The three challenges facing RIM

The new BB10 OS is a huge step forward, but is it enough to make BlackBerry relevant again?
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First Published: Wed, Jan 30 2013. 04 55 PM IST
Financial analysts are starting to see some slight room for a comeback. Photo: Pradeep Gaur/Mint
Financial analysts are starting to see some slight room for a comeback. Photo: Pradeep Gaur/Mint
Updated: Wed, Jan 30 2013. 09 34 PM IST
The BlackBerry has gone from being the dominant smartphone to becoming a marginal player in most markets, including India, and Research In Motion (RIM) has suffered huge losses, losing out to the iPhone and Android handsets.
A year after the iPad (first generation), RIM launched its own tablet, the BlackBerry PlayBook, in April 2011. This proved to be one of the biggest disasters for it. Initial sales of the PlayBook were poor (only 700,000 units had shipped [not sold] during the first two quarters following its release), and only picked up after the company started selling the device at a heavy discount. This move cost RIM $485 million (around Rs.2,600 crore now)—yet early reviews of the PlayBook had been mostly positive.
The fact was that the PlayBook had good hardware packed into a very pleasing design. The interface was more user-friendly than some of the alternatives available at the time, and while there were not too many apps at launch, RIM had announced incentives to get the ball rolling, and the company was even working directly with developers.
Yet, it was a flop. On Wednesday night, RIM will launch the BB10 OS, a dramatic reinvention of BlackBerry, along with a new phone which will run the OS.
What we’ve seen so far suggests that the new OS and phone are nicely designed, highly intuitive and packed with innovative features. But will this be enough? There are a few challenges that face RIM now, and could pose a problem.
WebOS all over again
Most people have not heard of WebOS, which is a pity. Developed by Palm (which was acquired by Hewlett-Packard in 2010), WebOS is seen by many as the inspiration for many of the key features of modern smartphones. Launched in 2009, the mobile operating system was smart, easy to use and looked great. The problem was that nobody really bought it. It was new and different, and didn’t have a large library of apps to compete with the iPhone, something that BB10 needs to address too.
RIM needs to get people to use the new OS to get support on board. But with just one company making handsets, will it be able to gain user numbers? And that’s a big issue, because unless the platform has a large number of users, it’s simply not cost-effective for app developers to get on board and spend money on building the application ecosystem.
App numbers aren’t the whole story
Building an application ecosystem isn’t just about getting the numbers up either—something Microsoft might be discovering now. Like RIM, Microsoft also has to face the challenge of building interest in a completely new platform, and both companies have been working with the developer community to try and make their app stores look active.
The most popular apps aren’t all available in the Windows Phone Apps+Games Store yet. There are usually alternatives available, but these often fall short in one way or another. And the experience of using the apps on the system is often sub par as well.
An Android or iOS user goes from a mature ecosystem of more than 700,000 apps to around 100,000 when moving to BB10. Today, most new apps of note still make their debut on iOS, and then move to Android, because developers have reported that it is easier to monetize iOS apps. With far fewer users, Windows Phone and BB10 can only be lower on the priority list, so even if both grow at a faster rate than the more established Android and iOS base, it will be difficult to bridge the gap in actual numbers for some time.
Does RIM have the time?
Recent reports have suggested that RIM is facing financial trouble. It certainly lost a lot of money over the PlayBook. While BB10 (and the new hardware) may in fact be better than the competition, this might still not be enough. Building user numbers and the app ecosystem is going to be a long process—is RIM going to be able to go the distance? Microsoft has a much larger war chest to draw upon, and companies like HTC, Samsung and Nokia to work with, helping it put a far wider array of options in the hands of users. RIM, on the other hand, is working alone.
The cost of the hardware could also slow adoption—Nokia, for instance, has seen low numbers for its Lumia phones, while the cheap Asha range has been growing quickly; and while Android is available in a range of prices, sales numbers for companies like Micromax make it clear that the low-end market is growing fast. Since RIM hasn’t formally announced the price of its new handsets, this is an open-ended issue for now—but it could end up being a decisive one.
Despite these caveats, the fact is that BB10 represents exciting new hardware and genuine innovation—whether that’s enough to keep RIM relevant remains to be seen.
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First Published: Wed, Jan 30 2013. 04 55 PM IST
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