It’s time for RIM to abandon BlackBerry 10 and adopt either Android or Windows Phone. It doesn’t matter that PlayBook 2.0 received some better-than-expected press coverage at CES last week, or that there have been some interesting hints here and there about what the first phones running RIM’s new mobile OS will look like. And while it’s bad enough that the first phones running BlackBerry 10 won’t ship until sometime around the end of the year, the real problem is that even if RIM started shipping phones tomorrow with an OS that could hold a candle to iOS, Android, and Windows Phone, it probably wouldn’t make much of a difference. RIM would still be in very serious trouble.
Why? Because the market has coalesced around iOS and Android, and the network effects (primarily, but not only, around apps) those two platforms have created is proving difficult for even a worthy competitor like Windows Phone, which has already been available for over a year, to gain marketshare.
Microsoft may yet pull it off and cement Windows Phone as top tier competitor alongside iOS and Android. If they do, it’s going to be in part because they landed the largest mobile phone maker in the world as a partner and are spending billions of dollars to compete. The scary thing for RIM is that they won’t have those kinds of advantages to draw on, and that by the time they ship the first BlackBerry 10 phones there’s a good chance Microsoft will have made enough inroads that they’ll be fighting not two, but three, major players for the allegiance of smartphone customers and developers.
You can dissect the reasons for iOS and Android’s success, but short of BlackBerry 10 being some phenomenal leap forward that’s years ahead of the competition — and I don’t think anyone honestly believes RIM has the chops to pull this off anyway — it’s just hard to see any scenario in which RIM delivers a mobile OS that attracts significant usage.
Remember that it’s not longer enough to be about as good as what else is out there. It’s not even enough to be a little bit better, or to be better than everyone else at a couple of things. To have a successful mobile OS in 2012 you have to offer a clear and compelling case for what is distinctly different and significantly better about your platform. I think this is something that would challenge any technology company today. Simply creating a world-class mobile OS isn’t a trivial matter; going beyond that and building one that leapfrogs its rivals is extraordinarily difficult. (This is why it was such a big deal when Apple introduced the iPhone.) We already saw what happened to webOS, which despite being well-regarded was simply not better enough than the competition in any meaningful way and failed to gain significant adoption. Is there any compelling evidence that RIM possesses the engineering and design expertise to avoid a similar fate for BlackBerry 10?
Given the low odds that BlackBerry 10 will be a game-changer, what should RIM do? Well, there are a few options:
1. Sell off the handset business
This would be tough for RIM psychologically, but there’s no reason for a cratering handset division to take down a company that still has a profitable services business. Separating the two sides would be complicated, but analysts have suggested that given how sucky RIM seems to be at making phones people want to buy, the more attractive long-term opportunity lies with enterprise network services. They’d probably be able to get someone like Huawei to buy it, and get them to commit to using RIM’s services infrastructure, to boot.
2. Go with Android or perhaps even Windows Phone
Either option will be a tough sell up in Waterloo, but it wasn’t easy for Stephen Elop to force Nokia to abandon Meego and Symbian for Windows Phone, and he managed to push it through. Yes, the jury is still out on whether Nokia’s move will be a success, but doesn’t it say something that the Lumia 800 is the first Nokia phone in years that people are legitimately excited about? RIM needs to face the same reality Nokia did, namely that this is a battle of ecosystems and not devices.
Besides, when it comes down to it, most people who buy a BlackBerry do so because of its awesome keyboard, BlackBerry Messenger, and excellent (and secure) Exchange support. They don’t care about the underlying OS, and there’s no reason why RIM couldn’t bring those same features to an Android device. (In fact, given how few Android phones with decent physical keyboards there are, there is probably a gap in the market that RIM could take advantage of.) Reproducing RIM’s email and messaging infrastructure in Android wouldn’t be trivial, but it might be better to direct the company’s relatively limited engineering resources towards that more limited problem rather than trying — and failing — to develop a full-blown OS. If RIM introduced a messaging-centric Android phone with a world-class keyboard and great Exchange support you could certainly see them making inroads in the enterprise market, as well as attracting renewed interest from consumers.
3. Hook up with Amazon
There were some rumors last month that Amazon was looking at buying RIM, and while an acquisition is unlikely, they could end up collaborating anyway. There’s no indication that this is happening, but it’s not impossible to imagine a scenario in which RIM, realizing that BlackBerry 10 is a dead end, but not wanting to become just another Android OEM, uses Amazon’s fork of Android on its phones and tablets.
Such a move would jumpstart RIM’s Android efforts and differentiate it from its competitors, while offsetting some development costs. If Amazon were willing to give RIM some cut of the profits from digital media sales or Prime subscriptions sign-ups generated it could potentially even lead to some additional revenue for RIM.
Amazon loses money on each Kindle Fire sold, so the idea of them letting someone else use their OS for free is not at all far-fetched. All they care about is whether it increases the userbase for Amazon products and services. Do they need RIM? No, probably not. But hooking up with RIM could be a way for Amazon to spread its ecosystem and take on Apple. Not that I see any indication that anyone at RIM (or Amazon) is thinking along these lines, but it’s fun to speculate about what they could do together.
Regardless of what they decide to do, RIM has to make the best of a bad situation. These three analyst quotes from a recent New York Times story (www.nytimes.com/2012/01/04/technology/rims-delay-c…) about RIM tell a grim story:
“They don’t have a firm grasp of the issues and realities of bringing these phones to market,” - Colin Gillis, analyst with BGC Partners.
“They can’t get the infrastructure and the operating system ready in time,” - Peter Misek, analyst with Jefferies & Company.
“Waiting for the chipset is a contributing factor in a number of factors that led to the delay. Creating the ecosystem for the phones is the bigger problem.” - Alkesh Shah, analyst with Evercore Partners
Years of poor decisions have led the company to a place where there are really no good options. The saddest part is that given the obstinance of RIM’s co-CEO’s, the most likely outcome is that the company will continue on the path its on, releasing the first BlackBerry 10 handsets around the end of this year to a largely indifferent market.
(by Peter Rojas, GDGT)