[hreiner1]

What Brought BlackBerry To The Brink And Why None Of It Matters Anymore - Seeking Alpha

What Brought BlackBerry To The Brink And Why None Of It Matters Anymore
December 22, 2012 | about: RIMM

Ron Johnson, the man behind the remarkable success of the Apple Store (AAPL), recently said that "Mindshare always precedes market share." Since the launch of the iPhone in June 2007, BlackBerry (RIMM) has been losing US mindshare even as they grew their global subscriber base from 8 to 79 million. US subscribers were holding steady at 21 million until early 2011 when RIM and the US carriers had a major disagreement regarding mobile payments. The introduction of the Blackberry Playbook in April 2011 further deteriorated carrier relations. A free tethering feature for consumers called Bridge, that carriers could neither detect nor bill for, ensured that carriers would be denied the astronomical data fees they were accustomed to receiving on other tablets.

US carrier support completely collapsed when RIM launched the current lineup of BB7 phones. The new phones were the polar opposite of the data hungry iPhone and Android beasts that carriers needed to pay for expensive LTE networks. For RIM, the decision not to release an LTE product was a costly one, but was logical for many reasons. By early 2010, RIM's management knew that their old messaging centric OS could not compete in a multimedia world and they had started on an ambitious project to create an entirely new smartphone paradigm. Instead of pursuing LTE on a less than ideal platform, they made a big bet on NFC. With NFC they believed that they could leverage their legacy operating system and enterprise strength to create market for building access and later mobile payments. The problem was that none of the NFC infrastructure needed was in place to support these initiatives and their enterprise dominance was weakening.

While it's true that RIM's management had indeed executed horribly during 2010 and 2011, they did do some important things right. Even as short-term execution suffered, all of their best resources continued to be directed to getting BB10, their state of the art OS, to the finish line. If they truly believed that BB10 was going to be a game changer, then the short-term pain was justified.

It all started with their purchase of QNX, the leader in real time embedded operating system deployment in April 2010. They continued with The Astonishing Tribe, a company known for squeezing every last bit of computing power out of devices to make beautiful user interfaces. So beautiful, in fact, that Google (GOOG) commissioned them to create the first all touch Android user interface. A long list of smaller acquisitions was completed to ensure that BB10 smartphones will know what users want before users do.

BlackBerry fans and skeptics around the world have seen just some of the unique features of BB10 and their enthusiasm is spreading. Even the US media is taking a second look at RIM and the news is encouraging. RIM's recent results add even more evidence that they are in a very strong position to launch BB10. During the third quarter, they not only grew cash reserves by an impressive $600 million to $2.9 billion, but they managed to keep their 79 million subscriber base largely intact. All this occurred while selling 15 month old hardware. If BB10 lives up to its potential, RIM could have a major coup on their hands.

[mathprof08]

Nice. It's refreshing to read good news about RIM for a change.

[ibpluto]

This article is well aimed at those that say RIM is too little too late. A sentiment I strongly disagree with, RIM is not too late. RIM will bounce back, and I think will be better positionsed as mobile computing (not mobile devices) moves us into the next technological phase. The more I drill down into the current OS's on the market, it is clear, they are quickly approaching the limits of what they need to make the next leap.

I read once where it was said QNX is the Trojan Horse in this whole game, and I felt that was one of the strongest things written about RIM to date.

[FF22]

There's the interesting observation that they lost the Carriers with two aspects of their platforms - rim's share of the data (bis/bes) earnings (split with carrier in some ratio) and that data is compressed - meaning folks need/use less (carriers earn less) and then there's the PB's use of bridge and initially only the wifi version. No Carrier support, leads to less retail exposure - try finding any bb phones on display at Verizon stores - almost none.

[kennyg17]

Speaking of Verizon - have they officially stated they will carry BB 10? In late fall, their CEO said they would carry at launch, but our local rep (upstate New York state) said they were waiting. We don't need major US carriers waiting - need them on board pronto. thanks

[jhanks64]

I'm ready to Pre-Order the Z10 from Verizon as soon as possible.

[CairnsRock]

There's the interesting observation that they lost the Carriers with two aspects of their platforms - rim's share of the data (bis/bes) and that data is compressed - meaning folks need/use less and then there's the PB's use of bridge and initially only the wifi version. No Carrier support, leads to less retail exposure - try finding any bb phones on display at Verizon stores - almost none.

Hi F2, exactly what I was thinking. I hope that they have refigured their way thru this snakepit. I know that Frank B is well qualified in carrier relations.

[Fuzzballz]

Nice. It's refreshing to read good news about RIM for a change.

Not sure about any good news in that article. It basically says that BB10 might be good. Let's hope, for RIM's sake, it is. The problem with that sentiment is: point out anything RIM's come up with in the past 10 years that's been good right from the start. I can't. Usually RIM requires 2 or 3 versions before a product is considered ok. Look at the Playbook itself. Anybody who bought v1.0 was a sucker and paid for something that was half-baked and overpriced. If BB10 turns out to be like PB1.0, RIM's done.

[FF22]

Not sure about any good news in that article. It basically says that BB10 might be good. Let's hope, for RIM's sake, it is. The problem with that sentiment is: point out anything RIM's come up with in the past 10 years that's been good right from the start. I can't. Usually RIM requires 2 or 3 versions before a product is considered ok. Look at the Playbook itself. Anybody who bought v1.0 was a sucker and paid for something that was half-baked and overpriced. If BB10 turns out to be like PB1.0, RIM's done.

I have to hope that BB10 gets a really good beta workout and not confined to the likes of folks who don't understand browser bookmark organization, search on webpage, folder organization of documents and emailing directly from the photo app. Seriously, it appears that there was too much "inbreeding" amongst the Rimmies and there were no fresh perspectives. Otherwise, you are right - it will blow up as the blemishes are found and outright bugs busting through the gala.