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.
How Many Seats at the Table?
Partitioning within the mobile space will be along the lines of operating systems. By my estimate, we will be looking at a maximum of three dominant players, and after that we're looking a niche fillers. Unfortunately, the niche players won’t have the necessary mass to attract developers and the all important applications that drive the market. Two of those seats are currently occupied by RIM and Apple, and while Apple’s is secure for the foreseeable future, RIM's fate will hinge on retaining that enterprise market. Beyond that, we will be looking at an interesting game of musical chairs. The players will include Android (the Google factor), the resurrected Windows Mobile ("come on Lucky 7"), Symbian (that's Nokia, who is changing their name to "No-Buyer"), Web OS (prediction: "Pre" will soon be "Post"), and LiMo (I think that's "beans").
Though its initial capabilities are pretty lame, all bets are on Android. The key advantage is the open operating system that I’m betting will likely draw as many developers as the iPhone. What's more, Android will be available on a variety of handsets from different manufacturers and there will be models that work on all carrier networks. What's more, in the Android environment the developers won't be stuck working around the iPhone's battery problems, O/S quirks (e.g. shutting down most applications when a call comes in), and the constraints created by Apple’s secret deals with AT&T.
RIM will face an even bigger challenge from Android than it did from Apple. Enterprise users should soon have the types of security and device management capabilities that Apple was loathe to deliver. Add to that a wider variety of hardware options including touch screen and full qwerty models, user interface features cloned from RIM, and all of the desk top synching and other BES type capabilities without the cost of a BES. While RIM has single-handedly controlled the enterprise smartphone market, they will now face the Android army who could quickly overwhelm RIM's meager lineup of devices. The killer for RIM would be if the predicted trend toward user provided handsets takes hold. In that scenario, RIM could stand to lose a percentage of enterprise users equivalent to the consumer hit. That turn of events might put the viability of the entire company in question.
At the lower end of the smartphone segment, Android-based devices could also be a catalyst to start moving users of basic texting phones up to the full mobile Web experience; that is a development that will certainly please the carriers.
Conclusion
While it is highly unlikely, RIM’s best move at this stage of the game would be to buy Motorola's beleaguered handset division to get a jump-start on the Android market. Hey, they could probably get them cheap! Both companies are known for quality audio and RF components, and it would position RIM for the time when consumers start to tire of their BlackBerries. The other possibility for RIM would be to begin developing their own line of Android based devices, but knowing RIM's culture, that alternative is too remote to even consider. However, if RIM sticks to its old game plan and bets its future on retaining the consumer market share, we might be looking at a "Wireless Nortel" (minus the corporate shenanigans) in a few short years.
For enterprise buyers, the big question will be how quickly the Android community recognizes that there is a market for enterprise mobility and that the requirements are vastly different from the consumer market. The opportunity is so obvious that I'm guessing there are dozens of companies with a plan to emulate the RIM environment in Android and without the RIM price.
While I've not been a fan of user owned smartphones for enterprise users, there is a model that’s taking shape that could work for dual use business/personal smartphones. The idea is to allow the user to bring their own device, but they would have to allow the enterprise IT department to install a software partition to separate the business from the personal functions. The user would have full use of the personal side and all the apps they could download, but the IT department would control the enterprise partition, be able to control software distribution, enforce security policies, and be able to securely wipe the enterprise partition when the employee leaves the company. Maybe at that point we might finally see some uptake in those mobile UC capabilities the PBX guys keep talking about.
