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Will (or Can) RIM Take the Road IBM Once Traveled?

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The big news in the mobile space this morning is that RIM is thinking about expanding its BlackBerry Messenger (BBM) service to Android and iOS platforms. It’s not confirmed, but BGR reports that it’s hearing the same thing from multiple, dependable sources. Why would RIM (s rimm) give away the biggest draw to its hardware platform? Maybe because it finally realized hardware isn’t where its strengths lie.

RIM has been keen to point to BBM as a key advantage its BlackBerry smartphones have over the competition. It provides direct, instant, device-to-device communications between BlackBerry handsets. And BBM isn’t any old messaging app. It also provides status updates, unlimited character length, display pictures, delivery and read confirmation, the ability to share videos and pics and group messaging. No other mobile platform has a similar native offering, so RIM is right to trumpet it as a major advantage. Which is why it seems counterintuitive that RIM would want to make the feature available to competing platforms, even if it only offers a stripped-down version.

But RIM must realize that its role in the mobile hardware game is in serious danger of being eclipsed by competitors such as Apple and Google, who appear to be much more adept at keeping up with technological advances and user experience improvements. Compared to the flood of new Android (s goog) hardware hitting the market on a pretty much constant basis from manufacturers like Samsung and HTC, Apple’s (s aapl) once-yearly update that never fails to impress, and even the looming specter of a Nokia(s nok) and Windows Phone 7 (s msft) partnership, BlackBerry devices and the operating system that powers them seems old and busted. If true, a move to open up BBM may be a sign that RIM realizes its strengths now lie in its network and in providing back-end services to enterprise users, and not in making phones, at least not anymore.

RIM is also experimenting with running Android software on its devices, according to at least one app developer and sources within the company. If you ask me, this is one part vain attempt to grasp at some shred of relevance for its hardware arm, the success of which depends largely on the success of the PlayBook tablet, and one part effort to explore cross-platform integration in the new mobile landscape. QNX still has plenty of promise, especially in the enterprise space, and RIM could easily continue its development even in a post-hardware phase. Providing enterprise-friendly stability with access to Google’s stable of apps would surely attract device-making partners.

IBM (s ibm) once faced a similar watershed moment, and it seems somewhat prescient that it chose to get out of the PC hardware game when it did, and into providing enterprise IT services instead. RIM’s actions of late suggest that it could follow a similar trajectory, but would even that be enough?

Unlike IBM’s switch, were RIM to do the same, it could hardly be called prescient. The BlackBerry brand has been experiencing a steady decline for years now, first in the eyes of the tech elite, and later in the eyes of consumers, too. Asking any BlackBerry user; it was easy to glean that the company’s real strength lay in its network and BlackBerry server.

There’s still value in those aspects of RIM’s business, but not so much as there was before, since competitors have been cropping up while RIM tried to bail out the sinking BlackBerry ship. BBM has lost its original lustre in the face of competitors like Kik (which it tried clumsily to block), and with Facebook poised to get in on the group messaging game, the space is about to get quite crowded.

At this point, it looks like a shift in focus to software and services might be RIM’s best option, but that doesn’t mean it’s an option that will necessarily succeed. IBM jumped early and with purpose, but RIM is moving late and out of desperation. We’ll see how much that affects the end result.

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12 Responses to “Will (or Can) RIM Take the Road IBM Once Traveled?”

  1. D Mihelek

    I think we will see this announcement come with the release of dual core qnx based handsets that run android apps. I would love to see RIM focus their efforts on one device with google’s help. I.E. A nexus blackberry of sorts running a propietary blackberry version of android while retaining all of the back end functionality from both companies. A super device like this could very well challenge the iPhone and allow users with low end android/blackberry devices in emerging markets to stay on the BBM bandwagon.

  2. Tom Devey

    This purported move doesn’t make any obvious sense at this time, as hiving off the hardware side would make it almost impossible to value the company. As I believe that RiM does their own manufacturing, a more rational move would be to outsource manufacturing to one of the contract manufacturers like Celestica, Flextronics or Sanmina-SCI. This would make far more sense than cutting the business down to just the BlackBerry messaging service as most of the value in the brand name would be evaporated.

  3. For many that do use BBM, the draw is international communication without additional cost. Many do not ever download any new apps to their blackberry devices. I see it as an opportunity for RIM to get their hooks into someone who has left the platform and would still like to communicate with international blackberry friends and family (even into someone who wants to know if they can use BBM even though they never owned a blackberry). Since they are expanding into emerging markets as of late, this could be huge on the uptake.

    • Wanted to add that in many of these emerging markets, the blackberry plan is so cheap in comparison to other data plans. So, its only natural for them to use BBM to communicate with family abroad. As a result, their family members cling to BBM also. This, to me, is a way to keep them in the BB fold. Maybe once the devices improve, they return to BB because they love BBM and now can use it where it is available natively.

  4. Providing enterprise-friendly adherence with admission to Google’s abiding of apps would absolutely allure device-making partners. IBM already faced a agnate watershed moment, and it seems somewhat clear-sighted that it chose to get out of the PC accouterments bold if it did, and into accouterment action IT casework instead.

  5. It’s an interesting theory, but I don’t buy it. I think this is the worst thing RIM could do with BBM, which is the only consumer differentiator for their platform and devices. For many consumers it’s the only reason they still have a BB in the face of many more attractive, functional and capable devices.

    The idea of giving up hardware for services makes less sense when you look at RIM’s $18+ billion in revenues last year, the vast majority of which came from devices at good operating and gross margins. No matter how optimistic you are about their services business, it will only ever be a small fraction of that, and I wouldn’t be that optimistic about the prospects of taking the platform device-independent – they’ve tried that before. Remember BlackBerry Connect? No? That’s because it was a flop.

    Today, BlackBerry is still a large, growing and profitable provider of devices and associated services. Though I see challenges ahead and negative trends in both growth and margins over time, I don’t believe this is the answer, and in fact I think it would accelerate the negative trends considerably without providing a meaningful upside as a counterpoint.

    • You might be right about that Jan, and I think that’s part of the problem. I’m not arguing RIM should definitely go this route necessarily, just that it might be considering it. Even if it isn’t, the things we’re hearing about its strategy seem so confusing (from the company and from watchers) that people should be more worried about whether there’s a clear plan in place at all, rather than about what that plan might ultimately be.

      The BlackBerry brand is still strong, as you rightly point out, but it has to be aware that it’s in danger of becoming irrelevant, or else why would it be doing what it’s doing with the PlayBook?

      I’m curious about what you think is a better answer for RIM. Maybe a complete hardware/software overhaul? Or are minor course corrections all that’s required?

      • I think they have a plan, but RIM doesn’t really communicate its strategy much, which is I think becoming a problem for them. At All Things D a while back, Mike Lazaridis attempted it but did a terrible job because it was in Q&A format rather than speech format, which he does better.

        In essence, though, I worry that RIM is in denial about the changes required to remain competitive. They disparagingly refer to the current competition in devices as an “arms race” which they don’t want to participate in, preferring to put their efforts into the Playbook as a platform more suited to faster processors, better battery life, media consumption etc. than the 3-4 inch phone. I think they’re wrong about that, but haven’t acknowledged it yet, and it will hurt them until they recognize it. Having said that, they do have some more competitive devices coming which may help.

        But overall, their only consumer appeal right now is BBM, so the last thing they should do is allow that to walk out the door as a differentiator, and in the enterprise Android and iPhone are becoming much more serious threats, whether enterprise IT departments like it or not. Over time, it’s easy to see their main segment being eroded without a significant counterbalancing improvement in consumer. Hard to see how they get around that, but I think they have several years of decent performance left in them.

  6. IBM got its clock cleaned in the PC business and was drummed out of town. It was lucky to be able to retreat into IT services. IBM hasn’t been a leader in technology for 20 years (the Jeopardy stunt was a parlor trick).