What does it mean for RIM? The new BlackBerry 6 platform, which is expected to be unveiled at an event tomorrow in New York, had better be VERY good.
RIM led the U.S. smartphone market for a long time based on its strong brand and distribution across all major carriers. But RIM has totally dropped the ball when it comes to evolving and improving its platform: It missed the boat on touch phones, its app platform and web browsers have been terrible so far, and the main reason that it’s still selling so many BlackBerry devices in the U.S. are super-cheap deals and buy-one, get-one-free offers. If BlackBerry 6 isn’t a huge improvement, RIM could wind up stuck at the low-margin, low-end of the smartphone market —not where it wants to be.
In no particular order of importance, some thoughts:
1. RIM’s problems are three fold: lack of applications, lack of application development platform/environment, lack of video and screen size.
2. RIM’s upside over the other phones are security and crypto, good battery life and a keyboard on the phone rather than a fold-out. They have phones that operate on both CDMA and GSM with the same feature set, unlike the iPhone, which is on only GSM carriers right now. The push technology was always better than what the competition offered, but that issue is becoming a moot point. The big upside on a Blackberry is you can lock the thing down tight as a drum with crypto and memory scrubbing.
3. RIM has a huge challenge in that their OS/platform isn’t intended for a whole lot of third parties to start rolling out applications. Sure, they have a development environment.... and it is about as much fund as hammering nails through your palms in comparison to Apple’s or Google’s environment. Further, the apps you can write are limited by the relatively modest CPU and memory capacity of the Blackberry handsets.
4. RIM is suffering from the issue I spoke of last week or the week before - the “installed base paradox.” They were successful, so they have this big installed base. Alas, the installed base wants all the new whizzy features, but they don’t want ANY breakage to get them.
The longer I developed software, the more and more I hated the “installed base paradox.”
5. All of the above has resulted in a Nielsen survey coming out today (yesterday) that shows that only 42% of current Blackberry users want their next phone to be a Blackberry. RIM is in serious, deep trouble here. They have a pent-up user base waiting to roll off contract to the competition, which means that if the nominal contract is 2 years, they have at most six months to address this issue or they’re toast where they stand right now.
See “Next Desired Smartphone OS” chart. Blackberry users aren’t loyal. iPhone users have very high loyalty and the Android user probably hasn’t had their product long enough to have much opinion firmed up.
IMO, this is an insurmountable problem for RIM now. Six months isn’t enough time to do what they need to do, which is address the third party app development issue. Unless OS 6 contains some huge mega-win tomorrow, I think I know what I’m going to be doing over the next two years - shorting RIMM.