Sorry Research in Motion (RIMM), your diagnonis is in: Life threatening disease

By: ispeculatornew
Date posted: 09.30.2010 (6:00 am) | Write a Comment  (4 Comments)

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Dear Mr Balsillie & Mr Lazaridis, Co-CEO’s of Research in Motion

It is with great regret that we notify you of the results from the latest report following the recent tests to determine the health of your company, Research in Motion.. Unfortunately, you find yourself in a very bad shape and I have to be honest with you, things are not looking very good.

Unless some kind of miracle happens, you will become the next Palm or the next Nokia, companies that once dominated your field but after a very rapid deterioration, they required extended support. You might have heard that Palm was finally let off the machines when HP decided to rescue it. However, I don’t think anyone could argue that life will ever be the same again for Palm. As for Nokia, once the king of mobile handsets, it is now barely surviving and could be the next giant to go under. It is not even clear if one of its assets could be used or if the Finnish company would accept such a transplant.

-Symptoms

You are probably asking yourself what happened. How could a company that dominated the smart phone market lose it all so quickly? There are many causes of course but it all started when your cousin Apple decided to get involved in your market. I know, you didn’t expect it to have much impact. Apple had been successful in music players but you did not expect the same to happen in the mobile phone market. There were many aspects about Apple’s Iphone that should have caused concern much earlier though.

When Apple started letting developers work on applications & games that could be downloaded for free or for a small fee, you really should have seen what kind of impact it could have. I know that you opened your store but that was years later and it never seemed to be a major priority for you. While Apple was putting apps and games at the center of its marketing campaigns and front in center on its phone, you simply had created the possibility but without many incentives. The result? Iphone users started using apps which gave big incentives for developers to work on the best applications and games possible. That of course gave huge incentives for developers to work on apps for Apple’s devices instead of RIMM’s.

That contributed to making your devices less “fun”, less “practical”, less “social” and thus less attractive. Now might have believed that all of these aspects did not matter much because your target market was mainly the business market. But it did matter. Even Wall Street banks such as JP Morgan have started switching to the Iphone. That is as big of a symptom as you can find. And of course, if you are having trouble keeping large corporations, I don’t need to tell you that retail users are much more enclined towards Apple.

As if all of that wasn’t enough, Google entered the game recently thanks to its “Android” operating system which enabled it to power devices by almost any handset except for the exclusive Apple and Blackberry devices. The Android had a quick surge in users and Google gave a lot of incentives (including bigger payouts) to get developers to work as hard as possible. They have not quite caught up yet but it’s happening very quickly. Google’s rise was a huge blow to your company. Why? Because in the US, by far your most important market, users that wanted to switch to Apple needed to accept going to AT&T which was too much for many to accept. But thanks to Google, it was now easy for any customer to buy a non-Blackberry smartphone no matter which carrier he wanted to use. Gamechanger…

-Tests

Honestly, we did look into results but if you had paid attention, you would have noticed things happening some time ago and would have taken action. Did you even bother trying to improve your device or keep up with the competition? No matter how solid your product is, if you do not work hard at it, it quickly can become obsolete. The most important data is related to growth and market share.

If you take a look at the numbers in a post like here, you will see that the trend is not good in any terms. Subscriber growth has slowed down significantly, as has the revenue per subscriber, etc.

Lastly, take a look at your stock, which reflect the confidence in both of you, in your company….. not flying too high at the moment

-What is the stage of my illness

To be honest sirs, the problem is widespread and serious by now. Unless you take critical action, it will probably be too late to save Research in Motion. Your rivals have momentum and they are being helped by armies of application developers that help make their products better every month. That is not the case for the Blackberry. You might be ready to launche an Ipad rival but in all honesty, Apple already has most of the market so you will be battling out with HP, Dell, Sony and others for whatever is left. That being said, you are not quite done….

-Avoiding denial

Sorry to say but the most important problem that patients of your type have is that they ignore the problem and often even deny that there is an issue. Look at the numbers. Take an Iphone and an Android powered phone for a drive for a week or two. You will discover many possibilities that you probably did not even know could be done on a phone. The Blackberry torch has the hardware necessary to compete but you do need to realize that the problem is much deeper than that. I’m sorry to say but a few more months of denial could be enough to tip your status into the “no hope” category. I am not trying to scare you but want to be certain that you understand what is happening.

-What is my diagnosis if I take no action?

I have to say, taking no action should not even be considered. You have over 12,000 employees that depend on you and if things continue, you will start losing your best ones very soon. The most innovative ones that helped the Blackberry become the market leader just a few years ago. You need to take action to show them that the Blackberry is not out of the run. More importantly, give confidence to consumers that Blackberry will improve just as much as rivals so that they can gather enough courage to sign up for a multi-year contract to use your device. It’s not easy to reverse a tendancy but yours is not known by everyone yet. Not everyone knows that you can do so much more with an Iphone or Android phone than you can do with a Blackberry. Act before it’s too late…..

-Available Treatment options (aggressive option or avoid suffering)

There are many different things that need to be done but I think the main one is getting developers excited. Show them that apps and games will be a big part of the future of the Blackberry.

-Organize contests for the best apps that are created (why not give 1 million dollars to the creator of the most downloaded app in the next year or similar ideas?)
-Include apps and games in future advertisements
-Put them in the middle of your main platforms so that users don’t need to search how to use them
-Give users incentives to use, rate and interact regarding these games, through social networks, blackberry messenger, etc
-Hire your own team of developers that can use Blackberry’s power to its maximum

-Chances of survival

I’ll be honest here. You are in a very bad share and battling two giants that will make life very difficult for you. But you have huge market share and solid hardware. It’s just a matter of taking the next step. I think it’s very possible and while I would not say it’s likely, I think there is a fair shot if you start acting desperate. Go for growth, make your product “cool”, make alliances with Facebook and Foursquare. You have solid revenues and lots of money. Do not let it burn quarter by quarter. Go ahead and spend it.

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4 Comments

  1. Comment by Zavi — September 30, 2010 @ 6:16 am

    wow it’s one of the best article. It’s so original, I love the concept. But don’t you think it’s a bit exaggerated hehehe… aren’t you LONG RIMM?

  2. Comment by John — September 30, 2010 @ 9:25 am

    Great post. Really. Do you think that Playbook is a good strategy for RIMM?

    For:
    – Tinner and lighter
    – Video camera
    – Compatible with flash
    – Focus in business market
    Against:
    – Bad timing (product out for beginning 2011)
    – Unknown price for the moment
    – Fierce competition

  3. Comment by IS — September 30, 2010 @ 7:03 pm

    @Zavi – Glad you liked it:) And yes, I am long RIMM. It is meant as being a bit of an exaggeration but the company is in trouble. That being said, the stock is still very low… maybe not low enough, but very low. I’m ok with my position for now.

    @John – It would have been if it had been launched last year or early this year…too late now in my opinion.

  4. Comment by The Passive Income Earner — October 3, 2010 @ 10:41 am

    I am curious when the honey moon with the iPhone will be over … Android is actually the OS that’s taking the market share and from what I hear, the iPhone ‘phone’ isn’t that great of a hardware compared with the other phones running Android … Interestingly enough, I don’t think either has cracked the Japanese market! Will one of them ever will …

    All I have is a BlackBerry provided by the office, so the business side is still important. I think it also depends on the deals telecoms can offer businesses since companies don’t really go through Apple or RIM but the telecoms to get the services.

    Don’t forget Microsoft … They are around the corner. They are paying lots of developers to create software for their Mobile 7 OS for the launch.

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