There was an intriguing piece in TechVibes today about Mike Lazaridis, complaining how people “… don’t appreciate our profits”. He goes on to try to explain how what they’ve accomplished is a big deal. Jim Balsillie, in a different interview quoted in the same article, shows his lack of understanding of computing history by claiming that “only Apple has successfully transitioned platforms” and that other companies that tried never made it. What concerns me is that it appears the RIM senior management is a bit blind, and seems to think that past accomplishments are worthy of investor’s trust and industry admiration. It’s hard to know what exactly they hoped to accomplish, other than to appear as if they are whining about not getting enough respect.
A History Lesson
First, let’s correct their poor historical knowledge, at least for companies I know about. To date, I know of 3 companies, in addition to Apple, that successfully transitioned some combination of hardware and software platforms: Sun Microsystems, Hewlett-Packard and IBM. Now, before anyone says “but Sun is dead now”: yes, it is. But it wasn’t their various platform transitions that occurred during the late 1980’s and early 1990’s that did them in. Those transitions happened during their ascendency, more than a decade before their decline. Their decline and fall were due to other issues, not the transitions they successfully navigated at the end of the 20th century.
Sun’s first transition was a hardware shift, moving to their newly invented SPARC chip. Up until 1987-1988, Sun used Motorola 68000-based processors as the heart of their workstations and servers, running a variant of UNIX 4.3 BSD that they called SunOS. However, there was interest in the computing industry to move to RISC (reduced instruction set computing) architectures that appeared to be faster and easier to optimize software for. Sun’s answer to RISC was the SPARC chip, and starting in 1988, they introduced it in their newer lines of machines. By 1989-1990, there were effectively no Motorola 68K-based machines available from Sun. That was their first transition.
Next, Sun made the move away from their BSD-based operating system, SunOS, and moved to a newer operating system based on System V Release 4, known as Solaris. The executables were a different format, filesystems were different, and some of the tooling had changed. Again, this was done around the mid-1990s, and by 1996-1997, SunOS was effectively no more.
IBM had also made a transition in processor technology, in their AS/400 (later known as iSeries) computers. The AS/400 found a lot of work for accounting, inventory management and point-of-sale support, but had its own proprietary hardware. Starting in late 1999, and moving into the first few years of the 21st century, IBM changed the hardware to simplify engineering and save costs. Their new platform, using the PowerPC and sharing the hardware platform with the RS/6000 (later pSeries) machines, IBM moved their entire iSeries product line to this shared platform. The iSeries is winding down, and customers have been moving to other IBM platforms and systems, putting IBM in another transition, and one that appears to be moving successfully.
HP had by far the most complex of platform transitions, mainly because of a series of mergers and acquisitions. First, back in the early 1990’s, HP bought Apollo computer, and with it inherited technology that went into their own RISC chip, known as PA-RISC. HP needed to migrate HP-UX customers on HP-9000 workstations and servers, as well as Apollo Domain and UNIX users (both of which used the Motorola 68000), to their new PA-RISC machines running HP-UX.
The next major step was moving HP-UX from System V Release 3 to System V Release 4, which again came with changes to executables, compilers, filesystems and devices. This was accomplished after the PC-RISC upgrade. HP also had to transition customers from their HP-3000 systems (which they discontinued), as well as newly acquired customers that came with their DEC and Tandem purchases. HP basically had to get their product mix (and customer base) to move from 7 different hardware platforms (HP-3000, HP-9000, Apollo, VAX, MIPS, Tandem NonStop, HP x86 servers) down to 3 (HP-9000, HP Intel servers and an updated Tandem) and from 8 operating systems (VMS, Domain, Apollo UNIX, HP-3000, Ultrix, Tandem Guardian, Windows Server, HP-UX) down to 2 (HP-UX and Windows Server). Guess what: they did it, and are better of because of it. Sounds like a successful series of transitions to me.
So, we have 3 other companies besides Apple, and multiple success stories in terms of transitions of hardware and software. I guess this sort of thing is more common that Mr. Balsillie would admit or apparently know.
Okay, But What Has Rim Accomplished
Having co-CEO’s of a technology company that don’t know their technology history is a bit disturbing, but not fatal. But let’s examine their arguments about what RIM has accomplished, in terms of product availability and carrier support. Yes, RIM has accomplished a lot in its time: 500 carriers, 170 countries, 30 languages. But, this isn’t any more than any other global handset maker has managed, including Nokia, Motorola, HTC, Samsung and others. This is what it takes to play in this game. A worthy accomplishment, and I won’t pretend it was easy, because it isn’t. But it isn’t unique, it’s the price of doing business.
So, here’s why people don’t “appreciate” RIM: it isn’t about finances today (which are still adequate, no question). It’s about the future, and right now RIM isn’t the leader, and their future is anything but certain. They aren’t setting the direction of the industry, they are barely able to keep up and follow along. Yes, there was a time (briefly) where the Blackberry was the smartphone standard. The product went from a brand to a noun: in North America, lots of people called smartphones “Blackberries” even when they weren’t. The product spawned the term “crackberry”, as executives all over the US and Canada got connected on the go. They were, for a short time, the gold standard in enterprise mobile computing, and their success doomed Windows Mobile (who were the top of the heap briefly before Blackberry supplanted it) and PalmOS (which was king before Windows Mobile) and effectively kept Symbian out of Canada and the US. But they never achieved that same level globally, where Symbian ruled the roost, and they still haven’t captured the attention of the retail market the way Android and iPhone have.
Sure, they had increased sales last year, but they lost marketshare, both in North America and globally. Basically, their sales increased because a rising tide generally lifts all boats (except for Windows Phone 7 apparently). Essentially, more people were buying smartphones, making the overall market bigger. Selling more is good, but losing ground in terms of installed base isn’t. Let’s face it: Blackberry isn’t the common noun it used to be. Now people want an iPhone, even if the device they buy isn’t actually an iPhone. Blackberry’s position as a placeholder for the device name in English has been supplanted.
What does RIM need to do? Well, first it needs to show it can lead again. Otherwise they are going to become “that other handset and tablet maker”, outselling future marginal platforms, but no longer the leader in any particular area. Their hold on the enterprise is slipping, and as iOS and Android start to catch up on enterprise features, RIM’s share of that market will continue to erode. What would help is a better environment for app developers. Sure, as the TechVibes article points out, Blackberry App World “… has nearly every major app the typical consumer would ever need”. But consumers aren’t about needs, they are about wants, and when they see that one phone has 10,000 apps or so, and another has 300,000 apps, they gravitate to the one that has more, even if they don’t need it. If consumers bought based on need, then the SUV would never had risen to prominence and the F-150 wouldn’t be the best-selling vehicle by unit volume. Almost everyone would drive a small sedan or a minivan.
RIM needs hardware designs that are better and more compelling. They need more apps, which means they need to sort out the OS and the development tools, streamline the app approval process and make it painless for developers to build for their platform. They need to find a way to shed the somewhat stodgy image they have, and find a new image that connects with the retail consumer that inspires a desire to buy their product. It isn’t about processor speed and gigabytes, its about a product that people want to touch, to hold and have in their possession. Until that happens, RIM is likely doomed to continue to decline into irrelevancy as the industry and consumers pass them by. Whining about a lack of appreciation won’t do it.