The first question during RIM’s earnings call today was from RBC analyst Mike Abramsky, who basically asked RIM co-CEO Jim Balsillie how the BlackBerry is going to keep up with the likes of Apple and Google, who have beat RIM in design and high-end phone specifications.
In response, Balsillie went on an epic rant for almost four minutes, which… sort of makes sense.
He started off by telling us to stay tuned for RIM’s developers conference later this month, when more of the company’s design strategy would be revealed:
“There’s such an interesting dynamic going on in the market because first of all, when you talk about platform and design and future aspects, I think you’re going to be pleasantly surprised at DevCon in a week Monday. I can’t really give you too much here but I think you’re going to be really interested there. More aspects of the design philosophy are going to come out there.”
Fair enough. But then he launched into an epic rant, which makes some sense, but also really gets into the weeds:
“I think in terms of what BlackBerry does, you know, it still has a tremendous number of attributes that really serve the market in the way that we align it for the service and for the carrier and for the segment that it’s supposed to address. And I think it’s dangerous to frame all this in a high-end arms race. And I think you’re going to see our capacity to go beyond what could have been expected by anyone and yet still address the issues of cost effectiveness, security, efficiency, and desired form factors.
Our specialty’s been in resolving a paradox, and if you don’t innovate to resolve that paradox… You know, robbing Peter to pay Paul isn’t really a solution because you’re just shifting strategies. The feature phones upgrading to a smartphone, I think our guidance just shows what’s happening. And if you saw the roadmap and you saw the engagement strategies you would see that we are being very prudent in our approaches.
But this is a really promising space, and we can address lots of segments. And we can still respect carrier alignment and efficiency, and different price points.
But, I think you’re going to see the ability to, I don’t know how to say it better, than other than “resolve the paradox.” Because if you make these things so high-end that they’re not addressable to the market, or they’re so consumptive of the networks they can’t scale, that’s not what we originally designed our business for.
And what we’ve done is innovate to really avail the capability but still not sell out our lineage, and that’s the paradox that we’re resolving. But be careful that just because you don’t jump to Peter and abandon Paul, to sort of carry on with that sort of approach, that we don’t have an answer. We’re trying to innovate, forward our business, not be strategically erratic.
The core BlackBerry aspects are well defended and looked after and protected. But it’s in a space where people have mushrooming expectations of what these things can do. And that’s the essence of the paradox. And all I can say is it won’t take long before you see how we’ve done that. And I think Torch and BlackBerry 6 is really an excellent step forward.
The promo campaigns are just really starting. But that’s why you’ve seen the jump in guidance… and the subs is that. I hope I answered your question. It’s hard for me to answer it too directly without sort-of violating confidential roadmap stuff.”
Balsillie seems to be saying that RIM does want to play in the high-end of the industry, but it’s taking its time to get there. But we can’t really tell. Balsillie also seems happy with the BlackBerry Torch and BB6 operating system so far, which worries us.
On one hand, he highlights what’s important to RIM — network efficiency, pricing, working with carriers and not against them — but on the other, he doesn’t really tell us what specifically he’s going to do to be more competitive in the high-end. And then there’s the whole Peter and Paul analogy, talk of paradoxes, etc.
Regardless of what anyone at RIM thinks, it is NOT competitive with the iPhone or Android. Sure, RIM may continue to sell plenty of phones, but it is not yet making the types of tiny computers that iPhone and Android buyers are getting used to using. And that suggests it’s actually going to be targeting the low end of the market, which should hurt margins and growth in the future.
We look forward to seeing what’s in store at the developers conference later this month.
But we’re not satisfied yet that RIM knows how far behind it is, or that it has a plan to catch up.
Earlier: RIM Is The New Palm