RIM's BBX Plans: Can They Reverse BlackBerry's Fortunes?
For months, Research In Motion executives have done their absolute best to convince media and analysts that the company's upcoming round of "superphones" will spare the Canadian company from the market-share doldrums by offering a viable competitor to the Apple iOS and Google Android devices currently dominating the market.
Those superphones (along with RIM's tablets) will run BBX, a QNX-based operating system, in place of a new version of the long-running BlackBerry OS. Thus far, RIM has offered precious few details about BlackBerry BBX's user interface or release date. But that aside, the transition raises some thorny issues for the company, including whether legacy applications will port to the new platform.
According to an Oct. 18 statement released by RIM, BBX will apparently "support applications developed using any of the tools available today for the BlackBerry PlayBook ... including native SDK, Adobe AIR/Flash and WebWorks/HTML5, as well as the BlackBerry Runtime for Android Apps."
That suggests BBX will interoperate with RIM's PlayBook (which currently runs a QNX-based operating system), but it's an open question whether those customers currently buying BlackBerry devices loaded with BlackBerry 7 OS-or those who already own older BlackBerry hardware-will have the ability to upgrade to the new operating system once it rolls out.
The other question is whether, by allowing Android applications onto its devices, RIM will end up alienating those developers who devoted much time and effort to developing BlackBerry apps. RIM needs both developers and its current base of customers to succeed in its latest endeavor.
The consequences of failure are dire. According to a new study from research firm Enterprise Management Associates, some 30 percent of Blackberry users in large enterprises "expect to migrate to a different platform within the next year." Lack of user satisfaction topped the survey respondents' reason for jumping.
"We expected to see some market share loss by RIM, but these results were far more dramatic than we could have anticipated," Steve Brasen, EMA's managing research director, wrote in an Oct. 19 statement. "Both enterprises and employees indicated they were broadly abandoning BlackBerry devise for primarily Android and iOS platforms-and this data was collected before the recent BlackBerry service failures, which can be expected to even further accelerate migration."
Research firm Nielsen estimated RIM's share of the U.S. smartphone market at 18 percent through August, behind both Google Android (43 percent) and Apple iOS (28 percent) but well ahead of Microsoft (8 percent). However, Microsoft is pouring millions of dollars and striking partnerships left and right to make Windows Phone the smartphone space's third major ecosystem, and both Android and iOS have made significant inroads within the business community over the past several quarters.
During its Sept. 15 earnings call, RIM reported revenues of $4.2 billion for the second quarter of its fiscal 2012, a 15 percent decline from the $4.9 billion it earned during the previous quarter. Those numbers led to analyst pessimism and even a well-publicized call, from Canadian merchant bank (and RIM shareholder) Jaguar Financial Corp, for a RIM executive shakeup. Those executives have roundly blamed soft sales of the aging BlackBerry line for at least some of that financial weakness, while expressing hope that new smartphones with BlackBerry 7 OS can hold the market-share line until the BBX ones arrive.
That means RIM will need to make a hard case for BBX devices over, say, Apple's iPhone or higher-end Android devices like Motorola's upcoming Droid Razr. If none of the current BlackBerry devices will support the new operating system, and if legacy applications won't run on BBX devices, then the case becomes that much harder. In many ways, RIM is facing a similar situation as Nokia, which abandoned its homegrown operating systems (such as Symbian) in favor of Windows Phone, and now needs to convince users to purchase a whole new generation of devices.
It takes considerable skill and luck for any company to regain the initiative in the face of significant market headwinds. Some succeed. RIM's executives doubtlessly hope their company will be among them.