It’s Do Or Die For Nokia And RIM

Not so long ago, Research In Motion and Nokia dominated the mobile world.

Legions of executives relied on RIM’s BlackBerry devices to feed them email and messages, and millions of consumers used Nokia phones to keep in touch with friends and loved ones.

Then Apple’s iPhone came along, followed by Google Android, Palm’s webOS, and Microsoft’s Windows Phone. These competitors not only crowded the mobile space, but sparked an innovation race in software and hardware. Nokia found its market share under assault by a flood of low-cost Google Android devices, while RIM faced softening sales, executive shakeups, and analyst negativity about its increasingly antiquated line of BlackBerry devices.

Escape strategies

In increasingly dire straits, RIM and Nokia have seized on remarkably similar escape plans: Create a next-generation operating system, pair it to sophisticated hardware and hope for the best. In RIM’s case, it’s a set of “superphones” based on the same QNX operating system that powers the company’s PlayBook tablet. Meanwhile, freshly minted Nokia CEO Stephen Elop is betting the house on Microsoft’s Windows Phone, which is taking the place of the Finnish phone-maker’s homegrown Symbian OS.

Like all escape plans, these face some potential snags. Despite the necessity created by RIM’s diving market share, those QNX-powered BlackBerry devices likely won’t hit the market before the second half of 2012. Nokia’s first Windows Phone smartphones are expected to arrive on store shelves by the end of the year, but it’s an open question whether the new devices — no matter how high-tech and shiny — will halt the company’s rapidly eroding customer base.

According to analysts, both companies face a long, hard slog in the quarters ahead.

“Nokia’s problem is about building sexy goods,” Ray Wang, principal analyst of the Constellation Research Group, told eWEEK. “They gave up on their OS to go with Microsoft. It means they have no differentiation going forward so they have taken a path to compete directly with the Korean handset manufacturers. It’ll be a brutal war.”

For RIM, he added, the challenges are slightly different: “RIM needs to focus on how to show why their enterprise-class capabilities are the way to go.” The key to future success will be figuring out “how they can take a consumer innovation and make it enterprise-class … safe, secure, simple, sexy, sustainable, scalable.”

Winning over the next generation

All that being said, both Nokia and RIM maintain substantial followings. For its part, RIM’s reputation for enterprise-class security continues to attract firms that deal in sensitive information. “It’s basically 100 percent around security given that we’re a regulated organisation,” said Jim Skipper, chief architect for Sun Life Financial, which has used BlackBerry devices on a company-wide basis for several years.

But in order to survive, neither Nokia nor RIM can rely wholly on their traditional base of customers; they’ll need to convince a new generation of users that their hardware and software are capable of meeting business and social needs.