Don’t call the Blackberry 10 a comeback

Research In Motion is still near death, but has one last shot at redemption

by Chris Sorensen

Don’t call it a comeback

Robert Galbraith/Reuters

It’s just before 10 a.m. and Andrew MacLeod, the Canadian managing director for Research In Motion Ltd., is sitting in a diner in downtown Toronto. For the first time in recent memory, he has some “good” news to talk about. A day earlier, the beleaguered BlackBerry-maker reported a quarterly loss of $235 million—less than many had feared. It also added about two million new subscribers, mostly in developing countries. RIM’s battered shares, which have traded as low as $6.22 in recent weeks, shot up 13 per cent.

While none of that means RIM is back from the brink—far from it, in fact—it does suggest the Waterloo, Ont.-based company may still be around in early 2013 to launch its long-overdue BlackBerry 10 smartphone, which seemed far from certain just a few weeks earlier. “We’re entering lab testing with our carrier partners next month,” says MacLeod. “Then we’ll be gearing up for a series of really big commercial platform launches. It’s a really exciting time for us.”

BlackBerry fans, a dwindling crowd, seem cautiously optimistic. Developers at a recent conference reacted positively to demo phones running BlackBerry 10, despite first being treated to a bizarre music video featuring Alec Saunders, RIM’s head of developer relations, singing a nerdy, BlackBerry-themed version of REO Speedwagon’s Keep on Loving You. Unlike Apple’s iPhone, or devices running Google’s Android software, BlackBerry 10 allows users to slide back-and-forth between applications (without the need for a “home” button) and check their inboxes by swiping away the screen they’re viewing. “It fundamentally changes the paradigm of how a smartphone should be used,” says independent tech analyst Carmi Levy. “The problem for RIM isn’t developing unique technology. It’s convincing people to at least give it a try.”

To that end, RIM has also added several consumer-oriented features, including a new take on predictive typing and a camera that “rewinds” photos to capture missed expression (by taking a series of shots before the user clicks the button). RIM has also caught a break from its bigger rivals, which have recently begun to look less invincible. The iPhone 5 failed to raise the bar for the industry and its launch was marred by Apple’s buggy Maps application, forcing a rare apology. Meanwhile, Samsung, now the world’s largest device maker, just lost a US$1-billion patent-infringement case to Apple, and Microsoft’s much talked about Windows Phone 8 has yet to catch on with consumers.

It all amounts to a narrow window of opportunity for RIM to regain its footing, although doing so will require near-flawless execution, brilliant marketing and a significant amount of luck—all of which have been in very short supply in recent years.

RIM’s market share has tumbled to just 4.8 per cent in recent months, according to research firm International Data Corp. Manufacturers who run Android, such as Samsung, Motorola and HTC, now control 68 per cent of the market while the iPhone boasts 17 per cent. “Unfortunately, there’s a loss of relevance when it comes to RIM,” says Scott Searls, a former senior vice-president of supply management for U.S. carrier T-Mobile. “It’s almost no matter what they do, it’s going to be considered too little too late, or merely table stakes.”

Thorsten Heins, who took over as CEO of RIM in January after Jim Balsillie and Mike Lazaridis stepped down amid pressure from investors, insists there’s a future for BlackBerry as a third-ranked platform. He argues that once people understand the efficiency and productivity gains that BlackBerry 10 offers, RIM will not only be able to hang onto its core base of business and government users, but win back consumers too. If all goes according to plan, the first phone to be introduced next year will be a touchscreen, followed shortly by one with a full keyboard. In addition to the new, multi-tasking operating system, the phones will allow corporate IT managers to effectively split the devices down the middle, keeping work emails secure and personal data like Facebook posts beyond the reach of your boss. It’s a recognition of the so-called BYOD trend, or “bring your own device,” that many businesses have adopted after their employees—and in some cases, senior executives—begged to be allowed to receive their work email on their iPhones, creating all sorts of IT headaches. “We think we’re really doing something different and innovative,” says MacLeod. “We absolutely think we will win back share in all markets around the world.”

Of course, RIM investors have heard such talk before, only to be disappointed. But that was at a time when RIM’s rivals were raising the bar with every new device launch. The pace of innovation has slowed. The iPhone 5, though faster and equipped with a bigger screen, still looks and acts a lot like the iPhone 4S. “That gives competitors the opportunity to stay on buyers’ radar,” says Levy

Carriers are also growing concerned that they’ve become overly dependent on industry heavyweights Apple and Samsung. More platforms mean more competition, which lowers the prices carriers pay manufacturers for their phones, boosting margins. “The carriers definitely want a third option,” says Searls. “And so far, Microsoft hasn’t got the traction that many thought it would.” That, in turn, could translate into critical marketing and promotional support for RIM.

But even if it’s a success, can BlackBerry 10 really save RIM? Searls says the best-case scenario is that a reinvigorated RIM gets bought by a competitor—likely Samsung—for something other than a fire-sale price. He notes RIM remains one of the few vulnerable smartphone manufacturers with a valuable portfolio of patents that has yet to be scooped up. “Samsung’s going to be saying, ‘If we don’t go after RIM, then we have to expect one of our competitors will,’ ” Searls says.

For now, the challenge remains launching BlackBerry 10 on schedule and winning over skeptical and indifferent consumers. It’s a tall order. But for the first time in months, there actually appears to be some semblance of a path out of the wilderness. As Levy puts it: “the light still flickers.”




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Don’t call the Blackberry 10 a comeback

  1. re: BlackBerry fans, a dwindling crowd,
    Blackberry nation grew 2 million last quarter alone. How can you be growing and ‘dwindling’…oh, I forgot, you omitted that fact in the article, I guess it’s easy to overlook 80 million people when you wear apple colored glasses.

  2. Blackberry GREW by two million users and this was with RIM’s old phones. The new BB10 phones are simply AMAZING and MILLIONS will be upgrading and or switching to BB10. It’s seems obvious the article was a pay for by apple or whoever to bash RIM. Shame on Macleans for writing up this garbage of a misleading article.

    • Just an FYI: Old phones will NOT be upgrading. BB10 is a fundamentally new OS.

  3. Positive news about RIM can’t be written without a few jabs, that’s what most reporters do, plus RIM has been the whipping boy, what will these reporters do when BB10 is a success? Maybe they’ll turn their knives on Apple.

  4. Yet another unbalanced media article on RIM and BlackBerry 10. Seriously? Don’t write anything unless you have new information and insights into the company. This is just a rehashing of fear and the same old speculation.

    • The time to worry about RIM is when they are not considered newsworthy. Seriously, the lack of any new product for almost a year and pre-announcing BBOS10 without a shipping date is a huge problem for RIM. There are definitely signs of improvement. Heins seems to be a quick learner after his initial denial that the company needed fundamental change and although painful, his actions may have saved the company. But they need also to maintain buzz/interest to maintain relevance.

  5. You guys are missing the point – RIM’s market share DROPPED, because the total market growth outpaced their 2mm subscribers. You RIM fans blow me away – reality should have set in two years ago – about the time I bought my Torch 9200 (or whatever it was) and it became clear I was deceived (horrible experience, same price as iphone). And don’t give me the same old RIM fanboy garbage. It is NOT normal to take 7 minutes to reboot after the once daily needed battery pull, or to upgrade apps one at a time with a reboot in between, or no IMAP, or clunky screen scrolling, or…it goes on.

    I’m not a fan of anything – I do own the iphone now because it works (don’t give me that business bs about RIM – my iphone has been FAR superior to my torch and IMAP is just a small example).

    I was so frustrated with my Torch I started posting on these sites to vent. For me, it will take a long time to even trust RIM again. And I want to, I’m Canadian. This article is correct, RIM has a HUGE opportunity right now, and everything I’ve read seems to point to an inevitable success. IF they have a decent ecosystem (like appletv type stuff) and as a minimum barrier to entry include Netflix and Skype, then yeah, I’ll look into them.

    The truth is that I have not bought the iphone 5 yet because I am waiting to see what RIM has. You guys need to wake up, RIM, Apple, Samsung – all of them are huge corporations and deserve your loyalty zero. RIM F’ed up, and this is the backlash. Get over it.

    • Wayne, what you just posted is insightful and meaningful and yes, the Torch is no competitor to iPhone. What many commenters post is immature and simply wish to see RIM die. Clearly they own stock in competing companies and have a fetish when it comes to the other brands.

      I’d just add that Samsung, Motorola and Nokia were all way behind RIM in 2009. It was only Android that saved them. RIM was ahead of anything before iPhone in 2007. Clearly this company can compete as one of the most innovative. Unfortunately, it takes years to acquire and integrate an OS – in this case QNX. They should have acquired QNX In 2008 – however I did read an article produced by Intel written in 2009 (pre acquisition) that stated QNX was by far the preferred choice over Linux for mobility due to its microkernel structure and power savings. However they stated that mobile hardware was not capable of powering it yet. By 2011 – RIM had the PlayBook on store shelves powered by QNX. That’s an amazing feat – I’m sure you can appreciate how difficult it is to acquire and integrate and innovate all at once. I think RIM did a fantastic job considering – unfortunately, Android’s growth was so rapid and perfectly timed to attack RIM when it was at its most weakest.

      Also yes the Torch was never a competitor for iPhone, but if it was powered by QNX, it would have been a completely different story. Honestly, I am pretty sure RIM will pull off this transition and build possibly the best phone on the market for Q1.

      • I would agree with what you say, but add that RIM CEO’s considered apps a dying fad, and stating “you’ll never see a camera or MP3 player on a blackberry” in response to the iphone, which led to 1 or 2 years of ignorant complacency. Think of all the devices your smartphone replaces – GPS, MP3, Internet, camera, etc. This is the lack of vision RIM had from 2007-2008 or 09 before reality set in. I would have loved to be there when they had their very first WTF?? moment! That’s when they realized their Java (i think) based platform would never be able to compete, so they went shopping. Meanwhile, they kept releasing increasingly obsolete products and selling them to suckers like me (to be fair, the torch was my first smartphone. I thought it was amazing until I was on my 5th battery pull in 2 weeks with a nearly unusable web browser while my friends on iphone 4′s were having all the fun. Oh, I never got a good shot with the camera – it had about a 5 second shutter lag regardless of conditions).

        So herein lies the real problem. There are millions of people just like me who bought a blackberry because I thought it was a good brand with a great reputation, only to find out it’s almost unusable. It was a $1200 mistake – I had to buy my 4s outright because I’m in a contract. Now I can’t give the BB away. I tried!

        Anyway, this is all in the past. QNX powers cars, medical devices, etc. Its the most advanced operating system in existence, hopefully they execute it well. I trust Thorten, and have always agreed this to be the correct path. I would not have considered BB10 if the other two yahoos were still there, you would expect a crappy product!

        Last thing – they need to stop numbering their phones in such a ridiculousness way. 9800, 9880, 9278, who knows what this means? BB10 is such a better name than BBX. I think that lawsuit helped them.

        Anyway, thanks for the reply.

        • Your first paragraph is provably crap. Blackberrys were playing MP3s before the iphone even existed. Cameras too.

    • Can’t argue with that. My Torch has been horrible. My wife switched to the iphone in March, and I can not wait until January when my contract allows me to upgrade. If the BB10 was on time, I’d look at it seriously, but since it’s delayed, yet again, I’m moving to the sure thing.

      • It’s not delayed, an analyst is saying it MAY be delayed.

        • This is true, and the one thing that can be considered unfair. I had to recheck the original article I read to verify this information is speculation from one obscure analyst, with no evidence other than a personal opinion. Well, RIM’s track record could be considered evidence…

  6. Unbelievable. Through poor management, complacency and a series of very bad decisions, RIM has found itself essentially circling the drain, but anytime anyone tries to report on the current condition of the company, the RIM fanboys jump on them to accuse them of piling on, or of being paid shills for either Samsung, or more typically Apple.

    I’m Canadian, and would love nothing more than to see this company do well, as they were an inspiring story for a long time, and I happen to own some stock through a mutual fund. But the problems that they are facing are very real, and almost entirely self-inflicted, and I’m SO tired of reading comments criticizing journalists for reporting on them. I have friends that live in Waterloo, and work at RIM, and believe me, the media is not exaggerating the kind of trouble this company is in. Morale is way down, people are scared and nobody is sure how things are going to turn out.

    I see the same reactions to political news. Too often these days, people reflexively attack any article or report which doesn’t support their ideology or worldview. Journalists aren’t cheerleaders. They’re don’t exist to tell you only what you want to hear. It’s not their job to try and put a positive spin on bad news. If you’re upset with the news about RIM, then focus your frustration at their board, or the recently departed CEOs, because they’re the ones who got them into this mess, not the reporters.

    And I can already imagine some of the replies this may generate, so I’ll attempt to preempt a few by saying that I’m not rooting against RIM or for Apple or Samsung. I would say exactly the same thing to the Apple fanboys that reacted badly to news reports over the recent problems with the new Apple maps. It happened, it’s news, nobody is “out to get you”. RIM brought this on themselves, and while I hope they can right the ship, it would be nice if people would stop shooting the various messengers for merely doing their jobs.

    • I don’t have any issue with anything you’ve said but you have left a big part of the issue out that Rim has rightfully talked about and that is the manipulation of their stock by dishonest analysts and brokers in that industry. How is it possible that one analyst can make a statement based totally on speculation admittedly so and the market responds by dropping the stock 15 %. This type of stuff should be illegal.

  7. I can’t help but think the scare mungerers (annalist), tend to heckle from the back of the crowd, to drive share price to the bottom of the toilet. Cowards!
    Then by up the shares at an all time low. Then to sell when new product shines in the light of investor’s.
    RIM isn’t going any where, any time soon.

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