RIM, the makers of the popular Blackberry line of handhelds and “smart” phones, are in the middle of a downward spiral towards irrelevancy. They have proven time and time again, that they can no longer innovate or lead their field, and have been replaced with the likes of Apple and Google (Android).
Today the co-CEO of RIM, Mike Lazaridis, got upset and cut short a BBC interview after the reporter asked him a (fair) question about the company’s issues with security in India. This comes shortly after he played Rodney Dangerfield to the New York Times, complaining about how his company doesn’t get any respect. It’s all very un-CEO-like behavior—and from a Canadian, no less (disclosure: I’m one, too). What’s got Lazaridis so rattled?
No one can know what’s going on in someone else’s head, but looking at the business of phones today, you can see good reason for him to be on edge. While his company sits atop a nice pile of market share (30.4% in the U.S., according the last ComScore report), it’s no longer top dog, having been recently ousted by Google’s Android. And while Lazaridis points out the company is showing growth and expanding into several markets, so are the other major players in the space. The triple factors of competition, a troubled product launch, and a rapidly changing market are all conspiring to twist up RIM’s underwear but good.
“I think the reason that they may not be garnering the respect he thinks they deserve is because the smartphone market is growing extrememly rapidly,” says Charles Golvin, a mobile analyst with Forrester Research. “Does their growth rate actually represent a declining share of a fast-growing market? And is that a harbinger of future decline? Even though their growth the past couple of years has come from the consumer market and overseas, their tradtional source of strength in the enterprise is also being eroded.”
The key problem RIM is facing is that its overall strategy, as laid out last fall, appears to be questionable at best and self-defeating at worst. At All Things D in December, Lazaridis said it was investing heavily in its acquired QNX operating system and dual-core devices, but not on everything (notably, pretty much every BlackBerry on the market today).
The trouble is, RIM doesn’t have any dual-core QNX devices yet. The imminent BlackBerry PlayBook is the first, and so far no phones have been announced. The company has essentially said you can forget about its current crop of smartphones since those aren’t going to be relevant in the future anyway (though to be fair, there will likely be a clear upgrade path). When Lazaridis was challenged on this at All Things D, he predictably backpedaled, but in a way that muddled things even further.
Add to that the coming launch of the BlackBerry PlayBook tablet. The PlayBook was once seen as a potential jewel in the crown of RIM—a tablet that would be the enterprise answer to the iPad. And who knows, it still might be (for PCMag’s take, check out our review). But it’s looking less and less likely. First, a tremendous amount of time has elapsed since the product was first unveiled in September and the launch, scheduled for April 19. In that time both the Motorola Xoom and iPad 2 have not only been announced but brought to market. Second, the PlayBook’s QNX software functions in some half-baked ways; for example, its email app is made to work with an accompanying smartphone. Finally, the launch was apparently delayed many times, possibly even because there was a part shortage due to orders from Apple. It’s been an very rocky road for a device that Golvin describes as “a sea change for [RIM] and a modernization of their platform.”
At the same time, competitors are clawing at RIM’s market share, with iOS holding onto a weighty 24.7 percent, and Android skyrocketing to 23.5 from 31.2 percent the last six months. In the Android camp, Motorola has even debuted a phone, the Droid Pro, that specifically attacks RIM on the one thing it holds over the competition: security.
Certainly, RIM is still huge in enterprise, but it’s there almost purely for functionality. I wager few people would really lunge for a BlackBerry when it’s put next to an iPhone and the latest Android superphone du jour. In other words, as CrunchGear’s John Biggs put it, it doesn’t have mind share. And in a business where consumers upgrade their phones every 18 months, on average, mind share is more crucial than ever.
In considering RIM’s position, it’s instructive to look at Nokia’s recent moves to stay relevant in the mobile space. Earlier this year, Nokia was in a position of huge market share, but on top of a very questionable platform. The CEO saw that the company needed to start playing catch-up fast, made some provocative (although considered) comments, and altered the company’s strategy radically.
The parallel only goes so far, especially since Nokia has virtually no U.S. presence while BlackBerries are everywhere. But it’ll take a lot more than just a commitment to dual-core devices to set RIM on the right course; everyone’s doing dual-core. QNX and the PlayBook will need to deliver, and its next generation of phones have got to wow people in ways the BlackBerry Torch didn’t.
So it’s understandable that tensions are high among RIM’s upper ranks. Things could really go either way for the company in the coming months, and what it needs now is leadership. Walking out of an interview in a self-righteous huff is a lot of things, but it’s not that.