Does the BlackBerry 10 launch even matter?

RIM’s real interests – and future – lay elsewhere

Eric Risberg/AP

Does anybody else have the feeling that this week’s launch of BlackBerry 10 doesn’t really matter? It’s not for anything that Research In Motion is or isn’t doing with its long-awaited and overdue handsets, but rather because mobile devices are on their way to becoming commoditized.

With smartphones, it’s Google that’s driving the trend. As with virtually every area of its business, the company isn’t so interested in selling things to consumers as it is in getting them online and using its services, with the money coming from the ads it serves them that way. That’s why Google is selling the Nexus 4 in North America for $300 without a contract, while in the developing world it’s moving smartphones for just $50. It’s also why Android has more than three quarters of the world’s market share for smartphones. If Google knew the first thing about actually selling stuff to consumers, the constantly sold-out Nexus 4 would be an even bigger deal than it is.

Neither the Nexus 4 nor those African phones are as high-powered as most of the “hero” devices being sold in advanced markets, but for many users, they’re good enough. With Google plying this very different agenda, smartphone prices have only one way to go: down.

That’s good for consumers, as it will ultimately change the way phones are sold here in North America. Cheap handsets mean consumers won’t need to sign on for subsidized contracts with carriers. And with no contracts to lock them in, carriers may actually be forced to give consumers better service and prices.

But it’s bad for phone makers. The healthy profit margins enjoyed so far by the likes of Samsung. and especially Apple. are coming under pressure, which is why there’s been so much chatter lately about the possibility of a cheaper iPhone.

Apple’s chief executive Tim Cook has tried to deflect such talk by saying he isn’t interested in “revenue for revenue’s sake,” yet the company’s previous actions speak volumes. Apple did launch the cheaper iPad Mini last year in response to pressure from Google and Amazon, who together set the new price agenda on that category with their own smaller and less expensive devices, the Nexus 7 and Kindle Fire, respectively.

Phones and tablets are inevitably following computers into commoditization. Apple may still charge a premium for its products, but it will ultimately have to settle for a relatively small market share as a result, just as it has in computers. There is also a limit to that premium – with the likes of Google and Amazon setting the pace, the respective days of $700 smartphones and $500 tablets are numbered.

Which brings us back to BlackBerry. With shrinking margins on the horizon, why would anyone want to be in the smartphone or tablet market? Monolithic conglomerates such as Google, Samsung and Apple can afford it because such devices are but pieces of their much larger wholes. They can take a bath on phones and tablets since they pay off in other ways, including keeping people within their larger ecosystems.

For smaller, single-purpose players such as RIM or Nokia, which don’t really have anything else to offer consumers, that low-margin future isn’t very appealing.

It’s no surprise, then, that RIM may be looking to pull an IBM, where it would sell off its hardware business to focus instead on software and services. It’s ironic that the same company involved in IBM’s computer spinoff nearly a decade ago – China’s Lenovo – is the latest potential dance partner to be attached to this idea. And it’s not just speculation; RIM CEO Thorsten Heins says he is considering doing exactly that.

The smartest thing currently going on at RIM is the development of BlackBerry Fusion, the toolkit that lets businesses manage all the different phones being brought in by employees. This bring-your-own-device niche is one which RIM’s current competitors are unlikely to enter – and it’s potentially a high-margin business, at that.

Put these trends together with Heins’ oddly-timed comments about a potential hardware sale, and it’s tough to get excited about this week’s BlackBerry 10 launch. It may just be a lot of sound and fury that ultimately won’t matter much, since RIM’s real interests – and future – lay elsewhere.




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Does the BlackBerry 10 launch even matter?

  1. Over 50% of the world’s population is still using lower cost feature phones, as opposed to smartphones. If RIM thinks they have a market in Africa with a $750 smartphone….

    But maybe it’s just all hype. They are giving it their best shot before selling off.

    • While RIM may be able to sell some of the high end BB10 handsets in developing countries, I’m sure they are working on a low end BB10 handset to keep those current legacy BB users.

    • RIM has already said that they will be releasing six new deices upon years end. We will definitely see a low-end device (curve line) running BB10. Also RIM has not yet abandoned the BBOS 7 platform and will continue to sell these phones along side BB10. I predict a very successful year for this company!

    • It’s a real problem for them. The developing nations have kept them alive, though they are bleeding money horribly every quarter. In recent months though, the inevitable has happened, and their 3rd world foothold is starting to erode….eventually it will go the way of North America where their market share is virtually 0 (1-2% actually). If they can get BB10 into the developing nations quickly, and at a budget rate, (I think they should…it can still be seen as “cutting edge” there) they can maintain their numbers there, but at the cost of losing their margins. Since they are already losing large amounts of money already, that is problematic.

      Just as you say, they can throw it out there….hope for an improbably hail-mary (early adopters be damned…when they realize they bought into a dead-end), and try to get another asset (a reasonable os) to use as a bargaining chip.

  2. It matters to their 80 million subscribers and people like me who are sooooo over the icrap and ready to go back to BlackBerry. Do you feel good having the only negative BB article right now? Do some quick research, Google BB10 and check out all the other positive articles on RIM and BB10, to answer your question, THESE are the people who care. Something tells me you have Apple shares and you are bitter over the TANKING Your shares have received over the past 3 + months.

    • lol, you sound like such a fool. What’s the cycle for a new smart phone right now, 6 months? This guy is talking long term, as in, a longer time than 3 months in the future. Looking forward a year, he’s right. Phones are becoming a commodity, the important thing is selling apps, advertising, etc. So what does this matter long term? Don’t you think the market knows that phones are commodities now? BTW… Apple shares are down for the exact same reason that this author is saying BB10 launch doesn’t matter.

      • Thanks for your expert opinion but it looks like most on here agree with me.

  3. While this article does have a few valid points, it overall is rubbish.

  4. Yeah, it does matter. It matters a LOT, especially to a company that is fighting tooth and nail to regain market share lost by former CEOs. It is trying to keep the jobs of those that work for RIM and offer consumers something other than the two dominant manufacturers right now. Anyone remember Apple in 1997? They fared just fine, RIM will too.

    We do not need an Apple and Android dominant world. If it were, I would do away with my cell phone altogether.

  5. Guys, the train has already left the station at full speed ahead!
    First it was DOA for the BB10(Sept), then it was “the excitement can’t last forever(Dec), now its “Android/iOS monopoly cannot be destroyed”. If you’re happy with the one trillion “apps” badge of honor for your respective platform then stay with it. Not sure exactly why, but this QNX powerhouse of a handset we call BB10 is sure making people angry.

  6. It’s matter to me as I am dropping my SG3 for BB10. BB10 wil lbe the BEST OS as ios and android will be behide. I only use the best and the best is going to be BB10. I’ve had iphones when they were top and then later on switched to androids (SG3) and now going to BB10 (Z10). These biased authors are so behide the curve or simple taking pribe money to write up stupid articles.

  7. I think more then ever, your article proves why BlackBerry 10 launch comes at such an interesting time.
    1) If Google is so prominent, will Samsung, HTC, LG, Sony, etc sit idly while Google makes ad revenue off their hardware backs?
    2) Smartphone are not quite a commodity yet, people will go without sex or coffee rather then go without their smartphone, smartphone “fanboys” can be found across all demographics and are tending to identity and function rather then replaceable good
    3) BlackBerry 10 is much more than smartphones and tablets, it’s a platform and possibly a machine 2 machine platform at that and that’s why it matters.

  8. BlackBerry 10 is NOT about a device… It is all about a New mobile computing Platform!

    So of course it matters – the world need to see what is happening – that it IS possible to re-invent and do things better.

    Devices are “just” that – Devices… BlackBerry 10 does not rely on the success of a device alone…

    Perhaps some of these bloggers need to re-invent themselves soon.

  9. I had owned a blackberry flip phone which I was OK with, but because of all the hype for the Iphone 5, I purchased the highest Ram Iphone on introduction day. I am considering selling my Iphone as it will not allow me to access Ameritrade trade architect, and the blackberry is actually more compact than the Iphone coupled with the protective case. The only advantage of the Iphone is the excellent voice recognition system. If Blackberrys new model has good features I will probably change back to Blackberry. Financial pundits generally see from a narrow point of view as evidenced by this article. All of a sudden, the author thinks that there will be no major innovations in the industry worth substantial appreciation of their share price, and cell phones are becoming simply a commodity item? If that were the case Apple stock would have never soared to the absolutely ridiculous, unbelievable value eclipsing the net worth of companies like ExxonMobil, GE, Dupont, Wallmart.

    • “The only advantage of the Iphone is the excellent voice recognition system.”

      You’re in luck. It looks like BB10′s voice recognition beats the pants off the iPhone: http://youtu.be/UK0hWJEr874

    • BB10 has a voice recognition system in place that appears to be better than Siri based off of leaked videos. Find out for sure in 2 days.

    • There’s already videos showing how much more accurate BB10′s voice recognition is compared to SIRI.

      I almost forgot what SIRI was till recently

  10. Uh… duh… does the launch really matter? Do the new phones really matter.

  11. I’m fascinated by the notion out there these days that Blackberry-maker RIM’s best move might be to stop making Blackberries.

    Interesting times for the company!

    • Yeah, all you can do about articles like these is scratch your head and ask yourself if you might have had too much to drink last night, and awakened on another planet.

      • Actually, I’m interested from the perspective of agreeing that it may be RIM’s best way forward. Personally, I don’t think it’s crazy, just ironic.

        • It is ironic, but…this happens in the tech-world often. A huge example being IBM getting out of the PC market.

          Don’t worry much about the hysterics trying to bash the article. They come from a site called Crackberry, where they actually post about any article they perceive as “negative” and encourage each other to troll the comments to try to “shout” down any true discussion. As one can see from the comments, another irony is that their comments simply reveal an inability – or an unwililngess – to understand the article’s premise! (sometimes they even brag about it….eg. “I didn’t read the article but I left a comment!!!” “the article was too long, I only read the first paragraph BUT….”

          it’s a sad bunch to say the least :-) Nothing worse than simpleton extremists WITH an inferiority complex!

  12. Media babyboomers….which is most of them….are loyal to one of their own, Steve Jobs. Cool, hip, exciting…soooo with it.

    They haven’t been fond of RIM or it’s two originators from day one…even though it’s better, and not as gimmicky. Unfortunately the sentiment has done a lot of damage to Canada.

    • You do know RIM is not owned by the Canadian Government? Right? How can the perception of a mobile device and company that manufactures them, be seen as having a negative impact on Canada (as a country)

      • Well Bong………. Avro Arrow, Corel, Cognos, Hummingbird, Mitel, Nortel, Radarsat, RIM….not much left in our tech sector.

  13. Your tag line proves you don’t really know why the launch is important…others have already hit on the key points so I won’t but….please do some research and write truthful factual information…not you and your buddies ipionions..

  14. This is a horrible article. How about learning the facts, and then writing about them. Do you realize there are 1,600 companies/organizations that have been testing BB10 since DECEMBER, If each company/organization has 1,000 employees (which would be very small considering RIM would not announce that small businesses are testing their devices/os) that equals 1,600,000 devices already sold. At $100 in profit margin per device that is $160,000,000 in profit from TARGETED businesses in the USA alone! To say they will not purchase the devices would be 99.99% unlikely. WHY? because why would a company/organization(private or government) test a device for TWO MONTHS, and then decide, “we no longer wish to purchase BB10 devices.” Mark my words BB10 will succeed!

  15. Why does Google have to drive trends? Why can’t it be BlackBerry that does it…they did it once and are back to do it again. And what is the price of BlackBerry 10 going to be?? Low…High…If you know something the rest of the world doesn’t please inform us….you make one or two very good points…but the rest of what you have to say is based on nothing but your bias opinion and not on fact at all.

  16. As a Waterloo native, and a supporter and user of BlackBerry devices for almost ten years; the point here is that RIM is NOT going to survive making handsets. They are going to become a SAS (Software and Services company). I’ve been saying this for almost two years now on various boards (CrackBerry, N4BB, BlackBerryOS, Business Insider) and on Twitter (http://www.twitter.com/SurrealCivic).

    RIM NEEDS TO EXIT THE HARDWARE BUSINESS!!

    Research In Motion has created a new, refreshing and revolutionary mobile platform. In order to show what this new platform can do, they need a vehicle to accomplish this with. This vehicle is create your own hardware, put it in the hands of users, and show them how it works. Making money off of this hardware is a very different story. This is where Mr. Nowak’s point comes in. Smartphones are being commoditized.

    I have been advocating this for what it seems well over a year now, that due to the changing global market and RIM’s position they are going to exit the hardware business and focus on being a software and services (SAS) company. But before that can happen, they need to show the world what their new mobile platform can do, the potential, as this will be the key to their business and hence revenue stream going forward.

    Research In Motion is going through a transition like never before. Having lived in Waterloo for over 15 years, I have watched RIM from pretty much infancy to global smartphone leader to where we are now (struggling to compete in this market with the likes of Apple, Google, Microsoft, etc).

    Research In Motion has built some great phones throughout the years; the Curve, Bold, Pearl, Storm, Torch, Style series. Albeit some were poorly executed on (ie. Storm) and some never fit into the current market (Style). But most were winners. The BlackBerry Bold is one of the greatest QWERTY smartphones every created, to this day. The BlackBerry Torch was a great way for RIM to incorporate the QWERTY keyboard into a touchscreen slider. The Curve, probably the most successful consumer smartphone RIM created. But as the years went on, competition increased, input prices increased (commodities), costs of labour increased (worldwide); it has proved to become too expensive for RIM to manufacture hardware. I know the truth is sometimes hard to swallow, but this is a fact.

    Year over Year, Gross Margins are tanking.

    Gross margins are the percent of total sales revenue that the company retains after incurring the direct costs associated with producing these goods. Therefore, the higher the percentage the more RIM makes from each dollar of sales.

    On a GAAP basis, hardware gross margins of Research In Motion:

    42% FY 2010
    36% FY 2011
    20% FY 2012

    Now introduce less revenue on hardware, year over year, and you have RIM losing money on the manufacturing and selling of hardware!

    Look at the competition out there, Apple (with FoxConn), Google (now with Motorola), HTC, LG, Samsung, Microsoft (with Nokia). And smartphones are becoming cheaper and cheaper each year, while input costs and labour keeps on rising.

    Solution: Research In Motion needs to exit the hardware business!

    SOFTWARE IS THE WAY TO GO

    Research In Motion purchased QNX Systems from Harman International over two years ago. They have had time to develop it into a mobile operating system that can actually compete with iOS, Android, WinPhone. And not only that, they have an OS that can be used across many different applications and industries (Automobile, Airplane to name a few).

    They have been spending a lot of money on the new QNX-based BlackBerry operating system. From the design process, to attracting developers, to building the tools to develop for this OS.

    It is clear now, the focus is on software. They also have their services business which has high margins and makes them approx. $1B per quarter. They also have many patents.

    RIM needs to exit the hardware business, focus on software, innovate and integrated their services and cash in on their patents (either through patent selling, licensing, etc).

    http://www.twitter.com/SurrealCivic

  17. It would *seem the commenters are more informed and educated on the topic than the author.(*be fact)

  18. The article is quite correct. RIM would be foolish indeed to truly pin their hopes on BB10 which will ultimately fail as a platform for RIM phones. RIm cannot continue on in it’s current existence or it will continue it’s slow death. BB10, will make a splash among the fanboys…but will not return RIM to profitability.

    I agree the RIM management are smart enough to at least know that, and they are undoubtedly planning for it. If they can at least release a reasonably solid and robust OS, they can demonstrate some value, while looking for a buyer/partner. if they cannot, the company is virtually worthless now aside from some patents.

  19. I have a feeling about BB10 too, but it came from actually reading articles about it, rather than just going by ‘truthiness’ of whatever your feelings were.

  20. Yes it matters, very excited about the new RIM. Definitely picking up a new BB10 phone on launch day.

  21. Does this article even matter?

  22. Whats an iPhone?

  23. embarrassing article…..seriously Peter I feel embarrassed for you. Please look for a new job….you’re very misinformed regarding tech.

  24. I agree that RIM’s hardware business is not profitable in the long run, and that’s the reason why Blackberry 10 launch matters a lot. It is to show the world what this mobile computer platform is capable of.

  25. no it doesn’t really matter… about half of the 80 million BB users are enterprise customers who got their BBs for free provided by their companies. and they surely dont give a damn about this BB10 launch!

  26. Is Macleans sponsored by Google, or is it Apple? Because they sure aren’t doing Blackberry any favors with their article. Take a look on most American websites and you can’t see enough of those two brands, yet Macleans feels the need to trash a promising new product launch by a Canadian company.

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