Following the recent ‘missed
quarter’ by RIM there has been much chatter about the future demise of the
company and its widely deployed BlackBerry at the hands of Apple’s
iPhone and devices running on the Google-backed Android platform. While
the articles bring up many valid points – iPhone’s encroaching RIM’s
enterprise stronghold, RIM lacking a strong touchscreen solution, RIM’s
App World metrics - the desire for sensationalist reporting may have
kept the reporters from addressing some of the more important issues.
More to the point: there remains much to be bullish about RIM.
BlackBerry’s core value
proposition revolves around its best in class – in terms of security and
manageability – enterprise wireless email and messaging solution. This
has and continues to resonate with enterprise customers. BlackBerry is
viewed as the Gold Standard in sectors – especially where security and
compliance mandates are tight – such as government, financial services
and healthcare. While RIM has done well to maintain and expand its
position in these core markets, it’s value proposition has recently been
challenged by individually liable (IL) devices entering the enterprise.
During the recession enterprises have been increasingly
receptive to the idea of supporting their employee’s personal device for
some enterprise applications (email, messaging, etc.). Moreover,
enterprises have succumbed to the pressure from individuals to support
popular consumer devices such as the iPhone. This has loosened
RIM’s vice grip on the enterprise segment and has created challenges for
RIM as the company generally performs best in accounts where it is the
only device.
These challenges have shown up in
market share figures as – according to our research – BlackBerry’s
share of the enterprise segment in North America is expected to decline
from just over 50% in 2009 to just over 40% by the end of 2010. The
primary beneficiaries here will be Apple – capturing 22% of the
enterprise market by the end of 2010 – and the various Android-based
devices. However, even as BlackBerry’s market share declines, overall
shipments and new subscribers are expected to grow, driven by the
continued strength in Smartphone demand.
RIM clearly needs to address the
IL issue more effectively – it has been targeting the consumer market
with mixed results for some time now. However, according to our
research, the share of corporate liable devices is actually expected to
increase slightly in North America. Conversely the share of IL devices
purchased from ‘approved list’ is expected to give way to IL devices
purchased from ‘any list’. In other words we are seeing a splintering in
the enterprise between highly controlled and regulated environments and
those that are more open to multiple platforms. RIM’s position in the
former is unquestioned. What it needs is a more effective answer for the
latter.
The fact remains that the
Smartphone opportunity is massive with growth continuing unabated. While
hardware innovation – such as Apple’s multi-touch interface – can
define and reward vendors, this market is not (entirely) about hardware.
It is about delivering appealing services and user experiences. The
killer applications for RIM and its BlackBerry platform have been
wireless email and BlackBerry Messenger which offers some of the
strongest real time communication and presence capabilities (through GPS
location integration and proximity sensing). RIM needs to build on
these platforms to extend a broader range of services in a broader range
of environments.
RIM is addressing this and several
of its recent acquisitions are targeted squarely at both improving the
user experience on the BlackBerry and also extending RIM’s reach beyond
the traditional Smartphone. More specifically, last August 2009 RIM
acquired Torch Mobile to support its WebKit-based browser development – a
major hole in its portfolio. The browser was officially released
earlier this year at MWC. (OK, this is more catch-up than trial
blazing). More recently RIM acquired QNX Software Systems from Harman
International. One of QNX’s leading markets for its Neutrino embedded OS
is the automotive sector. This acquisition has the potential to
significantly enhance the integration of RIM’s BlackBerry platform with
in-car computing, navigation, entertainment platforms (check out VDC’s
Embedded Practice’s blog post on this transaction).
Another – more traditional –
opportunity for RIM to lead is the creation of the de facto enterprise
mobile software application channel. The fact remains that
with all the success of Apple’s App Store, its most successful apps are
for gaming and other entertainment/consumer applications. No viable
channel exists today to address enterprise applications. While much of
this is tied to issues relating to back-end integration requirements and
customization requirements evident with so many enterprise mobile
applications – enterprise organizations are clamoring for ways to more
efficiently distribute and manage mobile applications. Getting the
developer community excited about BlackBerry development opportunities
will be critical here. BlackBerry has taken a step in the right
direction with its recently enhanced development tools (especially the
HotSwap simulator which significantly reduces development time).
RIM clearly has its work cut out for them. Apple, Google and others are nipping at their heels and are intensifying their enterprise play. However, considering RIM’s loyal customer base, broad global partner network and best in class services it would be reckless to write them off.
