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Summary:

New Research in Motion boss Thorsten Heins says that Europe — where the BlackBerry’s market share remains higher than in the U.S. — can save it from the brink of disaster. But he’s wrong: the reality is that the only thing that can save it is itself.

Thorsten heins

I’ve been turning over something in my mind since the weekend — the sort of nagging little voice in the back of my head that, whatever you do, you just can’t get rid of. It started from something that new RIM boss Thorsten Heins said a few days ago.

Ahead of Mobile World Congress, Heins sat down with Businessweek and said that despite the company’s troubles, it was looking to foreign markets for a boost.

“In Europe, Asia, the Middle East, Latin America, BlackBerry is a very strong brand, a leading brand — we can really rely on that… That doesn’t mean we don’t have to earn this every day again. We have to do that.’’

To back up that statement, Businessweek turned to Avian Securities analyst Matt Thornton, who confirmed: “The brand is still stronger in Europe than it is here.”

And you can see where they’re coming from.

The growing industry perception of RIM is that it’s dead in the water, a feeling led in no small part by the U.S. media, which seems to believe that there are no worthwhile markets beyond its shores and tends to disregards the possibility that innovation can percolate outside Silicon Valley. Nokia got a beating for years in the U.S. tech press because it never cracked America — and when its products got outflanked by Apple, that negative perception simply accelerated to supersonic speeds.

While BlackBerry’s popularity has declined hugely in America, its share of usage in Europe is higher. In fact, by some measures, it had as much as 23 percent of smartphone usage across the continent by the end of last year. That’s a lot of users.

The myopia of the press upsets a lot of European businesses, and you can imagine that it also irks Heins, a German. His company is having a tough time, but it’s doing better than everyone realizes. Why can’t anyone understand?

The truth is, there are many different reasons the picture is murky.

For a start, the numbers are confused. Every survey or study or analysis of the European market comes up with wildly different numbers. The company claims to have the most popular smartphone in Britain, but Comscore pins BlackBerry OS at around eight to 10 percent of the market in Germany, France, the U.K., Italy and Spain.

Secondly, while perception and reality might not always be in lockstep, they are connected in vital ways. Media perception is a bellwether for consumer perception and, since it is usually based on some underpinning factor like profitability, it can actually have real meaning.

But I think what got me most about Heins’s statement was that it relies on the loyalty of users, as if they are cows who — as long as they are satisfied — are there to be milked. He suggests, essentially, that if RIM keeps doing the job it’s doing outside America, the users will keep coming.

That ignores reality. Loyalty means almost nothing in the mobile industry, where churn rates are high and operators spend vast amounts trying to coax new customers in. It’s not enough to keep existing customers merely satisfied: you have to delight them and intrigue them more than the competition could. Every time that contract comes up for renewal, or a handset upgrade, you have to be the first thought in their mind.

For that reason, more than ever, product is key — and that is where RIM has wasted its opportunities time and time again.

BlackBerry’s most embedded user base, the corporate market, has started to desert it as the consumerization of business technology leans toward more user-friendly devices. For many people, the goodwill was burned up with the horror show that was the BlackBerry Storm.

And even though it is trying to put new products out, RIM has suffered delays, a slowdown in sales and declining margins, all of which mean it has less money to spend. It’s a destructive cycle, and even loyal users only have so much patience.

I don’t think Heins is totally off-base. BlackBerry is a stronger brand outside the United States than inside it, and that counts for something. But without something to back it up, its brand is nothing more than an empty shell. That means it’s not Europe that is going to save the BlackBerry: it needs to do that for itself.

  1. How long before bloggers get tired of wishing RIM dead? How many times will they trot out the mistakes of the past as if they are still occurring? It’s such lazy “journalism” that seems centered around the thought of “Oh, I have to file an article? Hmmm, how about another RIM bash piece? Yes! They’re so out of touch I can mock them and ignore what is happening now!”.

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    1. Divergent Trend Tuesday, February 28, 2012

      Spoken like a RIMM bagholder who has suffered an 80% loss over the last 12 months.

      RIM continues to take fire because the people in charge continue to say asinine things in public on a bi-weekly basis (See Roger Martin earlier this month), clearly demonstrating how little they’ve learned from those past mistakes.

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  2. US tech press tends to be hugely biased. Anonymous flaming, trolling and spinning seems to be the norm. Certain people in europe have been mentioning examinging this and called this in public a tendency to so called ‘economic nationalism’, ie. a biased press and tech blogosphere that is primarily self-serving. While understandable to some degree, it is also contradicting the spirit of free trade and could be construed as protectionism. So where the article states: “Loyalty means almost nothing in the mobile industry” this is actually not true. After all, despite the much touted iPhone and Android successes, people are still bought 4 times more Nokia phones (about 400 million) than iPhones in the world.

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    1. Divergent Trend Tuesday, February 28, 2012

      A series of baseless accusations and meaningless comparison. Excellent work.

      The raw number of Nokia phones sold does absolutely nothing to demonstrate loyalty, particularly in the face of Nokia’s steadily declining overall market share and rapidly vanishing smart phone share.

      “Becoming the largest Windows Phone player is by no means an indication of a revival at Nokia. Nokia’s fortunes in the smartphone market continue to decline rapidly to the benefit of Apple and Samsung. Nokia’s global smartphone market share declined from 33% in 2010 to 16% in 2011, while Samsung’s increased from 8% to 20%, and Apple’s increased from 16% to 19% during the same period.”

      http://goo.gl/CbfCW

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  3. You mention treating users like “cows who are there to be milked”. Honestly, as a former Blackberry user, and current iPhone and Playbook owner, I think that statement holds true for Apple as much as any other company. Apple products are overpriced, overhyped, and under criticized (still have barely ever heard an article or blog post slamming the iPhone for its atrocious scrolling/cutting/pasting functionality!).

    And also, for goodness sake, you claim that “The company claims to have the most popular smartphone in Britain, *but* Comscore pins BlackBerry OS at around eight to 10 percent of the market in Germany, France, the U.K., Italy and Spain” as if these measures contradict one another. But obviously obviously obviously one is measuring the British market and the other is an aggregate of 5 *independent* european nations. You are instantiating the very ignorance of other markets that you discuss in the article.

    In my experience, working with UK offices, never mind users overall, which seems high based on the numbers you quote, but corporate users are not in the least bit interested in iPhones – they are most definitely dedicated Blackberry users. Perhaps you might follow up with more data on corporate users both inside and outside the US?

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    1. My point was not that these numbers were contradictory (they’re not) but that the picture is not as complicated as “we have a strong brand in Europe”. If BB is the most popular handset in Britain with a 20 percent market share, and the pan-European market share is more like eight percent, then obviously there is a divergence in popularity between different European markets that means Heins’s characterization is probably not giving the whole picture.

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    2. “but corporate users are not in the least bit interested in iPhones – they are most definitely dedicated Blackberry users”

      Sure not what I’m seeing around here, in my corner of western Canada. Users are bringing their own iPhones, despite Exchange policies forcing them to use passwords and such, and they are happy. Why wouldn’t a company allow that?

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  4. Harsh piece. I find it very hard to believe that a company who has been through the ringer like RIM has, could maintain a “milk them” attitude towards their customer base. They get a pretty hard time of it – not just in the US press – but here in Europe also. Its the CEO’s job to present the positives – if they are stronger in Europe, why wouldn’t he talk that up?

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  5. Blackberry is still popular in the UK, but not in business. It is following the standard fashion arc where signifiers of wealth lose favour of the wealthy and become the status symbol of aspiration. These days the combination of a Blackberry and a Barbour jacket means you’re more likely to be someone who lives in a council flat than a Master of the Universe.

    The Blackberry is also fast becoming the phone of choice for 13 year olds. And let’s not forget BBM’s involvement in the London riots.

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    1. Very true: its heartland now is in the teen messaging market. But if there’s any group more fickle than teenagers, I’d like to meet them. :)

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  6. Sitting on the Fence Wednesday, February 29, 2012

    What a biased article. It doesn’t even mention the clear strengths of the BB’s – their solidity, and their real keyboard. For people who have to type a lot of emails and need to rely on a device for their daily professional live, the BB is still the best.

    I don’t need a toy, but a working machine. Ok, that means that the BB isn’t so sexy, but it is solid, and reliable.

    Trying to talk Blackberry down won’t change that, luckily.

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  7. Another typical idiotic article with nothing else to say but jumping on bashwagon. Seriously BJ, you got to do better than that. Man don’t you tech-bloggers have anything else to write about.. oh thats right, you get more views by bashing something than you do providing an objective piece.. What a frkn joke.. this world has flippd, the toy-phone has you all like zombies goin after any other company as they go through their transition. The…….. horse ………. has ……….. been……… beaten ………. to ……….. death. Get it?

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