The Struggles for Blackberry

While the iPhone gets all the attention, right now the Blackberry is actually one of the marketshare leaders. In North America, Blackberry holds over 40% of the smartphone market, taking the number 1 spot. Globally, it is behind Symbian, holding around 20% (compared to Symbian’s nearly 50% share). However, the iPhone gets the attention and the mindshare, and has become the benchmark industry analysts and observers use when looking at current and new phone offerings. TECHi offered some thoughts on how the Blackberry could reclaim the mindshare of the buying public, but I think the author missed the mark. Most of the suggestions dealt primarily with raw technology (keyboards, browsers, media players) and seems to overlook what I think are the Blackberry’s two main problems: image and ecosystem.

The Blackberry, from my anecdotal observations, is largely perceived as a corporate product. If you look at boardrooms and on the street in major commercial and financial centers, Blackberries abound. RIM has done a fantastic job of making sure that e-mail, contacts and scheduling can integrate seamlessly with most corporate environments. I’ve used Blackberries for many years, and can attest to how fantastic it is that my Outlook and my Blackberry were pretty much always in sync. However, that corporate image is making it hard for RIM to sell the Blackberry to attract retail customers. It isn’t clear that retail customers can easily integrate the Blackberry with their desktop/laptop world without requiring dedicated systems and the use of something like Blackberry Enterprise Server. Basically, when you say “Blackberry”, people generally seem to think “company device”.

The other issue with image is with apps: people simply don’t obtain apps for the Blackberry in the same volume as iPhone users do. An article on Electronista indicates that the Apple app store outsells the Blackberry store 10:1 or more. Part of the problem is that, with a lot of the devices being corporate machines, people aren’t likely to spend their own money on apps, and I suspect a lot of people don’t even know you can get apps for the Blackberry. The other issue, again, comes down to what people expect from their Blackberry: e-mail, contacts, scheduling and phone calls. Its primary function is for communications, not information, entertainment or even general computing. The Blackberry is certainly capable of more. It seems that people either don’t care, or don’t know, that this is the case.

How does RIM fix this image problem? What may be necessary is for RIM to start a new brand, aimed at a retail customer, who has different expectations in terms of what the device does, and how it is used. It is scary to abandon such a well-known name, but that name carries baggage. What may work is some kind of new brand “powered by Blackberry”. This way, they might be able to borrow the Blackberry name, but build a new brand aimed at the retail customer.

Part of that new brand would be a new ecosystem. The Blackberry’s problem when it comes to content is beyond being a technical problem with media playback. Their larger problem is that they don’t have the equivalent of the iTunes Store, where a customer can buy music, movies, TV shows and apps. By making it easy to buy more than just apps with an iPhone, and by providing an enormous library of content for desktops, laptops and iPhone/iPod users, Apple has built a retail giant for content. While the majority of people still buy music on CD’s, Apple holds the #1 spot overall, ahead of the CD-selling monster Walmart. And as the CD sales numbers seem to show, CD sales are dropping while electronically downloaded music continues to increase. Apple is a huge part of that download market. Apple is also building their sales for video (TV and movies). Add to that the App Store, and you have an ecosystem that people can use on both at home and on-the-go.

RIM needs to start to build this kind of retail ecosystem to attract new customers, and to retain them. When I left my last position, walking away from my Blackberry was easy, because I had nothing “invested in it”. The same goes for simple mobile phones I had in the past: it was largely a throw-away device. However, walking away from my iPhone to a Blackberry or Android phone would be a significant hit. I use my iPhone for more than just calls and e-mail. I use the Mobile Me service to sync my calendars and contacts across my desktop, laptop and iPhone. I have a significant investment in movies and TV shows from iTunes that I cannot play on anything but my iPhone, iPod or registered iTunes-enabled computers. My music is at least portable now (with the move to DRM-free music on the iTunes store). But right now I can get communications, information and entertainment in one device. Before, I had to carry at least 2 (Blackberry and an iPod). One device means one less charger, one less thing to carry around (and possibly break or lose). To attract and retain customers, RIM needs to do something similar. Otherwise, they are caught in a rush to the bottom line against the Android handset makers, with little or no customer retention or loyalty. That becomes a game of numbers and razor-thin margins.

Trying to build what Apple has is not easy. It took Apple nearly a decade to do it. But Apple has benefited from it in terms of new customers, returning customers, and being able to take a piece of all of the activity in the ecosystem (music sales, movie sales, TV show sales, app sales), and not just selling the hardware. RIM built the Blackberry on the back of a different ecosystem, one that catered to the needs of the corporate customer, and that took years to accomplish. If RIM is to succeed in the retail space, I think they need to build a new ecosystem, tied to a new brand, that attracts customers, and is built so that it encourages them to stay. It will take time for that to take hold, but without it, I see RIM going the way of Motorola, becoming just another player in a high-volume market with razor-thin margins, and risking becoming less relevant in the smartphone space.


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