How Did RIM Get It So Wrong?

There was a time not too long ago — in 2006 — when just about everyone had a BlackBerry. I know I did. It was the “gold standard” in enterprise mobility. Additionally, Research In Motion was beginning to offer versions of BlackBerry for consumers with special support for consumer email outside the company’s normal focus of enterprise through its BlackBerry Enterprise Server (BES) automatic sync with Microsoft Exchange, Lotus Notes or Novell GroupWise.

Even after Apple announced the iPhone in early 2007 and began shipping it in June that year, BlackBerry was still experiencing growth in sales. There was a lot of momentum in the BlackBerry platform. I remember being at an analyst meeting hosted by RIM that fall and asking management if they should be worried about the iPhone. “That’s a consumer device and won’t affect our stronghold in the enterprise,” executives said.

RIM’s complacency

In 2008, Google announced Android. Again, I asked RIM if they should consider using Android as their next-generation OS, but they replied: “We know more about mobile operating systems than Google.”

Now, in 2011, Google’s Android has the largest market share in smartphones, Apple is selling more than 100 million iPhones a year, and RIM is reporting declining sales. There still isn’t any “next generation” operating system for the BlackBerry platform.

In the past few weeks, RIM announced that its next-generation operating system will be called BBX, named after a blend of BlackBerry (BB) and QNX, the company’s full-featured OS that it acquired about 18 months ago. BBX will include a new user interface developed through technology RIM acquired by buying The Astonishing Tribe (TAT). In addition, the new operating system will have an exciting graphical user interface, multitasking, and full support for email, synchronization and security.

However, it’s going to take RIM about a year to implement BBX. Oh, by the way, current BlackBerry apps will not run on BBX, although BBX is supposed to run Android apps if they are recompiled under BBX. I wonder why RIM feels it’s important to support Android apps? Like I had suggested a couple of years ago, why didn’t RIM just adopt Android as its next-generation OS in the first place?

I’m sure that BBX will be a great smartphone OS. It will likely be on par with what Apple’s iOS and Google Android offer today. However, RIM also now has to deal with Microsoft and the software giant’s latest version of Phone 7 (Mango) that is being adopted by Nokia, Samsung and HTC.

RIM is clearly a company “at risk,” and the drop in the company’s stock price during the past year is a clear reflection of that. I feel as if RIM is like someone who’s holding a BlackBerry and walking backward to the edge of the Grand Canyon saying, “Hey, we’re the BlackBerry folks. Everyone will love what we’re doing. They just have to be patient a year, and we’ll be every bit as good as what those folks at Apple and Google are doing.”

Hero to zero

From an analyst perspective, RIM has moved from being the “darling” of the mobile market before the iPhone came out to a company that analysts like me are hoping can pull out of its current funk and stay in business.

However, the picture is not looking good. Just about everyone I saw in line the morning of 4 October to buy a new Apple iPhone 4S was holding a BlackBerry.

RIM has made some horrible miscues over the past couple of years. The company didn’t jump onboard with a new smartphone OS. RIM released its PlayBook tablet without the ability to run email.

At least now, company executives look like they have a better strategy in place.

I think there are three scenarios that RIM is facing:

1. RIM gets acquired (50 percent). The stock price is low, but the company still has more than 40 million users. It might represent a good acquisition by another firm such as Microsoft, Nokia, Hewlett-Packard or even Google.
2. RIM successfully makes the transition to BBX and sees sales increase again (30 percent). This is the best outcome company executives can hope to achieve.
3. RIM simply craters and files for bankruptcy (20 percent). This is the worst outcome, and no one hopes for this, but it is a very real possibility if the company has delays in the migration to BBX and users continue to defect in large numbers to more attractive options.

I’m rooting for RIM to make BlackBerry relevant again. Viable competitors make everyone do better.

If I were in charge of a large enterprise IT organisation with thousands of BlackBerrys deployed, I’d likely give RIM some time to see if the company can successfully make the transition to BBX.

If it can, then RIM gets to keep my business. But if it can’t, I suspect most IT administrators would have a backup plan to convert to Apple iOS, Google Android or Microsoft Windows Phone 7.

Good luck RIM.  Some of us are still rooting for you.