I read an intriguing analysis of RIM by Michael Mace on Mobile Opportunity. His main hypothesis is that RIM may be on the way out because they are doing what classically happens in a mature market, where a company starts looking at actions like cutting costs to try to continue to build a user base. While I concur with his concepts in general, that companies resort to some self-destructive tactics to try to maintain their position, in the case of RIM and smartphones, I disagree, because the market isn’t mature. I have seen numbers that indicate that less than 1/5th of current mobile phone users who could or would want a smartphone actually own a smartphone. If the market were mature, then how is that Apple and the Android phones continue to see double-digit growth quarter after quarter? This market is still very new, and to use Mace’s terminology, we are still just moving from early adopters to the middle portion of the market. We have yet to see a significant portion of these middle adopters take up the devices.
Lack of Product
What RIM is running into is their lack of compelling product. Their industrial design needs work. They haven’t attracted a significant base of app developers, and their content story is largely unknown to people not using a BlackBerry. Where Apple and Android are doing well, and what will help them to retain some number of the existing customers, is the “stickiness” of their product. People are starting to invest money, in the form of apps and content like books, music and video, on their platform of choice. For anyone who has invested hundreds of dollars in apps, switching to something else becomes a harder decision. It’s similar to the decision for someone who wants to switch from a PC to Mac: if you’ve invested hundreds or thousands of dollars in software, and you depend on it, then switching is not necessarily an easy decision. For some people, with minimal investment, the switch is easy. But for some (particularly businesses), the switch is more than moving documents. It’s reinvesting in new software, training, etc. These similar decisions will drive some existing smartphone users when it comes time to replace their current device.
Unify, Get Developers, Make Better Product
As I see it, RIM needs to do a few things. First, they need to unify their handsets under a single operating system. Part of this includes a mindset shift from seeing them as “smart phones” to looking at them as “little computers that make phone calls”. Doing this will help make it easier for developers to build apps for the platform because they see a consistent direction and a future. It should also make it easier for RIM to keep things straight internally. Part of moving to a single system also means maintaining as much backward compatibility as possible with older models. This market is one where people want the latest software features on older devices, much like the PC market. This isn’t the feature phone market where people are willing to dump a handset to get the latest software features.
Next, RIM needs to do a lot more do encourage developers to move to the platform. First and foremost, get their app development environment working on MacOS, because a significant number of the developers they need to encourage use it for iOS. They also need to clean up their app approval and submission process. Without apps and other content, again the platform lacks a “stickiness” to retain new customers as they continue to try to appeal to new ones.
RIM also needs to get better industrial design, and make their phones actually look attractive. Android is going to eat up the “cheap handset” market, so stop trying for that segment. Instead, go for the middle and higher end of the market (like Apple). Acquiring The Astonishing Tribe is a step in the right direction, but they need to sit down with companies like Frog Design and get some serious help at getting handsets that look good.
Part of the design cleanup also needs to include a catalog cleanup: stop trying to build and sell a half-dozen different models. It isn’t helping, and cheapens the brand. Apple is outselling RIM with 2 iPhone models, one of which is fairly expensive. RIM should cut theirs back to maybe 2 models: a keyboard-only model and a touchscreen model. I would suggest dumping the clamshell and the other form factors. Making product people aren’t buying doesn’t make sense.
Ultimate Goal: Rebuild the Brand
Last, they somehow need to remake their image without losing their identity. A lot of people have heard about BlackBerry, but the association is generally with boring business devices. RIM needs to find a way to change that.