Can RIM Really Pull it Back from the Brink?

My good friend Dave Michels did a post on his blog Talkingpointz titled "RIM: Back From the Brink?" Citing his undying support for the "underdog" and a demo of the upcoming BB10 operating system he got from Steve Newman, RIM's Sr. Director Use Identity and Software at the recent Defrag Conference, Dave takes a decidedly positive slant on the prospects for RIM's potential recovery. This is a funny turn of events as Dave and the rest of my associates at UCStrategies had long chided me for being the "last holdout" among the RIM faithful.

While I do appreciate someone going to bat for the beleaguered Canadian smartphone maker, the best outcome I can see from BB10 is that it helps RIM retain at least some of its market value increasing the price someone will have to pay to acquire this once proud enterprise. Indeed RIM's stock has jumped some 55% in recent days, fueled in part by opinions like those of CIBC (the "C" stands for "Canadian") World Markets analyst Todd Coupland, who wrote a note to clients arguing that RIM is "materially undervalued." Comments from other analysts weren't nearly so positive.

Dave does make some important points regarding the smartphone market, but it's going to take a lot more than a couple of positive reviews to win back more than a couple of points in market share with BB10. First off, the typical smartphone purchase has a two-year lifespan, so market shares can change drastically in a fairly short time span. The decline of RIM, the ascendance of Apple that was subsequently surpassed by Android, all occurred within the span of five years is a testament to that.

Further as Dave points out that "loyalty and prior purchases are only one of many considerations" in the smartphone buying decision. True, but Apple, and to a lesser degree Android, have shaped the expectations of a significant portion of the market and RIM would have to do something earth shattering to convince them it's worth the trouble to learn something new, and we simply haven't seen that type of creative leap from RIM in the past. The RIM culture seems to favor solid engineering and well thought out, incremental improvements to a tried-and-true approach.

For RIM, that "tried-and-true" approach is focused primarily on the needs of corporate email, and Dave correctly notes that is a market that RIM understands (or at least "understood") in its heyday. The problem is that BYOD has turned the corporate market on its ear, and no one is bringing their own BlackBerry! My research shows that close on 90 percent of enterprises are supporting or planning to support BYOD in some form, and RIM has simply fallen off the radar in the consumer market.

Further, the bulletproof security on which RIM built its reputation is no longer unique. Apple, Android, and Windows Phone platforms have all beefed up their security capabilities, and along with the capabilities of mobile device management systems like those from AirWatch, Fiberlink, MobileIron and the like, the capabilities that had once set RIM apart are now largely available across the board.

RIM also appears to be counting on Android to beef up the rather paltry offering in BlackBerry App World. One of the features of QNX (now BB10) when it was first announced in 2011 is that it would feature a player of some form that would allow it to run Android applications; like everything else in BB10, we're still waiting for it. If successful, that could certainly be a much shorter path to success than Microsoft's plan to develop its own app ecosystem for Windows Phone. However, RIM's strategy is not without risk.

First, there is a big question regarding what kind of performance BB10 will be able to deliver when running Android apps. Further, will all of those apps actually run? I have had only moderate success in getting Android apps to run on my Kindle Fire. Finally, Android has become the poster child for mobile malware with roughly 80 percent of identified exploits; Symbian comes in second with less than a quarter of that. What's that going to do to RIM's vaunted reputation for security?

RIM has a lot of smart people, but I just don't feel that they can overcome the company's legacy and culture or the realities of the smartphone market. I don't see them going away, but the best they can hope for is to hang on to a profitable niche for the highly security sensitive firms and "old guys" who simply don't see the value in learning to use another smartphone when all they really want is mobile email.

The bottom line is that with the move to BYOD, "enterprise mobility" has become the orphan child of the smartphone market. The consumer is king, and RIM has about as much chance as Microsoft in establishing (or "reestablishing") a significant position with consumers. Given the quality of the ads Microsoft is running for Windows 8, RIM probably has even less of a chance.

So while Dave may "expect great things," mere survival and a new corporate parent is probably the best RIM can hope for.