Over the past couple weeks, we’ve read a number of bedtimes stories about RIM’s next move. They all start with the same trope: Once upon a time, late last century, Apple was on the edge of the precipice and still managed to come back — and how! Today, RIM’s situation isn’t nearly as dire as Apple’s was then. Unlike Apple, it doesn’t need a cash transfusion and, in the words of Thorsten Heins, RIM’s new CEO: “If you look at the platform it’s still growing, if you look at the devices we’ve got a single phone that’s sold 45 million units.” RIM will pull off an Apple-like rebound and live happily ever after.
Equating RIM 2012 with Apple 1997 is, in so many respects, delusional. Let me count the ways.
First, the context, the marketplace. In its dark days, Apple faced PC clones running Windows. With Microsoft’s 95% market share, it wasn’t even a two-platform race. Microsoft came to Apple’s rescue with a $150M investment and a commitment to continue writing apps for the Macintosh. This was enlightened self-interest on Microsoft’s part: Discreetly tucked into the agreement was the settlement of a brewing IP suit. And by keeping their highly visible (if economically unthreatening) competitor alive, Microsoft hoped to score a few goodwill points in the face of the DOJ’s antitrust investigations.
Fifteen years later, there’s no looming smartphone monopoly. We have a genuine two-horse race between Android and iOS, and a third horse, Microsoft, circling in the paddock. This is a very different world, a much rougher one with bruisers such as Apple, Samsung, Huawei, and ZTE…with this many players, there’s no rationale for investing in a fallen player.
Second, ecosystems. In Stephen Elop’s ringing (if infelicitously timed) words, yesterday’s platform struggles have become all-out ecosystem wars. To claw back into the race, let alone to return to its former CrackBerry glory, RIM must build an array of content and services that can equal or better those that will be offered by the dominant players in 2013.
This isn’t just about app stores — a challenge unto itself when developers ask why they should commit to a troubled player. Smartphone and tablet users expect entertainment, navigation, synchronization between their devices and other Cloud services.
In the Daily Telegraph interview quoted earlier, Thorsten Heins boasts that BB10, the upcoming BlackBerry 10 OS, will have “true multitasking, … potentially running a car’s navigation, entertainment and gaming systems for the whole family“. Elsewhere, he refers to a new world of applications in which your Blackberry will connect to “the embedded systems that run constantly in the background of everyday life – from parking meters and car computers to credit card machines and ticket counters“. (Home automation can’t be very far off.) Even more majestically, Heins tells us that RIM’s mission is “to build a new mobile computing platform to empower a people in a way they didn’t think possible“.
This all sounds like a noble and worthy goal…but it’s a bit vague. How will RIM’s approach be different from — or better than — the competing ecosystems?
This leads us to our third point: The engineering team (or, “it’s simply a matter of implementation”). When Steve Jobs reverse-acquired Apple in 1997, he brought with him the creators of NextStep, the likes of Avie Tevanian, Bertrand Serlet, and Scott Forstall. They led a team of talented, like-minded computer scientists whose goal was clear: Replace the decrepit Mac OS with a truly modern foundation. It took them the better part of five years to produce what we know as OS X.
RIM acquired QNX, the foundation for BB10, a mere two years ago. After a quick bow to the work ethic and technical manhood of RIM’s engineers, one must ask if they’re in the same league as the team Jobs brought to Apple 2.0, if they can accomplish everything they need to do by early 2013. Weren’t most of these engineers already onboard when RIM fell asleep at the switch?
Fourth and last, leadership. Using Apple 1997 as the model for turning around a once-great company invites challenging comparisons. Or, more accurately, a single comparison: Is Thorsten Heins made of the same unobtainium as Steve Jobs? This isn’t a question of IQ, of neo-cortex, but of Mind, of being sufficiently agitated, of having the right animal inside.
The prodigal Jobs returned to Apple having known stellar business success with Pixar, and just-as-stellar lack thereof at NeXT (despite the company’s technical prowess). Heins, by contrast, is an insider. He’s been part of RIM’s problem since 2007.
But enough of this fantasy. Let’s turn to the latest story: RIM’s CEO has conceded that the company might have to license its platform:
To deliver BB10 we may need to look at licensing it to someone who can do this at a way better cost proposition than I can do it.
Dumbfoundingly, the licensing idea (which, presumably, will include BlackBerry Messenger), has been met with approval: ”RIM is in trouble and is seemingly finally listening to reason“.
This gambit doesn’t work. It didn’t work for Palm (twice!), nor for Nokia with Symbian. And it really didn’t work for Apple when it licensed the Mac OS to PowerComputing and Motorola in 1995. The Mac clones quickly underpriced the original products and siphoned profits out of Apple’s income statement. Jobs reversed that decision in 1997, and, after much initial criticism, was ultimately vindicated.
With these examples, what drives Heins to think that the BlackBerry 10 clones won’t underprice RIM’s own devices and empty the cash register? BlackBerry Messenger may be well-liked, but it’s also under attack by free, multi-device services such as iMessage.
So, where does this leave RIM? The use of “Private” in this note’s title isn’t a facile pun. It points to a possible avenue for the BlackBerry maker. If it decides to license the software layer of its (formerly) proprietary platform, RIM will indisputably see hardware dollars disappear much faster than software licenses can be signed. RIM will forego a known source of revenue in order to grow a new income stream that, given enough time, might be strong enough to keep the company solvent.
For a publicly-traded company, switching business models in this way is a factual impossibility, it defies business gravity. Shareholders might applaud the long-term strategy but when the cheering stops, they’ll dump the stock.
If RIM wants to do something bold, such as focusing on software and services, they might consider taking the company private. As I write this, RIM has a market cap that’s less than $4B and more than $2B in apparently unencumbered cash. Management and the Board could work with a Private Equity fund, a KKR-type organization, and buy the company from the shareholders.
The ink dries, the curtains close. Backstage, in private, the company performs painful surgery, sheds the groups and businesses that are no longer required by the new, tighter focus. This may be hard on employees, but it’s unavoidable either way: Lose some of the company now, or the entire thing soon enough.
In theory, the company re-emerges smaller but stronger, with a highly profitable software and services business model.
Will this work for RIM? I don’t think so. Given the company’s low market cap and the availability of private capital, if this were an attractive move, it would have been attempted already. Cold-hearted investors looking at the risk involved must have already asked themselves the burning question: How do you compete with free? How do you sell licenses when Android hands them out, gratis (even if licensees have to pay for a few Microsoft patents)?
Sadly for former BlackBerry fans like yours truly — or for current ones who appreciate its core functionality — there aren’t many moves left for RIM on the smartphone chessboard.
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33 Comments
Your thesis is bothersome. The QNX core is already running cars in multiple ways like Thorsten said! What is your whole point? Taking them private? Are you massively brain-damaged? Can you integrate iMessage into video conferencing with multiple people, or Integrate iMessage with Apps including games? Why don’t you let them show BlackBerry 10 before you go writing your whole obituary? Even you stated that RIM isn’t in fact as bad as Apple was in 1997! Regardless, why would you want to stand by a company that had to be bailed out by Microsoft? In fact, they have over 110 billion in the bank and still can’t find a way to innovate! Stupid Losers who can’t be anymore than a fake associated writer that doesn’t know anything!
@ Michael Schmitt: Thanks for letting me know how you feel about this Monday Note. While I respect your disagreement, I cannot do the same for name-calling.
@MS
“110 billion in the bank” is an innovation that no other company in history of western civilization has yet to achieve.
Apple has 40 years of innovation, idiots like you don’t even know what happen in 90s.
“integrate iMessage into video conferencing.” only a nut would ask for such a feature. Games already have GameCenter , they don’t need iMessage.
iMessage thru Apps is already available, it is called Share button.
RIM is so pathetic that it is fighting WebKit trademark against Apple.
What happen to “Who needs Apps” to “Super Apps” “We got AppWorld too”
Oh the Keyboard is real innovation from like 1874. Too bad RIM can’t patent that.
If Apple is not innovating then RIM is in coma.
I call a spade a spade, and if you would do proper research before throwing garbage out in some blog; you would get a lot more respect. If you want a phone that you have to reload through iTunes, I’m gonna laugh at you. I want a phone that powers International Space Stations, Cars, Nuclear Reactors. One that is stable, and can update OTA without a backup of some proprietary software. Good luck on your endeavor, but it’s crap that you know absolutely nothing about, that shuts down company’s that actually deserve a chance, unlike company’s named Apple!
@Coma
I see your to big of a PUNK to use your real name! Apple makes money out of stupid people like you. Too bad your too stupid to understand any concepts of an all touch screen. You’ll never see that from Apple! Why Not? They can’t innovate! Innovation isn’t suing the bejesus out of every other Manufacturer out there, now is it? Get a life, and the next time, I buy a car it’s gonna be powered by BlackBerry! You know why? Apple can’t innovate!
@Michael Schmitt – congrats, you win today’s award, a matching iPhone 4S and MacBook Air. Thanks for your thought provoking comments. You can pick up your prizes at the reception desk.
@Gary I see they have to give them away for free now! Is that because nobody wants them? I think so! If you’re gonna come at me with something, it better be damn good! Apple isn’t that good to make anything worth commenting anything good about!
@ All: Please refrain from personal attacks. Calling people stupid and such doesn’t advance anything.
QNX is the right bet.
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What they need now is developer evangelism and kits to develop cross platform low energy bluetooth 4/NFC gadgets. No one else has an OS with an ultra low energy profile.
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Thumb wheels, Scroll balls, E-paper, NFC, Qi charging, Energy harvesting and a UI paradigm for interacting with these gadgets on your phone are the areas they should be spending their money on.
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Would be even better if they can standardize the manufacturing processes and create a marketplace to sell them too.
Vishi, Have you tweeted BlackBerry or Alec Saunders yet? I’m sure they would be interested.
Pointing to QNX as the cure-all is to misunderstand the scope of the problem. RIM’s problem is not solve-able by a better OS.
That’s necessary, but insufficient. The mobile domain is an entirely different animal in terms of the end-to-endness required to be a player in the game.
Presumably, if RIM could have executed, they already would have, right? That’s not to denigrate, but it underscores the base question which JLG is putting a bow around — i.e., what’s changed?
QNX has good track record on the embedded market.
Maybe they should focus on this segment, while it is still “free” (ok, there is competition, but nothing really serious, … yet).
They don’t need to “flee” the smartphone market; even if their market share falls to 2%, it’s still a sizable number of consumers to serve. Plus it’s a good place to make the brand known.
They would just have to “size down” on Smartphone market to meet sustainable level, and invest in the new promising market.
You are right. Software licensing only ever worked for Microsoft, and it took the IBM monopoly and many criminal acts on the part of Microsoft executives to make it work.
RIM would be better off making iPhone accessories. If I switch from BlackBerry to iPhone, why can’t I buy a snap-on RIM keyboard and a BBM app for an extra $100?
> No one else [but RIM] has an OS with
> an ultra low energy profile.
Apple has 2: iOS and iPod OS (iPod nano and classic.) And both were tuned from inception for ARM mobiles and consumer users. A car actually has way, way more energy than an iPod or iPhone. QNX is getting terrible battery life for mobile computing compared to Apple’s solutions. And QNX has not shipped on mobiles. iOS has a battery-optimized app platform (no Flash, limited actions in the background, native C/C++ code) that will take years for anyone else to develop.
The problem is that RIM’s best case scenario is to be 5 years or more behind Apple for the next 5 years. They will have no customers left because it is easy to get the Apple products and people need these features now
In my opinion Android has better phone API:s than iOS but iOS is a much better computer. Together they pretty much cover to spectrum.
In fact people who look at the iPhone from within a framework of traditional smartphones seldom understand why the iPhone has disrupted (even destroyed) the smartphone business. Today there are only two left standing – Apple and the apple-copycat Samsung.
So were does RIM fit in. They picked up QNX but QNX is strong on communications and as a real-time kernel but seriously lacking wen it comes to UX (animation, typography, advanced graphics and so on).
And RIM is not a computing company – it is still very much a smartphone company. – so RIM unlikely has the necessary resources to add what QNX needs to be a viable platform for developers.
While there is nothing specifically wrong with the concept of a person buying every available smartphone, tablet or other device, is there some genetic defect that causes these people to become aggressively opinionated and stridently rude?
The author, an apparently successful person, accustomed to placing money $$$$ behind his opinion, does not claim to be an oracle. The aggressors on the other hand, notwithstanding claims of technical prowess, usually appear unable to handle spellcheck.
Technically, in my opinion, BB10 …… mmmm …. why bother?
Why not saving private RIM with crowdfunding? Just kidding…
More seriously, I would have loved to see the once praised Palm’s WebOS on my future BB. It would have stood a chance vs Apple and Android. BB should buy it back from HP!
In a highly competitive (and disruptive) market such as the smartphones, there is always room for more (innovative) players. “Competition is healthy”.
QNX is a great operating system, lots of parallels there with NextSTEP since it is a microkernel as well. I don’t think it will get very far though, not now with Android being so popular and not without a decent application development stack and VM for developers (like .NET or Java, writing UNIX C GUI apps isn’t very attractive)
I disagree with you regarding licensing. The attraction and popularity of RIM has always been its software and services, not hardware design. IMO the hardware was terrible, but it sent and received email flawlessly.
Apple spent ~7 years attempting to get a similar email and PIM sync system working, through false attempt after false attempt, mobileme etc. and now iCloud, which still isn’t perfect. the entire time RIM was sitting on the best solution in the world, but instead of seeing Apple as a potential partner where they could provide the cloud element, they freaked out and attempted to compete on the rest of the platform
The only other working sync is ActiveSync from Microsoft. HTC Android devices ‘powered by RIM’ for the enterprise, or iPhone devices powered by RIM. they could do this without official partnerships, just develop clients for each of the platforms. they already have the worldwide server network and could compete with Good and MobileIron
IMO they should have done this 3-4 years ago. a leveraged buyout must be getting to the point of being attractive, problem is that most LBO firms are only competent at stripping, merging and selling like a wrecking yard or chop-shop rather than innovating. I feel RIM are on their own with this till the end.
Nice post, I’m waiting to see BB10 before making my mind about RIM’s direction. But It doesn’t seem good, on a software level It they can’t win against the polished iOS interface or the Android platform,
It would be nice to see RIM focusing on the hardware of their new smartphones, that has been always their strong point and maybe they can still offer something interesting, I’d like changing my recharge-me-everyday atrix 2 for a Blackberry with a stupidly high battery life and BB10.
The comments of death to RIM that you see in here, are exactly the comments you saw about Apple in 1997… You’re all about to witness a change, one that you will not want to accept but RIM will come out on top if you believe it or not!
with present RIM culture, engineer will layoff, pretender will keep in RIM, and then let them stay in old RIM, new RIM will be good
No RIM is not gettng ready to do anything spectacular (other than reaching the point of being cheap enough to purchase for any relevent patents). When the first IPhone came out three cell phone companies laughed, derided and predicted that Apple was out of it’s league. Those three companies…..RIM, Nokia and Motorola, last time I checked the only two cell phone companies (or companies that make cell phones) that were profitable were Apple and Samsung (heck Apple generates more revenue from IPhone sales than Microsoft generates altogether). Hubris and arrogance did it’s little dance and the titans have been replaced by the new gods of olympus (and to MS and all of the other name calling RIM supporters from above, I don’t own a single Apple product or even a smart phone), but reality is reality,
@MC The problem with everyone is that everybody cursed the iPhone in 2007, saying it would never crush BlackBerry: http://www.businessweek.com/the_thread/techbeat/archives/2007/01/an_iphone_reali_1.html
Reality of course sunk in and is killing the BlackBerry. This Author is in theory claiming that BlackBerry 10 will not kill the iPhone. Really? How do they know what RIM is working on? I’ll save this Page and in 5 years come back and say I told you that BlackBerry can come back! The reason: I know what they’re working on!
@JLG:
I’m sad to see you promulgating the fiction that Apple was “rescued” by Microsoft’s $150 million investment, and linking to an article two years after the fact that was entirely bereft of any true context or actual figures other than that “$150 million” one.
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When Microsoft invested $150 million in Apple stock in 1997, Apple still had $1.2 billion (that’s “billion” with a “B”) in the bank:
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http://news.cnet.com/2100-1001-202143.html
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It really wasn’t all that much money for either company. What it more amounted to was a settlement to the patent disputes between the two companies that Apple had brought against Microsoft for copying some code from QuickTime. Now if $150 million seems like a lot for a patent settlement, consider that it’s estimated that Apple paid Nokia $600 million to settle the patent dispute between them last year, and Apple is asking for $2.5 billion in their case against Samsung.
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In addition Microsoft was paying for Apple to set Internet Explorer as the default browser in Mac OS. How much has been paid for other, similar deals? How much does Google pay to Mozilla and Apple for their position as the default search engine in Firefox and Safari?
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Note that just a few months earlier in 1997 Microsoft had bought the little company WebTV outright for $425 million. Later that year Microsoft acquired Hotmail for $500 million. In 2007, 10 years later, Microsoft invested $240 million in Facebook. Far from “rescuing” Facebook this amounted to a mere 1.6% of that company. Just last year Microsoft paid $8.5 billion (that’s again with a “B”) for Skype.
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$150 million is only a symbolic amount of money for companies of this size.
@Lun it’s sad to see an apple-fanboy downplaying the importance of the 1997′s 150M$ package from Microsoft, and completely change the wording of JLG article long the way.
The 150M$ package brought with it a message : Microsoft will come the rescue of Apple. As a consequence, the Mac platform is* viable*. It made a terrible difference in the purchasing decision of Apple users, especially corporate ones : are they investing in a dead end, or something they know will be there a few years down the line ?
That’s, in essence, what Microsoft gave to Apple in 1997 (at the request of Steve Jobs by the way). As said by JLG, the “money package” did not come alone : there was also a commitment to continue developing critical applications for the platform for many years. And a personal note from Bill Gates at the conference.
This is the kind of strong messages Apple needed to just remain relevant. A starting point, from which Jobs could build something greater.
Making a straight relation with current investment in Facebook is purposely falsifying the importance of the event. Only to pretend that Apple “could have succeeded alone”, without any helping hand from Redmont in its darkest days. Sure, please yourself.
Rewriting history is a much too common practice among apple-fanboys, this is plain sickening.
What I’d like to see is a RIM machine that’d let people make custom ROMs, which gives users options to adapt the hardware to their needs. So, open it up but have excellent hardware and with a kernel of sorts that’s super-fast, swishy, sweet graphics and able to plug-in to other machines as well e.g. why can’t my RIM phone talk with and/or easily connect/share to my Cowon MP3 player?
@JLG:
It’s unfortunate that so many of the comments on your blog have degenerated to such a level of vitriol and name-calling, with arguments based so much on opinion and hypothesis rather than specific factual information.
@ Lun Esex: You’re right. Name calling and other uncivil comments don’t help. We tought about removing such comments and made a deliberate decision to let them continue. One thought is they’re self-destructive: personal attacks and other insults demean the originator, not the target.
That said, I’m afraid it turn into too much pollution. We’ll see.
@Michael Schmitt: We get it, you’re a big fan of RIM. However, saying that you know what they are working on doesn’t really help this discussion. You mention “calling a spade a spade”. That’s precisely what JLG is doing. No matter how you spin this, RIM is in trouble and trending downwards. Could things turn around? Sure, anything is possible. In this case, the general consensus is that it’s improbable. That’s not based out of a hatred for RIM. It’s based on the facts of the current climate in the mobile market today.
@Mark Sigal: Exactly! Improving the OS is simply a minimum requirement to stay in the game. But look at Microsoft… they’ve done that and it simply isn’t enough. An ecosystem needs to be built that outclasses that of Android or iOS. I don’t think RIM understands this and if they do, I see no evidence that they’re not already to late. The tools needed to compete in today’s smartphone market are much different than they were 5 – 10 years ago.
@Lun Esex: Agreed. JLG seems to be playing up the $150M investment by MS to dramatic effect. It’s generally understood that MS’s investment was more symbolic than anything else. The continued investment in Office meant more than the cash. Apple was in bad shape, but the $150M wasn’t the make or break deal. It was a vote of confidence that did also serve to keep them out of trouble with the DOJ.
I like the iphone. I have one of the very first ones (4GB if you remember). But, I suspect that RIM, if they are committed to what they are doing just might have a shot. My reasons are: 1) whereas computers are very sticky (sorry I don’t do Mac cause I think Windows), phones and tablets are much less so. I am amazed how much people switch between tablets and phones. People have less invested in their tablets and phones. Remember they are personal statements(fashion or otherwise). What becomes cool is often something that is not the thing that “everyone” else is doing. People will switch. 2) Yes, there are lots of apps, but many of those apps cannot be found, according to studies. There are only about a 1000 apps that are downloaded in a meaningful quantity. Most people will only see and download the top apps (favs). So, as a developer of apps, new ecosystems become fresh territory where one can make their mark. Can’t get any traction with iTunes, perhaps one can be a top app on BB10. 3) The choice of QNX may mean that RIM bought into a preexisting ecosystem (autos etc.) which could be a potential market for their services. Could this lead to the next big thing? 4) A recent report from Chetan Sharma Consulting found that 90 percent of tablet users are only using Wi-Fi, even if the tablets have cellular data capabilities. As well, most of the larger tablets never leave home. Is this how it will always be, or is there something missing that is keeping people from using their tablet’s outside the home. I want to go through Safeway and have all my preselected deals pointed out to me as I go up and down the aisles. I cannot do that yet. 5) Has the iphone plateaued at the moment, making it easier for others to catch up? The obvious big improvements were in the early days.
Disclaimer: I got myself a BB Playbook to see what it is all about, and I quite like it. The software is still a bit rough around the edges, but I don’t want to give up the multitasking now that I have gotten used to it. And, it is quite fun to see what “missing” feature they will fix or add (such as downloading podcasts in the background while I am doing something else, which was added in the latest OS release a week ago).
Where does all this leave a mere consumer? Here I am thinking of buying a tablet for my missus. Now I own an Ipad 1 and operate a bold,they just don’t mix, especially as my blackberry is on enterprise configuration. However my missus owns the curve,so was thinking of buying the playbook. However everyone I speak to screams ‘no don’t do it. A. Android is better and B. if RIM goes bust you will be stuck with a no support,no apps etc.
Whats the truth,is the market for RIM imploding..do I get the playbook or go Android. Based on the above article,I am screwed.
Ottimo, articolo davvero interessante, era proprio quello che cercavo! Grazie per lo spunto!
It’s genuinely very complex in this full of activity life to listen news on Television, thus I simply use web for that purpose, and take the most recent news.
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