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BlackBerry: A Dual Personality Disorder?

[RIM is torn between two very different market segments: Enterprise mobile messaging and text-addicted consumers. Amidst troubling signs for RIM's future, the company needs to reconcile its dual personality. VisionMobile Research Partner Michael Vakulenko explains why RIM needs to create separate product experiences for business users and consumers and analyses the possibilities.]

BlackBerry: A dual personality disorder?

It’s hardly news today that RIM is at the verge of losing its smartphone leadership. Analysts dog-pile on the company downgrading the stock amidst declining smartphone market shareincreasing subscriber acquisition costs, increasing competition from Apple and a slew of Android handsets from tens of OEMs.

How should RIM to solve its product portfolio dilemma?

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A lot has changed since RIM earned its success on providing mobile push-email to enterprises. Today RIM serves two distinct market segments: enterprise users and text-addicted consumers.

Contrary to common perception, enterprise market is no longer RIM’s largest market. Back in June 2009 the company reported in that 80% of the growth came from consumers. Today in fact more than half of BlackBerry active users are consumers. Who are these people?

BlackBerry was conceived as a messaging device with optimized user interface and physical keyboard being its primary advantages. These advantages found warm reception in the hands of text-addicted youth, who according to Nielsen are sending on average 3,339 texts (SMS) a month in the US.

SMS is not the only way to socialize using BlackBerry. BlackBerry Messenger (BBM) is a proprietary instant messaging application running on BlackBerry smartphones. BBM uses BlackBerry PIN programed in the device to identify BBM users. The application supports avatars, groups, photo sharing, voice notes and reading the PIN using bar code. Because of the device-specific BlackBerry PIN, BBM has strong viral effect. A person must have a BlackBerry device to participate in the social network formed around BBM. As of May 2010, BBM had about 22.5 million users, representing close to 50% penetration across a total subscription base of 46 million subscribers.

In countries like Saudi Arabia and the United Arab Emirates, about 90% of BlackBerry owners use the BBM service – a figure which concerned government authorities, which weren’t able to intercept BBM communications. In the UK and France BBM is one of the main drivers for BlackBerry device sales. In Netherlands, Venezuela, Indonesia and Thailand users put the bar code of their BlackBerry PIN on their business cards, t-shirts or even swimwear.

A Personality Dilemma
Consumer success is great news for RIM. It is however increasingly difficult for RIM to maneuver between its established high-margin enterprise market, and the less familiar lower-margin consumer market. RIM will risk loosing both markets to competition, if it continues to serve them with the same brand and product portfolio. Enterprise users have very different and often conflicting expectations compared to the enthusiasts of message-based socializing:

- Cost is important factor for many text-addicts. Many of them are young or live in developing counties. A BlackBerry price tag in the pre-paid range has significant allure for this segment. For example, Carphone Warehouse sells BlackBerry Curve 8520 for £129.95 (more than $200) with a Pay-as-You-Go plan. On the enterprise side, the last thing that a high-flying executive wants is to use a smartphone associated with a cheapy, “smartphone-for-the-rest-of-us” brand (for example see this T-Mobile commercial)

- Many text-addicts buy BlackBerry because they don’t like touch screen. If they would, many of them would be buying iPhone or Android phones. Instead they prefer a device with physical keyboard and optimized for one-handed operation. On the enterprise side, touch screen is important to compete against high-end iPhone, iPad and Android devices.

- Text-addicts need texting, instant messaging and integration with popular social networks.  Enterprise users need emphasis on email, PDA functions, synchronization, MS Office compatibility and device management.

- Security is a big issue in the enterprise, while many consumers don’t know how to spell it – as demonstrated by the wide adoption of Facebook, despite privacy issues.

Is RIM putting its R&D cycles and money in the right places? No – RIM seems to be gravitating towards the convenient and familiar enterprise segment playing catchup with Apple. RIM acquired DataWiz, maker of MS Office compatibility software, in September 2010; Introduced high-end touch screen model, BlackBerry Torch, in August 2010; and recently announced PlayBook tablet squarely aimed at the enterprise market.
There is very little in the recent RIM product announcements to bolster confidence in the company’s historical smartphone leadership. New developments are mostly about catching up with Apple, without introducing anything significantly new and relevant for RIM’s devoted user base.

A Gordian Solution
Instead of chasing Apple, RIM shall build on its advantages and focus on unique needs of its devoted user base. The first step would be separating its product portfolio into enterprise and consumer product lines. This will free consumer products of unnecessary burden and complexity, while keeping enterprise products focused on productivity and security.

The second step would be enhancing the BlackBerry Product Experience (PX) by building up the social features of BBM on the consumer side and beefing up on the proven push-infrastructure, security and team collaboration features on the enterprise side.
Today, competition in the mobile industry shapes around Experience Ecosystems comprising of connected devices, applications, services and communities. New Product Experiences based on connected services should be the focus for RIM’s innovation. Here’s how RIM could create service-based product differentiation for future versions of BlackBerry devices.

Location-based games have proved to be very popular, especially with RIM’s consumer demographics. Foursquare, a company developing a smartphone check-in service, reached a valuation of $125M having just 1.8 Million users and 27 Employees.

Compare this with RIM who has over 20 Million users in their BBM network. Why can’t RIM build its own checkin service on top of BBM, exclusive to BlackBerry devices? Adding location context to BBM messaging will greatly enhance social interaction of the platform’s users. Moreover, check-in apps show strong advertising potential. With 20 Million BBM users RIM could create new revenue streams for itself and mobile operators.

Even compulsive texters use the phone once in a while, but for them voice call is often a part of a longer conversation taking place using multiple means of communication. RIM could integrate voice calling with BBM making voice part of a wider social context. Users would enjoy better communication experience, while operators would be happy to see users consuming more voice minutes.

Business users use their devices in rather different context from consumers. Many of them are mobile and depend on collaborating with their colleagues remotely. BlackBerry-based team collaboration could become a killer app and differentiator for such users. Real-time activity updates, multiparty discussions, wikis, collaborative task lists have all enjoyed success on the Internet as shown by Teambox, Yammer, 37 signals and long list of other Internet collaboration startups. Why not integrate information sharing tools and video calling into the operating system making BlackBerry indispensable not only for email, but for team collaboration?

The Clock is Ticking
In order to keep its position in the smartphone market RIM needs to create separate Product Experiences for consumer and business users, and focus on innovation in connected services.

RIM doesn’t have much time for experiments with the PlayBook tablet, or on internal debates about replacing the vintage BlackBerry OS with the more capable QNX OS. The mobile market continues to evolve rapidly: Apple is making steady progress in improving enterprise readiness of its products, prompting mass defections of enterprise users to more appealing iPhone and iPad devices. At the same time, Android is spreading into low-cost smartphones threatening to displace BBM with Internet-based alternatives.

What do you think RIM should do to keep its smartphone leadership position?

- Michael

[Michael Vakulenko is a Research Partner at VisionMobile. He has been working in the mobile industry for over 16 years starting his career in wireless in Qualcomm. Michael has experience across many aspects of mobile technologies including handset software, mobile services, network infrastructure and wireless system engineering. He can be reached at michael [/at/] visionmobile.com]

  • Hampus

    Vision mobile usually has excellent posts, but this was a very strange mix of opinions. I think the whole industry can see that RIM needs to update themselves due to Android and iOS, but Michael – your post is very strange apart from that observation.

    - How is touch important for enterprise users?

    - Torch is a pure hygiene play – both Apple and Google have good browsers, and Torch is competitive. So that was probably good for both consumers and enterprises.

    - The DataWiz acquisition is in my view right in the enterprise segment.

    - LBS – why is not Foursquare or any of those as apps enough? Why should they build an app of their own?

    - Collaboration – good idea.

  • http://jeremyjustice.net Jeremy

    I have to agree that just doing a Foursquare or FB Places wouldn't be enough, it does seem logical to think they could build something LBS-related that directly appeals back to their enterprise segments. There are probably a lot of brands out there that shy away from the check-in biz because it doesn't fit their targets…but something from BB/RIM might.

  • http://www.mobileinc.co.uk Murat

    This is spot on.

    RIM is in a precarious position, they currently have the teen segment addicited to BBM, but remember, BBM is just a service – one that can be easily replicated by Apple and Android. Once that happens they are really screwed.

    Facebooks announcement yesterday means that any manufacturer will be able to hook into their APIs and build a 'BBM' killer. Rim had better get moving

    I've upgraded my Blackberry for 2 years in a row now and there has been hardly any improvement whatsoever. The basics stuff like being notified of a OS update – just isn't being done.

    The truth is – the browser is awful, the camera is awful, zooming in and out of images is awful, the only reason I still have this phone is BBM, I now have enough friends on it that its become hard to get rid of the phone. Somehow RIM has stumbled upon this fantastic service in amongst a pile of crap.

    Even the emails aren't up to scratch anymore, everyone does it as good if not better.

    RIM need to integrate Facebook and Twitter into BBM quickly, either than or branch BBM out into more Facebook-like features. They have the opportunity to create a social network out of BBM, it basically is already

    They also need a decent OS

    <a href="http://www.Twitter.com/mutlu82” target=”_blank”>www.Twitter.com/mutlu82

  • Mark

    BlackBerry succumbed to the short-term allure of trying to be all things to all people and in the process it gave away its dominant position as being a serious business tool.

    However, there was a cultural shift that will bring down BlackBerry. That shift is the worker wanting to return more control over their life and remove their employers control and the sense that the worker is working for free outside the office.

    Human behavior and not a phone's features, drive device purchases. The bottom line is that we live 168 hours per week, each week we sleep more than we work and we spend more time out of work than we do in work. Why should we carry a device that's more suited for work? It makes more sense to carry a device suited for our personal lives that can do secondary duty at work.

    The basic premise of a Smart Phone is that it allows its user to be reached 24 x 7 with data. That means that a worker is tethered to their job around the clock. The workers realized if they give their employers this unpaid access to their free time their needs to be a give-take. This exchange theory is why so many workers have replaced their BlackBerry's with iPhones, a device more suited to bringing its user pleasure not work related data. The exchange theory exchanges the right of an employers access to employee with the freedom of allowing the worker a device that can provide personal pleasure attributes in the workplace. In the exchange theory the Apple iPhone has more to exchange than the BlackBerry.

    Now, for the present, the iPhone's App Store makes the iPhone the better consumer choice. So rather than carrying a stronger performing work device into the worker's personal life, the worker would prefer carrying a stronger performing personal life device into their work life.

    BlackBerry paved the way for Smart Phones. In its time it was a fantastic workers device. Apple brought the Smart phone into the consumers sphere, and is the more friendly people's device.

    Good technology develops around human behavior, bad technology forces a change in human behavior to support technology's limitations. Apple is great with developing their technology around human behavior. Waking into work with your iPhone, with your music on your iPhone and your games on your iPhone is far more compelling and will drive more sales than walking into your home with a device that will push useless emails at you during dinner and the final 2 minutes of a tied football game.

    Apple wins.

  • olalala

    In Netherlands, Venezuela, Indonesia and Thailand users put the bar code of their BlackBerry PIN on their business cards, t-shirts or even swimwear.

    AWESOME!!

    Let it come to india

  • Annamaria Rossi

    subscribing to follow up

  • http://blogs.blackberry.com Douglas 'Tron&a

    Hi Michael,

    Interesting take on the personality of RIM – spot on with the importance of text and BBM going forward. You may have seen this article from Bloomberg about how popular BBM is in Latin America: http://www.bloomberg.com/news/2010-11-11/rim-taps

    You mention how different the enterprise market is from the consumer market, which is true, but more and more, you're seeing the same things that are important to enterprises (reliability, manageability, security) are also very important to consumers. At the same time, people's work and home lives are blurring, and a device that meets both needs is important. Our upcoming PlayBook is a device that is enterprise-ready, but also allows people to watch videos, enjoy web-based Flash content, or play games, activities which traditionally are more personal. The recently released Torch delivers a compelling touch-screen experience, while also giving users a full keyboard…at the same time, we've released the Style flip phone to appeal to new smartphone users that like using a flip phone.

    I think you have some really good ideas on ways to better utilize the BBM platform. We recently announced the open BBM Social Platform so the BlackBerry developer community has the opportunity to leverage the power of BBM in their own applications, see http://devblog.blackberry.com/2010/09/bbm-social-… for more details. Thanks again for the analysis.

    Cheers,

    Douglas from RIM

    @tron / @BlackBerry / @BlackBerryBlog

  • Francisco Kattan

    Good article Michael. This consumer versus enterprise issue is certainly hurting RIM. We just witnessed the RIM Playbook positioning fiasco as another example (first announced as an enterprise device only to later reposition it as a consumer device).

    However i think there is a more fundamental question for RIM: Should RIM even be in the smartphone business to begin with? I wrote about this here:
    http://franciscokattan.com/2011/03/20/is-rim-in-t

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