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It’s time for BlackBerry maker Research In Motion (RIMM) to find a buyer — before it’s too late.
RIM revolutionised email-and-Internet on the go, for which a generation of executives will always be grateful. It has also built a big, profitable business selling BlackBerry devices and email services to corporations.
But while the smartphone industry is still growing rapidly, RIM’s relative strength within it is fading.
From here on in, we think it will be mostly downhill for RIM. So now is a great time to sell.
Why is RIM’s position getting weaker?
- The growth in the smartphone market is now shifting toward consumers, not corporations. (Even 80% of RIM’s new subscriber accounts were “non-enterprise” last quarter.)
- RIM’s strength is the enterprise, not the consumer. RIM is not a technology or design leader for consumer-focused smartphone hardware or software.
- RIM’s competitors are coming up fast. Apple is gaining market share and Google’s Android is stealing favour from carriers, which are RIM’s most important customers.
- Even corporate customers are starting to jettison BlackBerries for iPhones.
- Smartphones are becoming a platform business in which third-party developers rule the day. RIM is way behind Apple and, soon, Google in app development
For an example of all this, take a look at Verizon Wireless, the top U.S. carrier. Its story is emblematic of RIM’s current situation.
Last Christmas, when Verizon desperately needed a smartphone to market as a competitor to Apple’s iPhone — which is exclusive to archrival AT&T — it picked RIM’s BlackBerry Storm. The Storm was not a very good phone — its software was unimpressive and its click-screen display was awkward — but it still sold like crazy because Verizon’s huge customer base had no other touchscreen smartphones to buy.
But this year, Verizon has taken its marketing muscle elsewhere. Its top phone to compete with the iPhone is now the Droid, a phone made by Motorola that runs Android. Verizon is now planning an entire series of Droid phones, which will probably be its main smartphone story until it can sell the iPhone.
Yes, Verizon will still sell RIM’s new, improved BlackBerry Storm 2. But this is not going to be the carrier’s go-to smartphone for Christmas. And it’s not going to be a top seller.
Why not? Because while RIM’s competitors have dramatically improved their hardware and software offerings, RIM has only slightly improved.
- The BlackBerry operating system now looks primitive next to rivals.
- The software available in the BlackBerry app store is not nearly as good as the 100,000 apps on Apple’s iPhone App Store.
- The BlackBerry is not going to get better on its own. Developers complain that RIM isn’t giving them the tools and access to the device to make games and other apps as good as those for the iPhone.
- The BlackBerry Web browser is still lame next to the iPhone’s, Android’s, or the Palm Pre’s.
- The company still doesn’t have a device that looks nearly as sexy as the iPhone, or even some of the other smartphones out there.
Can RIM fix these problems?
Anything’s possible. But the smartphone game has become a waltz of elephants, and RIM is running out of time.
With a $33 billion market cap, it won’t be easy for RIM to find a buyer. But it’s won’t be impossible, either.
Microsoft seems like one potential acquirer. (Microsoft has its own mobile problems, which RIM might help solve.) As does Nokia, which is weak in the U.S. smartphone market. And RIM does have many useful, promising elements — such as its huge, devoted user base, excellent brand, and best-in-class mobile email service.
Regardless, RIM should sell now, before it’s too late.