Home Your IT Mobility BlackBerry’s day of reckoning – and RIM is no more
BlackBerry’s day of reckoning – and RIM is no more Featured

The much anticipated BlackBerry 10 has finally been released. And the whole company has changed its name to Blackberry.

In a global launch, the company formerly known as Research in Motion (RIM) has announced two new BlackBerry smartphones, the Z10 and the Q10, both powered by the new BlackBerry 10 operating system. The two machines and their capabilities are pretty well what the market expected. What was a surprise was the renaming of the company, from RIM to BlackBerry.

But RIM, or BlackBerry, will need more than a name change to re-establish itself in a smart phone market that is very different from the one it dominated five years ago. The Apple iPhone and a range of increasingly sophisticated Android devices have changed the game forever. And Microsoft’s new Windows Phone 8 is no slouch, either. BlackBerry needed to release something extra special to leapfrog these players. It has not done so.

The new phones are good, indeed they are very good. But they are not demonstrably superior to their rivals. And they do not have the critical mass of apps that Apple and Android have.

The first new BlackBerry is the Z10, which will be available in the US in March. Australian availability has not been announced – BlackBerry is holding an event shortly after our deadline. But it is likely to be soon – Australia was a good market for Blackberry, and we typically don’t have to wait too long for the latest devices.

The Z10 is an “all touch” phone, while the Q10, which will not be available until some months later, is a more traditional BlackBerry with a keyboard and a touch screen. Anybody familiar with the iPhone or Android will feel at home with the new BlackBerry phones – which may be one of the problems. Are they sufficiently different to attract new users, or to attract old users back to the fold?

Both phones are powered by the new BlackBerry10 (BB10) operating platform. One key feature of BB10 is the ability to quickly switch between “work” and “home” mode, which will appeal to many corporates struggling with mobile device management and BYOD computing.

Analyst reaction has been pretty consistent. Adam Leach, principal analyst at Ovum, says the BlackBerry 10 platform offers a “differentiated user experience in today’s crowded and homogenous smartphone market. The Blackberry Z10 and Q10 will stand out from the Android masses and look distinct from Apple’s iPhone. “The user experience of Blackberry 10 introduces some nice new features but importantly builds on Blackberry’s UI heritage and therefore will certainly appeal to existing Blackberry users. But the challenge for the company will be to attract new users and those that have already moved to alternative smartphones.

"Blackberry has rightly focused on ensuring that the BB10 devices have a large catalogue of content and applications. This is now essential for any modern smart phone, and achieving 70,000 applications at the launch of a new platform is a good start.

"But Ovum believes that despite a well-designed BB10 platform, which will certainly attract short-term interest from existing users, the company will struggle to appeal to a wider audience and in the long-term will become a niche player in the smart phone market."

Malik Saadi, Principal Analyst at Informa Telecoms and Media, says the success of BB10 is vital for RIM’s survival. His company has also published some interesting statistics to show how difficult it will be for BlackBerry to come anywhere near achieving its former market position.

“The BlackBerry brand continues to lose its lustre and is relying on the BB10 platform, developed from scratch, to regain consumer confidence. In developed markets, BlackBerry is no longer perceived as a premium brand and subscribers in these regions have deserted the platform in their masses due to the lack of attractive devices.”

Informa’s data shows that in 2012 the company sold fewer than 14 million BlackBerry phones in Western Europe and North America combined. “But it could well win these users back if it can offer them a premium user experience in line with the quality of its services, notably its BBM messaging platform and ie-mail. And this is exactly what the BB10 platform is trying to achieve.”

In emerging markets, the situation is different. The introduction of affordable BlackBerry devices such as the BlackBerry Curve has enabled RIM to attract a large audience in these markets, mainly young professionals and students. The significant drop in BlackBerry’s average selling price (ASP) from US$280 in 2010 to US$200 in 2012 has helped maintain a decent rate of growth in device sales in these regions.

Performance of BlackBerry smartphones, 2010-2012

2010

2012

Share of total smartphone sales

14%

4%

BB sales (million units)

37.0

27.5

Share of emerging markets

25%

47%

Share of developed markets

75%

53%

Global Average Selling Price (ASP) US$

327.0

235.0

ASP in emerging markets US$

280.0

200.0

ASP in developed markets US$

343.0

266.0

  Source:Informa Telecoms and Media

“The challenge BlackBerry faces is not so much related to the device’s performance or its appeal but is more to do with how consumers will react to its brand new approach to the user experience,” says Saadi. “No doubt it will be challenging for BlackBerry to push the new device to consumers in retail stores. Sales representatives often prefer to sell as many phones as quickly as possible, preferably ones that don’t require too much effort in educating the consumer, which happens each time a new platform is introduced to the market.”

Saadi says that given the very fast growing smartphone market, BlackBerry should aim to sell at least a million units of the new device in the first quarter after its launch. “Anything below this would call into question the company’s ability to execute its marketing strategy, while anything above 3 million units would be a spectacular performance, which will undoubtedly resurrect both the consumers’ and the investors’ confidence in the BlackBerry brand?”

So, the tumult and the shouting has died. Or perhaps it has barely begun. BlackBerry’s share price, which has risen by more than 25% in recent months on anticipation of BB10 and on rumours that all or part of the company has been sold, remained unmoved by the announcement. Shares went up 5%, then down by the same amount, during the launch event. Clearly the market had already factored in the announcement.

As Informa’s Saadi points out, it will all come down to sales, mostly in North America. The four big US carriers will all be carrying the new phones. How successful will they be at selling them?

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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