Mobile Solutions CI

RIM's co-CEOs to step down | Mobile - CNET News

Research In Motion's co-chief executives have resigned their positions as part of a management shuffle, the company announced this evening.

via news.cnet.com

Balsillie and Lazaridis are stepping down to be replaced by their COO. It must be very hard for them to make this move. It will be interesting to see what affect this has on the decision making within the company. At the senior level it still feels as if RIM is the only one who doesn't understand how far behind the market it is. Will that change overnight? Or do they need leadership from outside the company to cope?

This was the one move they had to leverage for a statement acknowledging a need to change (more to the analyst, carrier, and IT segments than end users). However the strong "business as usual" statements ignored that opportunity.

As RIM stands now it's hard to believe they exit 2012 a standalone. Given this will not be an attempt to revitalize the brand or product portfolio it looks more like housecleaning in advance of a deal.

Android chips away at Nokia and RIM from low end, Apple takes high end

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via www.rcrwireless.com

This article actually makes a contrary point to the headline. Look through the android devices named in the article as leading sales across US carriers and it shows Android splitting both high and low end. This seems to indicate the Android platform has been successful in its strategy of going across form factors and price points, even at the expense of fragmentation. The result will be that all the main players in the US mobile industry will continue to be heavily incented to work against helping developers consolidate the Android consumer experience.

RIM Cuts Profit Forecast as BlackBerry Demand Falls Short - Bloomberg

Research In Motion Ltd. (RIM), facing intensifying competition from Apple Inc. (AAPL) and Google Inc. (GOOG), cut its sales and profit forecasts for this quarter on slower-than- expected demand for BlackBerry smartphones. The stock plunged.

via www.bloomberg.com

The stock plunge is a reflection of the opportunity cost facing any manufacturer who misses an entire quarter on a product refresh. With smartphone adoption shifting rapidly to mass consumer segments, RIM just lost another critical window to acquire new customers. The market growth for that window will instead keep going to Android and Apple.

Not only is this the second big slip on this important generational upgrade for RIM devices, but they are now unlikely to make 2012 holiday promotional programs in the US. This is a huge miss for RIM.

RIM goes off the platform -- BBM as roadmap strategy

The past week or so has been a busy news period for RIM. Their CMO resigned just before playbook hits the market, a key supplier earnings support (Marvel) has started speculation about a low-cost move in the handset portfolio, and lost amidst all of this comes speculation published on long-time Blackberry leak newsite BGR that Blackberry Messenger (BBM) will go cross platform.

This last piece is the smartest thing RIM has done in years! I'm so curious how the person driving that product got the buy-off to do this as I've been unsuccessfully trying to implement a similar strategy for several years now. Neither from the OEM side or carrier side can I get buy-off to actually do it so hat's off to RIM for pulling the trigger.

Now they will be extending a core use case off their devices to expand their customer base. Best of all they get to use license fees, which pay for NOC traffic, to have carriers and enterprises pay the cost of delivering over the top. Brilliant!

In the future I hope to see many device companies follow this model. First build the user experience, propagate it through Facebook and Android and iPhone apps, iterate as it builds, then once you have a living community build the physical platform/product to optimize the experience based on actual usage information--UX traffic paths, day/time/place/intensity/frequency stats, support feedback, time on page analysis, and perhaps most importantly studying where people are falling out of the experience. 

For RIM this allows them to extend their customer base off of Blackberry OS as it is today, onto the application layer (both on and off device), then bring those customers back to the QNX platform within a familiar UX. What a great platform migration roadmap to solve the problem of an active user base--and what a great way to incent current device owners to upgrade to new QNX devices.

RIM earnings Q4 2010: US consumer bounces back, but mostly within installed base

RIM released their financial Q3 2011 results yesterday, revealing a positive bounce in consumer subscriber adds while holding steady in enterprise and overall North American adds.

As usual the best information is to just read through the earnings call transcript. Oh how I love seekingalpha.

Overall consumer growth rate was actually flat at 12% quarter on quarter, but within the US RIM bounced from about -5% last quarter to about 5% this quarter. This huge swing is important as a demonstration that the new OS, handsets such as the Torch, and the email/messaging-first proposition overall still have resonance with consumers. However, if I am doing calculator math correctly while also balancing my coffee, dividing new subscribers by devices shipped show an all-time low of 36% acquisition. Even when you discount this dip for holiday channel fill that number should not be dropping, only slowing. RIM is getting better at selling new devices to existing subscribers but getting worse at acquiring new subscribers.

Another thing to note: This growth rate seems to have been purchased by AT&T creating demand for and then promoting down the Torch 2-year subsidy price. "In the United States, Torch was launched in two new colors, red and white, to coincide with the $99 pricing from AT&T and sell-through run rates have increased as a result of these programs". RIM proves here that without hero status at AT&T, VZW, or Sprint (arguably only the first two) they are not a growth prospect in the US. One of the big two carriers has to spend RIM into growth. They can't do it on their own. Given Android's rapid growth in first time smartphone buyers this is a troubling trend which is not reversing.

With a total NA subscriber base of around 26.8M RIM will have trouble demonstrating critical mass and momentum to content developers. Figure at least half of those subs are on BES or older OS phones which cannot access or run app world, and believe me 50% is really generous, and you have an installed base of 12-14M. That's not big enough to drive investment from games and content developers who increasingly rely upon internet-size audience scale to support advertising, freemium, or in-app revenue models.

The JP Morgan analyst asked about this dynamic in the last question taken at Q&A. Balsille's answer is basically "we have a tablet, and some cool devices we will show at CES". That's pretty weak considering what a softball question this is. The tablet doesn't address the scale issue and actually highlights it--how will Playbook draw evergreen content if it is a single device and only rolls onto a base of less than 15M? And no, "eclipse development tools" is not an answer.

The "we sell through carriers, not against them" is more interesting but given the flatness we see on the devices side for subscriber acquisition in NA relative to years past this also rings a bit hollow to me.

Looking at RIM September 2010 earnings as background for their Tablet

Several people have asked me what I think of RIM's new tablet. It made me curious how important this is to RIM so I went back and looked at their last earnings call a few weeks ago. Boy were there some surprises there.

First of all RIM continues to sell devices and their subscriber base is now a robust 50 million. What could be bad about that picture?

Well...

Here's the short of it. RIM is making money selling upgrade devices to existing US corporate users and selling new devices to APAC and LATA consumers. That is not a fantastic spread to try and defend and grow. 

Some specifics: Their new subs have been relatively flat over the past year. Their quarter-on-quarter growth rate was a steady 15-18% for years but has been 10, 12 and 10% over the last three quarters. The percent of devices sold to new customers has plunged to 37%! BIS (consumer) is now 67% of their base which has both good and bad elements to it. I estimate their NA base is now about 54% of all subs but their NA growth rate has dropped from 11, to 8, to 5, to 2% the past several quarters. It's falling off the cliff.

What does all this mean?

They need the tablet because in the US they have totally flatlined on enterprise growth, consumer “growth” is all upgrade sales to existing BB customers, and international is large in scale but just a following market to US. In short a huge hole in their portfolio which has to be filled from somewhere.

The challenge for RIM is twofold. On the product side, the tablet requires excellence in their historically weakest areas: A UI optimized for media consumption, web browsing, form factors beyond qwerty focused, a touch interface seamlessly integrated to all of the that.

Secondly, RIM must sell this to a declining US consumer base. And it's a base which depends upon leverage from enterprise installed base which doesn't apply to this product.

All in all I'd say this is a product unlikely to succeed.

Rise in android market share driven by "Bogo"

Many bloggers and commentators are noting that the aggressive adoption of "Buy one get one" campaigns is a main driver to Android's market share surge over the past half year. Verizon and T-Mobile have both been particularly aggressive in adopting this packaging to drive new subscriber uptake.

And it is indeed a main factor in Android device sales growth. 

But you know what? This single, and relatively simple, method has long been a mainstay of Blackberry adoption and no one spent that last few years saying that RIM was maintaining growth only because VZW's aggressive BOGO plans were forcing others to do the same with the Curve in particular (driving that device to #1 in sales over several quarters).

I also don't recall much commentary on the fact that RIM first broke into the mainstream by including their own Spiff on data plans (so that retail sales staff effectively doubled commission on Blackberry sales). A great and effective sales strategy but once again nothing to do with the device or mobile OS itself.

So good for Android providers for jumping on the bandwagon. But don't dismiss sales growth because of the packaging strategies employed. 

The main idea most commentators were emphasizing was that iPhone has retained phenomenal sales given a single form factor and single carrier distribution. And they are right. But that has more to do with Apple's entire business model and value proposition than a device to device comparison. The iPhone just happens to be the platform on which Apple competes in mobile devices--no one else has brought a similar ecosystem play. Certainly not on an Android device.

So by all means pay attention to how devices are bundled, packaged, promoted, and priced. But don't lose sight of the very different value propositions which form substitute as much as competitive products.

BlackBerry Outage Again, Day 2?

Blackberry having an outage in February/March? No updates available? An eighth straight year of outages with no customer support?

"Day 2 of this outage. No update, no RIM statements… just the same continuance from yesterday’s data issues. 

Again, this is affecting devices on all North American carriers, BIS and BES, and it appears to be only devices on WiFi, wherein data works “sometimes” when connected via WiFi; no data when WiFi is disconnected."

 Shocking!

Mobile platforms driving "the smartphone craze"

Here, on the Vision Mobile website,  is an interesting look at segmenting mobile operating systems. I've cross-posted my comments below because I don't agree entirely with this. But I do think it raises some interesting thoughts about where RIM, Windows Mobile, and Android will be positioned and is worth a read--go read it.

I don't believe Android belongs in "Type 1". The whole point of Android is in expanding the upper boundary of "Hybrid" -- at the upper ranges by OEM UI overlays (HTC, MOT) to optimize for usage types not otherwise as polished as alternatives, at the lower end by messaging-centric devices.

The real driver Type 1 is having a cloud or PC-based service as brand fulcrum. If you want to deliver an integrated service it doesn't matter whether your OS is "open", whether you truly have an OS, or any other criteria which denotes "smartphone" as opposed to a rich feature phone. Instead delivering an integrated service experience is the dividing line. Open only matters when and if a service experience breaks down.

BREW has gained momentum in some regions and vendors (the AT&T announcement at CES was a surprise win), but that position is nuanced by losing traction at others. Far more important is the state of developer depth and engagement in BREW. The real point to BREW is that it is "open" as a platform only to OEMs who can invest headcount over years on it. Indy developers have voted with their feet to direct distribution (i.e. app store) models. BREW is a "most cost" distribution path for merchants, casual game vendors, etc.

And that is the real point of difference between the typologies. The consumer use cases for Type 1 are built around content consumption and delivery not possible on Hybrid and Type 2 devices. Hybrid is migrating to messaging-based and messaging-delivered activities (including messaging as transport uses, such as social networking). What will this mean for RIM who is firmly in Type 1 but with a Hybrid use case and OS? And Type 2 remains voice-centric, waiting for better voice search, navigation, and content.

Finally, no WinMo at all?

As someone who has been working in this space for some time now it makes me laugh to title this post "the smartphone craze". Using mobile devices to connect to people and consume content has certainly developed in uneven spikes but calling this evolution a "craze" and linking it specifically to smartphones strikes me as funny. 

Great recap of RIM's decade of success

Engadget has a great essay on Blackberry handset evolution.

The article abandons its more industry-wide focus at the beginning but is nonetheless a very fun and well written piece showing the slow steady evolution of the Blackberry. Go read it!