The outer RIM

Features Kevin Pocock Dec 15, 2012

The mobile sector is developing at break-neck speeds. Kevin Pocock considers a current ‘also ran’

Recent history hasn’t been too kind to the company millions know as the developer of the BlackBerry range of smartphones.Despite Research In Motion (RIM) doing much of the hard work and development required to establish the technology fuelling demand within the current, burgeoning, smartphone market, during the past couple of years it seems to have lost its edge. It has certainly lost ground to multi-touch devices, and its failure to innovate (whether perceived or real) has left the company in an awkward spot, struggling in the wake of later entrants into the field. So how did this all come to pass and what is Research In Motion doing about it?

Fail to prepare?

“It’s not that RIM hasn’t seen trouble coming, or failed to attempt innovation. It’s tried to expand its horizons, spotted opportunities, developed and shipped new products. The problem is they simply haven’t been received as well as it hoped they would be. I’m referring, of course, to the original BlackBerry PlayBook, which endured a tepid reception at a time, around March 2011, when Apple was launching its iPad 2 to huge acclaim. Samsung’s new iterations of its Android-based Galaxy Tab, like the 10.1, felt the effect of that Apple shockwave. Samsung’s releases were shunted back to summer 2011 after Lee Don-Joo, the company’s vice president of mobile, commented, “We will have to improve the parts that are inadequate .... Apple made it [the iPad 2] very thin”.

Samsung’s delayed releases enjoyed a warm reception before the light of patent disputes had fully penetrated into the public domain. This was a time when any company that wasn’t Apple was in a battle for second place and RIM was a particular late-comer. Android devices were slow starters in the tablet market too, but the open source OS and ‘modder community’ backing for devices running Google’s mobile OS buoyed hardware manufacturers’ hopes. If you were with Android, the future looked good, but companies outside of Apple who didn’t have the support of a global community seduced by the plucky alternative to the closed iOS environment were in for a rough ride.

Freefall

A device that suffered a similar fate was the HP TouchPad. Announced in February 2011, three models of 16, 32 and 64GB storage were released in July 2011. This journalist attended a meeting about the launch, was sent a device to test and a week later was asked to return it. HP, it turned out, had decided to discontinue its webOS devices, including the TouchPad, which had received a mediocre reception. Sales of this tablet were so below estimation it’s reported that Best Buy refused to buy any more stock. What occurred thereafter was a fire-sale in which everybody wanted a premium TouchPad at a criminally low price, indicating that at the original pricing a well-made device just couldn’t compete with Apple’s dominance or the faith of the Android-supporting community.

Clearly, RIM wasn’t the only tablet manufacturer to suffer, with its devices running the uninspiring BlackBerry Tablet OS, but at this point HP learned a lesson and changed tack. Claiming it would keep options open for webOS, HP decided to fulfil existing TouchPad orders, with retailers to continue the discounts. In summer 2011, the majority of TouchPad owners were likely busy wiping away webOS and installing Android onto their devices, but now the company is officially behind Windows 8, with more devices in the works.

Terminal velocity

Any aspirations for an HP webOS tablet fell flat, and the company defaulted to the tablet OS newcomer, Windows 8. Yet RIM, after its own uninspiring entry into the tablet market, resisted and continues to resist, moving forward with its own Tablet OS. Android, iOS and Windows are the OSs most users in the space are talking about, but RIM sticks to its guns. Which is fine, if you’ve some wiggle room in which to use them. Unfortunately, RIM’s recent financial reports don’t provide much happy reading.

The last three fiscal reports detail a challenging time for the company. The Q4 fiscal report for 2012 was wounding. RIM’s revenue was $4.2 billion, with a net loss of $125 million. This, tied in with a dip in the selling of units, didn’t make for good reading. The good news was that the PlayBook range shipped around 500,000 units, up from 150,000 in Q3 2012 fiscal reports. However, worse news was just a quarter away. Q1 2013 fiscal reports saw revenue drop to $2.8 billion, and a huge net loss of $518 million. RIM shipped just 260,000 PlayBooks over the quarter and 7.8 million BlackBerrys, compared to the 500,000 PlayBook figure above and 11.1 million BlackBerrys.

The kicker was that there was no relief to come from any soon-to-be released BlackBerry 10 products. No reinvigoration, and no full-touch product for RIM to engage the smartphone buying public with. BlackBerry 10 was being pushed back to a release in the first calendar quarter of 2013. In regards to that news, CEO Thorsten Heins said, “RIM’s development teams are relentlessly focused on ensuring the quality and reliability of the platform, and I will not compromise the product by delivering it before it is ready.”

Sounding rather like it was Heins’s own personal mission to improve the company fortunes, the reasoning was still sound and the ethic commendable. Panicking and rushing out a product could hurt the company even more in the long run. Not to put too much pressure on future releases but to regain interest, any upcoming products need to be the best and most interesting they can be. So if consumers need to wait a little, they need to wait a little. RIM’s recent financial history doesn’t make for great reading, but that staggering £518m loss - the first Q1 loss since 2004 - is as bad as it gets.

A rough landing

Where RIM currently stands would at least seem to be on firmer ground, as opposed to spiralling wildly out of control, but getting there wasn’t without some painful decisions. After the Q1 results, and that huge half a billion dollar loss, analysts were predicting imminent death-throes if the Waterloo, Ontario based firm didn’t break up or put itself up for sale. However, RIM instead went about closing manufacturing sites and cutting 5,000 global jobs. While on a human scale such decisions are are always detestable and saddening for those involved, as a business move RIM thought it had no choice. Cut the costs and believe in the products was the message.
A statement in September by PR manager Morgan Evans, sent to website The Inquirer read, “Our financial target is to drive at least $1 billion in savings by the end of fiscal 2013, based on our Q4 2012 run rate, and headcount reductions are part of this initiative. RIM has reduced some positions as part of this programme and may continue to do so as the company methodically works through a review of the business.”

Such business speak overlooks the impact of that on livelihoods and families, but come the Q2 2013 results, it seemed those hard decisions had some positive company impact.

Dusting off

The Q2 2013 fiscal results showed that things had somewhat improved. Revenue was up $2.8m to $2.9 billion, and losses down from $518m to $235 million. Obviously, to continually operate at a loss just isn’t sustainable, but to cut losses in half in one quarter isn’t a bad step in the right direction.

RIM allowed itself a bit of optimism but had to recognise its position. With Windows 8 and the Windows Phone 8 ecosystems on the horizon, it had a direct challenger in being the third option (or choice, perhaps) for end-users. Quietly confident about BlackBerry 10 and potential licensing opportunities, RIM would need to not only battle against Microsoft’s Windows 8 and Windows Phone 8 but provide a viable alternative to Apple and Android (or Android and Apple, based on global market-share). More than that, it would need to convince hardware manufacturers of the attraction of its coming release to a global audience - hardware manufacturers that have already signed up to produce devices for other ecosystems.

For its part, RIM seems to have been doing some legwork to ensure 10 gets as good a start in the market as it can. Although it’s now likely to be a March rather than January 2013 launch, RIM has declared it’s received good feedback from developers and has also managed to sign up TomTom for its navigation know-how and respected mobile games developer Gameloft. Gameloft is responsible for Android titles The Amazing Spiderman and The Dark Knight Rises, and Apple titles Wild Blood and NFL PRO 2013.

It’s not a bad start, particularly as 11 Gameloft titles will be available on launch, but when Microsoft has the backing of Electronic Arts and a four-month headstart, it’s not enough on its own. Equally, not all developers seem impressed with RIM’s ambitions. Paragon Software’s PR director, Katia Shabanova, recently told our sister title, Know Your Mobile, “As a multi-platform software developer, we no longer develop for BB, and don’t even consider developing for this platform anymore. We don’t have faith in RIM.”

Smarten up

Some might take convincing, yet generally specific responses to BlackBerry 10 have been pretty positive. A video of a live demo from this year’s BlackBerry Jam Americas Keynote shows some interesting strengths of the new operating system, strengths that could be key to reinvigorating RIM’s smartphone and tablet fortunes.

Demoed by Vivek Bhardwaj of the BlackBerry 10 product team, a Dev Alpha B device is used in the video to show the critical importance of single touch gestures using what BlackBerry is calling ‘BlackBerry Peek’. Peek allows users to, at all times, peek at notifications from things like Facebook, Twitter and LinkedIn and then have instant access to the ‘BlackBerry Hub’, which is the integrated home of messages and events. Of even more use for business (or just busy) users is the way that events provide details of others who are attending the meeting, right in the hub - their details, but also details of your previous and future activities, in one place.

Perhaps even more impressive is the BlackBerry 10 approach to text and messaging. Not only does 10 have predictive text and predictive phrases based on your use - suggested words appear on the keyboard as you type - but it also caters for multilingual messaging for BlackBerry’s 30% of users who message in more than one language. So if you’re writing in English and switch to another language halfway through the message, BlackBerry 10 knows. However, quite how many languages are catered for we don’t yet know.
Another feature called BlackBerry Balance allows the neat separation of work and personal use. A dragged ‘pull down’ gesture from the top of a multi-touch device will allow users to choose between personal or work very simply. BlackBerry 10 is multi-threaded so has separate and secure parameters for personal and professional identities, and a company can even allow only certain access to App World in the ‘work’ identity. If you leave the company and keep the phone, then that part of the OS can be wiped clean.

A new frontier

Tellingly, CEO Thorsten Heins is convinced that the ‘application grid’ experience is getting old. Multi-tasking is BlackBerry’s focus here in its ‘multi-tasking space’, allowing users to move seamlessly from one application to another. What you don’t have to do is to come out of one application, go back to the application grid and then go into another like you would with Android or iPhone devices. This, combined with the BlackBerry Hub, which takes Windows Phone 7’s people and personal tiles and runs and jumps with them (and then throws in an integrated calendar), should be attractive to anyone who craves a neat and tidy mind and device.

It all sounds very impressive. In the last year the BlackBerry brand has anecdotally fallen out of favour in global markets. However, RIM has continued to support its tablet and smartphone users and points firmly to an 80 million strong - and growing - user-base. That, combined with the belief that it is the quality of its BlackBerry 10 operating system that people will be happy to wait for, is what is keeping RIM’s candle burning bright, even as Android and iOS updates appear and Windows Phone 8 establishes a strong hold in the market.

RIM’s future market impact will certainly be interesting. What it comes down to for the market is that more choice for users is always good and that RIM is looking to deliver a mobile ecosystem that is as slick as it is useful. Having counted some heavy losses and having had to make some tough decisions over the last year, RIM is looking forward to 2013 as its time to regain a place of respect in the mobile market. Recent financial results have shown an upturn in fortunes, and if the feedback from BlackBerry 10 continues to be positive, it might only take the platform’s release and the deliverance on promises to return the company to favour. And if that happens, RIM may redefine the mobile experience and once again establish itself as a serious contender.