Editorial: Comparing RIM to Palm and Why BlackBerry’s Not Screwed

Dusan commented on Business Insider’s piece on Research In Motion being dead in the water, and as the resident BlackBerry Dude, I’ve got some territory to defend.

After the dust has settled from the launch of the BlackBerry Torch 9800 and the results of a lukewarm reception have become evident, analysts and investors have begun flipping out over RIMM stock and calling for The End of Days, as they are wont to do.  What bothers me most about these pieces is that they’re less about what is specifically wrong with BlackBerry and more about how it can be more like iPhone or Android, which RIM has no interest in being (nor should they if they want BlackBerry to remain a differentiated, unique product). Maybe the “RIM is Dead” angle is borne of hype, fanboyism, or a need to stir up nonexistent controversy for the sake of page hits, but whatever the case may be,  it’s a game that crops up often enough when Apple or Google have a big announcement about their respective platforms.

Lately, the trendy thing to post about is how Research In Motion is becoming like Palm: a slowly dying, antiquated company that’s ripe for acquisition. The problem with equating RIM to Palm in that sense is that RIM is still growing, and they continue to lead the North American smartphone market. No doubt the likes of Android are accelerating more quickly, but to think that Google’s mobile platform is immune to diminishing returns or any kind of plateau over time is on the outer edge of optimism, even with an army of manufacturers as back up. Besides that, the smartphone market is still the relative minority compared to the mobile market as a whole; most consumers still use feature phones, leaving ample and equal opportunity for any manufacturer who has a solid foothold in the smartphone game, including RIM.

Dusan does bring up the good point that RIM’s patent prospects aren’t great. RIM had a shot at a healthy batch from Nortel, and rumour has it they made a bid for Palm prior to HP’s acquisition. It’s definitely in RIM’s best interest and suits their all-in-house attitude to have major wireless patents under their wing, but things like that aren’t cheap, and aren’t often available. Isn’t it surprising though that despite the significant disparity in intellectual property between RIM and Palm, RIM has weathered the test of time better than Palm? More patents would be a nice feather in RIM’s cap, but if the lack of in-house GSM or CDMA patents was going to kill BlackBerry, wouldn’t it have done that by now, after RIM has spent some 25-odd years in the wireless business?

Another valid argument is RIM’s inability to produce high-end devices. The fact that efficiency lies so close to the core of BlackBerry’s DNA means that hot-burning CPUs and displays are ruled out from production. This leaves other manufacturers who are willing to sacrifice a bit of battery life, or tack on a bit to retail costs for the sake of speed, to offer the top-tier smartphones. As a consumer, this situation makes me sad, but if I were an investor (I’m not, FYI), I would be very confident about RIM’s strategy here. The upper-end devices, though high-margin and high-profile, are a small part of the smartphone market; the real money is in the fat middle, which is what RIM is clearly aiming for. Lower-end parts are also easier to make, which is why you don’t see BlackBerry shortages because RIM can’t come up with displays or internal storage fast enough. A steady supply means the money train keeps on rolling.

The efficiency argument extends to the BlackBerry operating system. Everyone was looking to BlackBerry 6 as if it was going to change everything, but the fact is the BlackBerry OS was built from the ground up for a messaging terminal, not an application platform, and as such messaging will remain the primary strength of BlackBerry. Don’t hold your breath for a webOS or Windows Phone 7-style overhaul; RIM is happy where they are doing what they do, and they’ve got little reason to radically change their strategy. They for sure have a lot of work to do to woo app developers and RIM knows it, but it’s not like BlackBerry’s going to go out of business because customers can’t download a particular fart app. As is, App World has most of the big names in mobile software covered, if not being quite accessible enough to the garage developers who sometimes pump out something interesting. For now, that’s good enough.

Don’t get me wrong, there are lots of ways that BlackBerry can improve (nobody’s perfect after all), but it seems to me that folks who think BlackBerry needs to be more like Android or iPhone haven’t spent enough time with the phone, or don’t realize that RIM works to a different set of standards than many players do. Using the HTC Desire this week, I’ve definitely experienced a stark difference with the Torch 9800, but there are very good reasons for those differences.

  • John M

    The part about the fat middle is really interesting. It seems to suit RIM to a T. What people forget is how ugly RIM phones used to be. That is, they never have been a high-end consumer phone. I think a lot of people who like BBs will stay with them and those that stray (like me) may come back. I bought an iPhone a year or so ago and found it just didn’t work well for what I wanted. People say they can type on an iPhone but the fact (that’s right, FACT) is they cannot. If you want proof look at the email sent from your friends’ iPhones. They will all be as short as text messages 99.9% of the time. Ask and iPhone user how many time that have sat in front of their computer and typed an email on their phone rather than using the computer – practically never, but BB users do it all the time.

    The fact is with a BB you can get business done and with an iPhone you can’t.

    I often wonder what will happen when the younger generation turns on apple. I view this as a not insignificant risk. Apple is so universally popular now that it’s only time before some hot teenage rock star is going to tell apple and steve jobs where to go. When that happens we’ll all hear the thud of apple stock. Apple’s market is driven by trendy teenagers while RIM’s is based on corporate clients, which stock do you think is riskier?

    Finally Apple will never go for the fat middle, Steve Jobs hates it.

    • Anony

      That’s not a fact. I write long emails on my iPhone all the time. In fact, I had a typing “race” with my brother, who had a Blackberry at the time (yeah, we are cool like that). I just barely won with my iPhone. Many people do complain about the virtual keyboard, so the physical keyboard isn’t going anywhere anytime soon. I found it terrible for the first few days–at first I was physically incapable of typing a single word without making a mistake. But after a few days, I was up to speed and typing quickly.

      Even if the Blackberry is better for business, the younger generations don’t care. We demand the “funner” phones from our companies. I use my iPhone for business all the time via the phone and email functionality. But I use it for personal use via apps, streaming video, etc even more.

  • Fair points man.

    Guess we remain divided on this one. 🙂

    • Hey, you never know, I might be wrong in the end. I’m curious to see what happens in the next couple of years. 🙂

  • Matthew

    umm actually blackberry and Palm are screwed, why well there boring and for people who dont know any better, android os is the new microsoft, its on almost everything and i have a blackberry phone and same with my girlfriend and only have to wait 3 more months and be outta our contract and we are so done with blackberry.

    • Jordan M

      By that logic, NPR shouldn’t be broadcasting. It may be “boring” by some standards, but they’re very good at what they do.

  • John

    Very insightful article, Simon. I think you may be on to something with your argument too. I know tons of friends who keep opting for Bolds, Curves and Pearls simply because they do everything they want to do on a phone ie. Facebook, BBM, text, take pictures. Unlike me, they don’t care about resolutions, processor speeds or RAM. For them, as long as the phone works and has a few added perks over traditional phones, they’re happy. So I’m sure RIM can keep chugging along on that big market and leave the high end tech battles to Android.

    • Jordan M

      I agree with you. Frankly, there’s a lot to admire about Blackberries. I love the form factor, and their keyboards are always dependable, unlike some of the competition (Ie Motorola Droid).
      If I weren’t developing for Android, I’d definitely have a Blackberry.

  • Rob Stevens

    As a mobile app developer I have an iPhone, a Google Nexus and a Blackberry.
    My iPhone sits gathering dust on my desk.
    My Nexus is always in my briefcase in case I need a hotspot (love that feature of Android 2.2)
    My Blackberry is always on my hip.

    • James Sloat

      I truly agree with you Rob. Having said that I am hoping that the rumored BB Storm 3 9570 will have a more efficient OS 6 and be able to function better than my 1st generation Storm 9530 that I have been using with hybrids for over 1 year now.

  • Darren

    I understand the appeal of BBs to business. Having the BB enterprise server is a huge security advantage for IT departments. Having said that, I am completely baffled by any consumer who chooses a BB over an iphone or an Android phone. I recently gave up my iphone for a work BB. I do enjoy not paying the $85 a month, but as far as the phones are concerned, it’s no contest. I can’t stand the BB. Not even close to what an iphone 3G was.

    And more to the point of this article, it seems to me that it would be easier for Apple and Google to create their own version of the enterprise server and thus let businesses have more control over the handset. That would seem to open up a huge market for them, but they don’t seem interested at this point in providing that option.

    • ljp

      To further the point about the “low end” parts, RIM seems to have made the right choice as they keep growing in revenue,profit, cash flow and subscribers.

      The part suppliers aren’t expected to be in a position to keep up with demand until late 2011. I wouldn’t be surprised to see RIM start offering devices with comparable specifications to the competition when this occurs.

      And the Palm comparison really is ridiculous. Can anyone remember the last time Palm posted a profit? RIM is in excellent financial shape and that position continues to improve. The smartphone world is still in its infancy, trying to predict the winners before the market is defined is a foolish endeavour.

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