RIM’s Desperate Position

The entire tech blogosphere world has been commenting/discussing the fall from grace of the near invincible CrackBerry messaging empire. The warning signs (the awful Storm series of phones) have been there for a while, but it seems like RIM’s descent is only picking up speed.

As bad as things are there’s a more dangerous cliff approaching fast for the Canadian phone manufacturer if two recent news reports are at all accurate.

Massive Problem 1

The Loop is reporting that the reason that the Playbook Tablet does not have native email is that RIM BlackBerry Enterprise Server Email system is designed around one user account = one email = one device. Now this makes sense in the framework of early 2000 to provide security for email distribution by locking it into one PIN/one piece of physical hardware. What’s incredible is that RIM in the last four years didn’t anticipate the need for email to be shared with multiple devices and have a fix ready for deployment with the launch of the Playbook. This massive feature set gap along with the half-baked nature of the Playbook launch OS would strongly indicate that RIM does not have the software knowledge or capability to launch their new QNX based “Superphones” by next year. Building a modern touch screen phone OS from scratch is not an easy task. It took Apple a decade in the 90s to come up with a real replacement for Mac OS 7, ask Microsoft’s Vista team about the hell that is OS system development. It’s taken Apple 3 years to flesh out the feature set of the industry’s leading device, and that’s Apple a company who right now does not have an equal in OS development (Apple this year will release OS X Lion and iOS 5, while Google and Microsoft combined won’t match that level of OS development).  It’s basically July, and we have not even seen one demo of the BlackBerry Superphone OS.  Apple demo’ed the iPhone 6 months before launch. Microsoft demo’ed Windows Phone 7 6 months before launch. BlackBerry demo’ed the PlayBook almost 6 months before launch and then launched it half baked, it cannot afford to do the same thing with the Superphone OS. RIM needs to build excitement for this new device while knowing that demonstrating the new OS/new hardware may also be the final blow to their existing lineups sales. Ignoring that self inflicted problem, right now, the QNX RIM Superphone is at least 6 to 9 months away leading to ……

Massive Problem 2

Needham & Co. analyst Charlie Wolf  has published US smartphone marketshare stats from Q1 2011. If his data is accurate, not only has the Verizon iPhone slowed Android’s growth (Android percentage dropped for the first time in five quarters) increased the iPhone market share by 9 percent, it has contributed to a total collapse of RIMM’s marketshare down to 13.8%. RIMM in one calendar year has lost nearly 24% market share in the US. RIMM’s current phone lineup is being eviscerated by a endless stream of Android devices by HTC, Samsung, and LG on the low end across all carriers, and Verizon’s addition of the iPhone has to be hurting corporate sales for RIMM since now corporate clients on Verizon have access to the device. RIM’s latest batch of phones appear to be delayed and if another rumor is right from BGR these phones appear to be suffering from a host of bugs and problems. None of these phones appear to be capable of stemming the tide due to their legacy BlackBerry OS underpinnings. And there’s a strong possibility of a T-Mobile and a Sprint iPhone this fall, as well as a cheaper iPhone to attack the lower end markets in developing regions. If RIM continues to lose market share in the US, by mid 2012 they could be an irrelevant player in the US smartphone industry. US and European market share is amplified in value due to the application development resources in both regions. Any Superphone by RIM is going to need a robust App Store to be successful, and how is RIM going to convince programmers that RIM is a good bet when their US market share is gone and their only phone sales are cheap, underpowered, older BlackBerry OS based devices.

With no existing marketshare since no other RIM devices will be backwards compatible and no developer interest or goodwill, the RIM QNX Superphone could already be DOA. RIM’s facing two problems feeding on each other. Microsoft went through something similar in 2010 when they ditched Windows Mobile. Their sales for older devices disappeared and Microsoft’s flatlined launch of Windows Phone 7 is showing just how brutal a market it is for a new phone OS with iOS and Android rampaging like Godzilla and Ghidra (the 3 headed Android Dragon). Microsoft basically is paying Nokia billions in a desperate attempt to regain smartphone relevance.  It’s doubtful that RIM has that cash or will have that option. In retrospect, RIM should have spent their R&D on creating the world most secure/locked down/corporate secure version of Android built off RIM proprietary security add- on applications, and let Google do the OS development heavy lifting. The RIM Android hybrid could have been out to market this year and actually competing.

MoD will be very interested to see where RIM stands in January 2012 with 3 huge assaults coming iPhone 5, WinFin Phones, and even cheaper Android devices.

There’s huge value in the Enterprise Server product for someone (IBM??) not to buy that business as the phone hardware business craters.

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