On 16 June, Research In Motion (RIM), the Canadian company that makes BlackBerry smartphones, announced that its first quarter earnings for the year had been below expectations. The company then went on to warn that the second quarter would be even worse—its revenues would miss targets by around a billion dollars.
This was the first time revenue had dropped in a quarter for RIM in nine years. But for all practical purposes the company has had a dreadful time since early 2009. That was when US market share for the company’s flagship smartphones began to drop. From around 53% then—according to one analyst’s estimate—RIM is now estimated to have a little less than 15% share. An exploding smartphone market propped up revenues, but RIM is slowly being squeezed out of relevance.
What happened to the BlackBerry brand that had become synonymous with the lifestyles of consultants and bankers?
Most of the brand’s shortcomings can be traced to a hubristic over-dependence on corporate clients. For years information technology managers had a simple solution to their messaging problems—give everyone BlackBerrys. The system allowed easy set-up, security and watertight control over what users did with their phones. RIM raked in billions from network operators who marketed the system.
What happened next is a dire warning to any company over-dependent on enterprise.
RIM bet big on end-users not having the power to choose devices. But this has begun to change. Users now want their iPhones, Android handsets and tablets to connect to enterprise servers. The widespread adoption of the iPad hastened the breaking of RIM’s hegemony.
Suddenly RIM needs to seduce the non-business consumer for revenues. And it has no idea how to. For years it has marketed, designed and developed for the enterprise. But now it struggles to compete with user-friendly iOS and Android devices. Central to the success of these new platforms have been robust app stores and app developers. Something RIM never really had to worry about when its main customers were corporate employees who, in most cases, were actively prevented from installing anything “unofficial” on their devices.
RIM is fast losing old customers. And is ill-equipped to gain new ones. It has out-dated phones running out-dated software. A desperate tablet project is now floundering.
The company has to take some tough decisions involving almost every aspect of its business. And they might involve steps as drastic as those recently taken by Nokia. The faster RIM realizes that people now buy phones by choice and no longer by decree, the faster it will make those decisions.
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