Asked by silicon.com last year why the company was failing to innovate at the speed of rivals such as Apple, RIM's SVP of the BlackBerry platform pointed to BBM - its BlackBerry Messenger software - as an example of RIM pioneering the mobile space.

BBM is indeed a popular and sticky instant-messaging service, beloved of teens and office gossips alike. It is also an innovation under critical attack from savvy rivals. Apple has announced iOS 5 will include a feature called iMessage, replicating BBM's functionality on Apple's next-gen operating system, even as BlackBerry users are stuck on a last-gen platform - meaning another of BlackBerry's USPs is for the chop.

On the tablet front, RIM has struggled to follow Apple's iPad lead. RIM's own tablet limped to market more than a year later, missing key features such as native email. But it's not just Apple RIM has to worry about. Android is no slouch in bringing emerging tech to its platform and keeping things fresh with feature-packed, regular OS updates, including a tablet-focused one.

By contrast, RIM hasn't been able to overhaul its smartphone OS yet, and has been slow off the starting blocks in tablets. The company risks being forever outstripped by fleet-of-foot - and deep of pocket - rivals who are setting the mobile agenda.

"This isn't an easy industry to be in," said Ovum's Cripps. "What I think we're seeing is...

...an acceleration. The rate at which [mobile] software platforms need refreshing begins to shorten because there's always going to be a vendor that has a next-gen product in the market."

"RIM really need to execute more quickly," Cozza concluded.

5 - Avoiding acquisition
RIM's share price took a battering earlier this month, following disappointing financial results, resurrecting talk of the company as a takeover target.

Speculation about possible suitors for RIM has included the likes of Dell and Microsoft. The BlackBerry maker has been spending a fair amount of its own cash in recent years buying a variety of software companies such as DataViz - maker of the Documents To Go apps - and most recently QNX, creator of its new OS platform, adding to its attractiveness as an acquisition target.

"They are going to have a difficult year this year," Ovum's Cripps said. "They're not necessarily going to meet all the expectations that the investment community has of them. Nonetheless, they are a very sound business and they've done remarkably well - coming out of being effectively a two-way pager company originally. They've maintained momentum in the smartphone industry and in the handset industry generally that I don't think anyone would have expected they were going to be able to. But 2011 is not necessarily going to be a year they're going to remember all that fondly."

6 - Protecting its lower end
A particular risk to RIM is at the lower end of its portfolio, which is now under threat from cheaper and cheaper Android handsets.

The battle for the high end has arguably already been lost to Apple's iPhone but RIM has made volume and a broad portfolio of mid-tier handsets work hard for it in recent years. RIM is therefore being squeezed from above and below - and the risk is it has nowhere left to go.

BlackBerry vs iPhone: RIM has been usurped by more innovative rivals

BlackBerry vs iPhone: RIM's cachet has been eroded by a new class of mobile device… Photo: Natasha Lomas/silicon.com

"More than half of their business now is international sales which means from emerging markets as well as Europe," Gartner's Cozza said. "In these markets they've been successful mainly because of their lower end devices like the Curve and because, for example in Europe, they pushed their mid-tier device in the pre-pay segment and so on, so I think they have issues [with the rise of low-cost Android handsets]."

The average selling price of BlackBerry devices has also been declining in recent years, putting pressure on the company's profitability and requiring it to ship more and more BlackBerrys, running faster and faster just to stand still. With handset costs being driven down by increased competition, and RIM needing to discount its devices to woo customers away from rivals, the company also risks eroding the cachet of its brand: the BlackBerry becomes less a badge of reliability and quality, and starts to look more like cheap and cheerful bargain bin fodder.

"In the cheaper smartphone segment, RIM are the main competitive play against cheap Android smartphones," said Fogg. "RIM is still very competitive in...

...that segment and that is why we've seen the average selling price of their smartphones decline. They're still selling in large volumes but they're selling in a cheaper price point."

This effect is compounded by RIM's inability to deliver a 'hero handset' to compete with the very cream of the mobile market. RIM's attempt to deliver one backfired spectacularly in 2008 when it turned out the opposite: the ill-fated BlackBerry Storm. It was the opposite of innovative - buggy, cumbersome and lacking key features such as wi-fi.

Since the Storm, RIM has continued to iterate its handset design, all too often just tweaking existing models rather than putting in the R&D effort to come up with a fresh take. As Microsoft rebooted its mobile efforts, ditching Windows Mobile for Windows Phone, RIM desperately needs to start afresh.

7 - Keeping shareholders happy
Confidence, as economists will tell you, makes the money markets go round. Take it away and everything grinds to a halt. RIM risks being caught in a vicious circle situation: poor performance causes a lack of confidence which leads to hasty efforts to push products to market before they're ready, meaning such devices then perform poorly.

As the company's performance continues to deteriorate and it continues to lose out to rival platforms, customers will churn. Pulling out of this death spiral is going to take time - time for RIM to rebuild its OS strategy, to woo developers and grow an ecosystem - which means times are going to get tougher for the company in the coming months. Shareholders will need to keep their nerve and pray RIM can turn things around.

RIM's confidence problem is compounded by the high calibre of competition it now faces, as Ovum's Cripps notes. "The obvious problem is it gets rated against in market-cap terms the biggest tech company in the world [Apple] - is that really a fair comparison?"

"Those sort of market forces that are driven from the investment side of things have certain expectations. Right now, RIM's not meeting the expectations that those people have and certainly the fact it has adjusted its guidance and so on in terms of the investment markets is not a great thing at all. It gives them reason to doubt the strength of the shares moving forward and it may well result in some of the biggest institutional shareholders getting out of RIM if they think RIM doesn't offer them the best opportunity for their investment in the longer term," he added.

"Perhaps the market expectations on RIM in terms of volume shipments are becoming...

...somewhat unrealistic," Cripps continued. "Some of RIM's own expectations have been perhaps greater than the current market conditions allow for. For many years, you could argue that RIM has had spectacular growth - you would therefore expect that as the years went on that would begin to slow down. What it might be is a case of RIM having to find a new level."

BlackBerry 7250 - when smartphones were email phones

A BlackBerry 7250 - the road warrior's 'email phone' of choice, back in 2005...Photo: Bart Everson

8 - Understanding the consumerisation of IT
RIM's glory years came at a time when the IT department was a fortress within business and the IT chief held all the keys to tech's kingdom. But the CIO's times are changing and RIM clearly hasn't grasped quite how much corporate IT is being overtaken by the consumer tidal wave. The company still uses phrases such as "enterprise grade" and "CIO-approved" to market its products, failing to realise such terms are increasingly meaningless in today's business world. Chances are the CEO doesn't want a BlackBerry anymore, the CEO wants an iPhone and probably an iPad too.

"We are seeing iPhone getting into the enterprise and we will also see Android getting into the enterprise, simply because employees will want to have their own toys and the IT function will just have to deal with it. This is increasing pressure on RIM," said Gartner's Cozza.

9 - Beating complacency

Success is a seductive mistress and for many years RIM took pleasure in a market that was largely made up of business users, but failed to see this would not last. It's not surprising that a company founded in 1984 might not be able to stay at the cutting edge of mobile technology forever, but RIM has shown itself to be stubbornly resistive to change for a very long time now - so much so it's starting to look like the curse of complacency. In a fiercely competitive market such as the mobile space there is zero room for complacency. The mantra must be innovate or die.

"They've left it late [to change to a new platform] but I think that was partly because the BlackBerry platform was a more competitive platform than either Palm OS classic or the original version of Windows Mobile," Fogg said. "[RIM] could afford to leave it later because they had a better starting point. If the current BlackBerry platform had a long future ahead of it, it would be a much easier position for RIM to add things to it and keep its existing customers happy."

"It becomes sequentially more difficult to...

...adapt [a previous-generation platform] to new requirements over time," added Ovum's Cripps. "RIM has found itself in a not dissimilar situation to Nokia with Symbian. These are products from, in a sense, a previous generation, maybe two previous generations."

Gartner's Cozza continued: "At the very beginning of the smartphone market they were really a defining vendor. It seems to me that now they've really been more of a passenger of the market. The competitors are innovating faster.

"They've really been slow in responding more drastically to things that they should have done, like abandoning the BlackBerry OS in favour of something more capable or even adding the full touch form factor. It seems they didn't pay much attention to some of the trends."

10 - Putting a stop to mixed messages
RIM hasn't been covering itself in glory on the marketing and PR front in recent years, and having a clear and compelling message is more important than ever in such a competitive mobile space. Whether it's overhyping devices or badging them with yesterday's benchmarks - "enterprise grade", "CIO approved" - or indeed inventing terms to conceal its lack of innovation - think "super apps" - its messages can seem outdated or just wrong-headed.

RIM: co-CEO Jim Balsillie

RIM's co-CEO Jim Balsillie on stage at the company's annual conference in 2008Photo: Nan Palmero

Mixed messages are also a problem for RIM. What exactly is a 'clickable touchscreen' saying to the mobile user? More recently, a lack of clear direction marred the launch of the PlayBook, with RIM starting out saying the slate would not have native email and then subsequently claiming the BlackBerry Bridge 'email-reader' feature is just temporary and that native email will be added in time.

Its message to PlayBook developers has been equally muddled, with the announcement of an app emulator that will allow PlayBook users to run Android apps on the BlackBerry slate. "I'm not sure what type of message it's sending to QNX developers," noted Gartner's Cozza.

The company's chiefs haven't always helped RIM convey a sense of a clear, well-thought-out strategy, with co-CEO Mike Lazaridis attempting to claim Qwerty keyboards are the next big thing in a post-iPhone world, and co-CEO Jim Balsillie, whose speaking style tends towards a tortured stream of jargon - "multi-variant scarcity equation" and "peripheralisation" being two choice examples - consistently failing to speak in a language consumers understand. This is a communications company that finds it remarkably difficult to get a clear message out. It's also a company pitted against that master of marketing: Apple.

RIM may be confused, but it simply cannot afford to sound confused.

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