Channelnomics

 

RIM Faces Long Road to Redemption

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Once there was a time when there were cellphones and there was the BlackBerry. Today, there are iPhones and a whole lot of Androids. Research in Motion’s BlackBerry continues to slide in market share numbers, dragged down by poor user satisfaction  and steadily increasing popularity of Apple products.

Today, RIM’s inability to answer Apple’s surge into the smartphone market and dominance in tablets is costing its co-CEOs Jim Balsillie and Mike Lazaridis their jobs. They’ve been replaced by Thorsten Heins, who joined RIM four years ago as chief operating officer.

Heins number one job: stabilizing RIM and finding a way to crack Apple and Android’s grip on mobility. This is no easy task, especially considering the hole RIM has dug itself over the past several years.

RIM has been investing heavily in new products and technologies to compete against the likes of Apple and Google. It’s turned to the channel to develop applications and infrastructure deployment scenarios to create more business value for its products. Most recently, RIM enlisted Tech Data to develop and manage a program through which solution providers could buy BlackBerry smartphones, applications and carrier services through a single distribution point.

None of these efforts have had a substantial impact on RIM’s standing.  According to new satisfaction ratings compiled by ChangeWave, smartphone users give RIM the lowest marks in the field. BlackBerry earned “very satisfied” grade from 22 percent of users, where as Apple’s iPhone got 75 percent and Samsung’s various Android smartphones earned 47 percent. RIM was even behind market laggards LG and Nokia.

The same survey finds consumers are less likely to buy BlackBerry smartphones. Of smartphone users planning to buy new devices over the next 90 days, only 2 percent will choose BlackBerry, compared to the 54 percent for iPhone and 13 percent for Samsung products.

The result of this satisfaction and purchasing propensity is palatable on RIM’s market share numbers. According to Nielsen Mobile Insights, Blackberry continues to lose market share, falling from 8.8 percent in November 2010 to 4.5 percent in December 2011. By comparison, Android and iPhone market share numbers continue to soar at 46.9 percent and 44.5 percent, respectively.

And the problem isn’t just with RIM smartphones. RIM’s foray into tablets has been nothing short of a thud. Its Playbook is underpowered and too reliant on specialized support servers to make it a viable, easy-to-use alternative to the iPad or growing number of Android-powered tablets. The Playbook is due for a software update and has already seen price cuts. Neither is expected to improve its market standing.

Worse for RIM: Competition just keeps getting tougher. Even if it does reverse perceptions about BlackBerry and make Playbook more commercially viable, it will be up against an even stronger market of existing and emerging competitors.

In 2012, Microsoft is finally coming out with its first tablet operating system, Windows 8, which is expected to drive millions of new tablet sales. Microsoft is already beginning to see a slight turnaround with its Windows Phone operating system, as critics are giving the latest version, Mango, high marks. Manufacturers are looking at Microsoft with legitimacy as the third player in mobility.

Apple is expected to come out with iPad 3 and perhaps some smaller, 7-inch versions of the iPad to compete against the Amazon Kindle Fire and Samsung Galaxy Tab. Sometime in 2012, the iPhone 5 could come to market, too, even though the iPhone 4S is a worldwide bestseller.

And, Android is expanding its margin as the mobile operating system leader. Google is developing its own integrated Android tablet, as well as pushing new products through technology alliance members, such as Samsung and Acer.

Moreover Apple, Google and Microsoft (to a lesser degree) have an advantage over RIM: well-established application stores. Apple and Google are literally selling millions of mobile apps ever day through their direct and indirect distribution channels. Microsoft has a growing library of applications for Windows Phone 7, too. RIM hasn’t been able to catch fire with app developers, which puts it at a disadvantage with enterprise and consumer buyers.

The channel could be a powerful force in restoring RIM’s fortunes, but Heins and his team will need to first fix the products and value-add applications to BlackBerry and Playbooks before the channel will engage in the turnaround process.

If Heins isn’t able to produce measurable results, RIM could become the first casualty of the mobility era.

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