Last week Research In Motion announced earnings. While the company grew Blackberry shipments 43% over fiscal 2010, its earnings failed to impress the street. Its shares fell at least 10% on what Wall Street considered a weak outlook.
The move reflects a general negativity around the RIMs current strategy and future outlook. RIM is a company that is caught in the cross hairs.
While a pioneer of mobility, RIM faces serious competition from Apple on the UI front and from Google’s Android on the distribution of the OS to numerous device OEMs such as HTC, Motorola, and Samsung who make it better Android better by customizing it. RIM is at the center of mobility and mobility is changing what we connect, how we connect it and how we transact.
Mobile is a high growth market globally and RIM is increasing its business outside of North America. In fact, 52% of RIM’s fiscal Q4 revenue came from international markets. By all rights, RIM has room to grow.
But it’s also a dynamic market with no more than six months passing before one of the main players announces a major release that changes the landscape. In some cases, it’s three months or less. As a result RIM has been on an acquisition spree since last year to fill gaps as well as to move the platform forward. Its acquired QNX, a set of middleware, development tools, realtime operating system software and services for superior embedded design.
It acquired TAT, which is now designing and developing user interfaces for the RIM ecosystem. And within the past week it has bought tinyHippos, a cross-platform mobile app development and testing tool, known for its Ripple Mobile Environment emulator. RIM has many, if not all, of the raw materials to build a successful business but it needs to find a way to unlock innovation within the company.
To drive success in the mobile market, RIM should consider breaking the company into two parts or acting like it has. The company could break into two official divisions under one holding company or take a more subtle approach of two P&L centers. One division would be a device unit and one unit should focus on software and cloud solutions.
Software is at the essence of who RIM is as a company. Enterprises purchased RIM gear is droves because it offered a one-stop shop for solid devices but also for security, device management, long battery life, data compression and enterprise integration- all of these are enabled by its robust software. RIM is also upping its game with a mixture of the realtime OS of QNX and web-based technologies such as Webkit.
Enterprises are also struggling with ways to manage the diverse device ecosystem. Companies would welcome RIM making a second attempt at providing a cross-platform operating system and mobility management solution. While vertical integration has been a success for RIM in the past and is currently a hallmark of the Apple strategy, RIM is leaving opportunity on the table to make its software the preferred OS for all device platforms.
If RIM were to follow this path, several new options would open up to the company.First it could provide enterprise grade software to Samsung and ZTE to address the corporate landscape. There are numerous hardware manufacturers competing in the space but most of them focus on just the consumer aspects.
While consumers are driving enterprise device purchases, RIM has a blending of both. It has the ability to integrate tightly with tools like Oracle and SAP, it has robust security and management and it supports social apps like Facebook and Twitter with rich interfaces.
Second, RIM could supply devices and/or build specialized devices for other companies. In June of last year Cisco announced it was building an Android-based collaboration business tablet designed to deliver virtual desktop integration with a range of Cisco collaboration and communication applications.
With so many tablets available why did Cisco decide to build its own? RIM’s new Playbook would make an excellent foundation for companies like Cisco to launch targeted services. Healthcare providers are enamored with the iPad but RIM’s new Playbook could easily be positioned at this space and sold by as bundled offering with special software loaded by companies such as GE and McKesson.
In many ways, RIM is pursuing the right path. Its recent acquisitions provide it with UI expertise and mobile development tools. It has already begun to offer cloud-based services with its Microsoft partnership that allows companies that use Microsoft Exchange Server to move their Exchange servers to off-site data centers.
RIM also brilliantly announced that it will support Java and Android apps on the Playbook. But there is a battle for who will dominate the next generation of operating system in a post PC world and RIM has to do more. HP plans on putting its WebOS in printers, PCs, tablets, smartphones and more devices. Google is already working with numerous OEMs. RIM needs a strategy that embeds its core software and management solutions into the millions of devices that will be coming online in the coming years.
They already have a leg up in the embedded software market with QNX and they shouldn’t lose site of that. This is in addition to, not replacing, RIM building a best in class product for the RIM brand. There is a tremendous growth in the wireless industry and RIM still has an opportunity to capture a large share of it.
What do you think RIM should do?
Posted by Maribel Lopez