The Smartphone Market in the Android Age:
If user-owned handsets are the future of enterprise use, that won't bode well for the future of the Blackberry.

While many may think this prediction a bit premature, I'm betting that RIM's dominance in the North American smartphone market is about to come to an abrupt halt. The reason for that is tied directly to the growth engine that has fueled them for the past few years, consumer sales. For the past few years, fully 60% of RIM's sales have been to consumers, and that’s running on highly volatile fuel. It’s kind of like drag racing: you go real fast, but you’re also the first one to the scene of the accident! Their core email focus, excellent design, and pace-setting security features will help keep them viable in the enterprise space, but if the predicted trend toward user-owned handsets in business takes hold, it could be a cold winter in Waterloo.

For my money, RIM still delivers the best overall mobile experience for the enterprise user. While the service cost is high (typically $45 per user per month for the BlackBerry service alone) and when you count in the BlackBerry Enterprise Server and required device licenses, you are looking at the most costly device you can provide short of giving everyone a satellite phone. For that lofty price you get a solid device that feels good in your hand, synchs seamlessly with the desktop, does email and secure text to beat the band, and provides an engaging user experience based on hundreds of well thought-out design features. They also gave you a browser that will make you think AOL could still make a comeback in the Web market.

However, the consumer market is far more fickle and more readily attracted to "bright shiny objects," a fact that is illustrated by the phenomenal success of the iPhone. However, there was more to the iPhone's success than the glitz--it's the apps. With its revolutionary user interface, full functioned browser, and a virtual army of developers banging out applications, the Apple crew was able to deliver yet another blockbuster consumer product and turned the entire mobile device category on its ear. In essence, the iPhone changed the user’s expectations about what the mobile experience should deliver. Well, maybe not the miserable battery life and lousy 3G coverage, but you know what I mean.

Viewed in terms of a consumer market whose expectations have been shaped by the iPhone, the RIM experience is looking a bit "mid-decade." Of course, "stodgy" is worn as a badge of honor by RIM, particularly when they talk about the management and security features that have endeared them to enterprise IT departments. However, that’s not going to get them any points with consumers. The solid feel of the keyboard and the immediacy of BlackBerry Messenger (compared to traditional SMS services) fueled RIM's entry into the consumer space, but with the new competition in the smart phone market, that's table stakes. To stay in the consumer game you need products that continue to engage consumers, and despite their run at an app store, RIM is simply not in the same class as Apple or the other up-and-comers. Their best shot was the Storm, but comparing that to the iPhone is like comparing Gregorian Chant to rock and roll.

So if things are looking this bad for RIM, how soon can we expect the plunge? The "how bad" is pretty easy to calculate: look at their consumer sales and reduce them by 50% to 75%. "How fast" is pretty easy too. Look at the growth curve for consumer sales, time-shift it forward two years (the term of the average cellular contract) and reverse its direction. I don’t make too many financial predictions, but call your broker and go short on RIM.