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What job is a Blackberry hired to do?

When mobile platforms are discussed, the conversation frequently turns to market share battles between Android and iOS. I’ve pointed out before that the problem with this reasoning is that market share in a market that’s growing at 90% is a false measure of performance.

The more important measure is how much of the non-smartphone market is being taken by smartphones and how fast the whole phone market is growing. Competition with non-consumption is very different from platform warfare.

But even when discussing the rivalry between current platforms, the Blackberry and Symbian are often overlooked as contenders. Windows Phone and iOS come in and out of discussion only on the basis of press releases. The truth is however that Symbian, Windows, Blackberry are not going to disappear anytime soon.  Why is that?

The reason is that when you stop framing the market as rivalry between platforms, you see that many buying decisions are driven by specific device value propositions or jobs that the products are hired to do. For many years smartphones were purchased because they had the best cameras or the best keyboards and users never downloaded any apps or even used data plans.

Later, smartphones were purchased because they allowed for browsing and gameplay. Very rarely did buyers opt for “iOS” or “Symbian”. Most buyers don’t even know what these words mean. Phones are rarely advertised according to their platforms. (As an aside, the mention of Windows in a PC ad is made possible by Microsoft funding, the same as “Intel Inside.” So for platform recognition, someone needs to fund the promotion and that implies some revenue to justify it.)

To illustrate, consider the Blackberry: A product that continues to grow despite a completely different basis of competition from the large screen touch competitors. It comes down to being good at some very specific jobs. RIM continues to grow in certain markets like Latin America and the Middle East on the basis of BBM (RIM’s sales outside the U.S. climbed 94 percent last quarter from a year earlier.)

“A 15-year-old boy who likes a 15-year-old girl, sends her a BBM and he’s able to measure how important he is to her based on the speed of response after the letter turns to an R,” meaning it’s been read, he says. “No one else runs an end-to- end service plan like we do. That’s killer and is why it’s almost a social phenomenon.”

or

BBM is also popular in socially conservative Saudi Arabia where its speed — messages are typically sent in less than two seconds, according to Morgan Keegan — has made it a way for teenagers to communicate in a country where religious police bar unmarried couples from meeting in public.

You could argue that the other platforms also allow for free messaging (through free texting apps) but the combination of a low cost device, a data plan and attention to detail (like Message Read notification) gives the Blackberry an edge.

The general purpose smartphone that Google and Microsoft and Apple promote is still not the prevailing view of mobile usage for most buyers. One could also argue that many if not most Nokia smartphones are still being “hired” to do feature phone jobs.

The fact that all these devices are classified as smart and therefore competing misses the point that they are hired for different things.

  • Rob Scott

    Blackberry is still a very popular platform but it is a losing platform and that is the problem. Its growing because its competing on price points that Apple is not addressing. What happens when Apple does to phones what they did to MP3s. Widen the range and price accordingly addressing all segments of the market? This is why people ignore BB and Symbian. They are losing and do not look like they will recover anytime soon. I think you have written about network effects, the question then is – what happens when Apple sell 100 – 200 million iPhones a year? To me in the long run other platforms will have to go. This is why it is important to chose correctly now. There are former Apple supporters who have gone Android because they are tired of being number 2.

  • JonathanU

    Completely agree with this post. I commented a while back about the strong network effects of BBM (Metcalfe's Law etc.). If a number of people in your social circle use BBM as a form of mass communication/chatting, what sort of phone are you likely to want to buy? One that may have the wizziest apps etc., or one that allows you in on the fun?

    Now obviously this pretty subjective and will differ from one user to another, however, I for one know how powerful the lure of BBM is depending on whether people within your social circle use it or not…

  • Jon T

    Don't Blackberry users understand just how creepy it is to be tracked in that way?

    I would certainly not appreciate my device telling anyone what my priorities may or may not be.

    Aside from anything, Blackberry hardware is terrible. Anecdotally, a heavy user I know has to have a new device at least every six months. He's probably a profitable customer, but that isn't encouraging for other people to choose it.

    • http://twitter.com/aegisdesign @aegisdesign

      The answer to that is 'no they don't'. It's the same answer for Facebook users. That's pretty popular too I hear.

    • JonathanU

      Meh, have had my BB (from my employer, have an iPhone for personal phone) for the past 12 months and no problems. Would say that I am a fairly heavy user.

      Also I believe you can turn the automatic updates off so it doesn't send these responses. However, I think it's pretty useful so don't really mind.

      Each to their own I suppose.

  • Joe_Winfield_IL

    The BBM phenomenon is exactly what Apple is trying to achieve with FaceTime. Carriers have too much control over regular texting, but FaceTime has a chance to bridge the gap as a proprietary communications service.

    Blackberry isn't dying any time soon, but I wouldn't want to invest in their stock. There is plenty of room for growth among all smartphone players – for now. I don't know how well they can hold on to their share in 3-5 years as the market begins to reach early saturation.

    • JonathanU

      I would agree with you, except for the fact that RIMM is pretty darn cheap on most valuation metrics you care to look at. Back when the stock was priced in the mid 40's, it was a decent buy. If I had the funds, I probably would have bought in… (as will all things though, much easier to say in hindsight!).

      One other thing that I love about RIMM as a stock is the management is not afraid to use it in the form of stock buybacks. Wish Apple would learn a thing or two about this. But that's a whole 'nother discussion right there!

      • Joe_Winfield_IL

        I tend to favor the buy and hold forever investment strategy. That is the only reason I say I won't put money into RIMM. I agree that the company is well valued and well run; they are getting the most out of what they have.

        I admittedly have a huge bias toward Apple, and I define the smartphone era as starting in 2007. Nokia and RIM had a huge installed base when iPhone came out. But in my estimation, only Apple and Google (through OEMS) have so far successfully built really smart devices at a major scale. Because most of the market is still untapped, everyone is doing fine. But I don't think BB can stand on its own in a world with 70% smartphone penetration unless they make radical changes.

        I too wish Apple would figure out something meaningful to do with their cash. The problem is that most of the money is outside the US, and once they bring it home it is subject to 40% taxation. The US Congress is currently considering a tax holiday of sorts to allow tech companies to repatriate cash without punishing shareholders. This act would likely create a windfall of cash for tech investors, and AAPL would almost definitely be on the list either through dividends or buybacks.

  • dave

    I do not understand why RIMM gets all the hate. It is an 11 pe stock that is growing 30% y/y. I would argue it should be higher, but it is getting killed on the Apple/Android comparisons.

    A growing market has room for more than one winner, but I guess the analysts don't understand that.

  • Al

    I suppose the larger question is whether general platforms are capable of eroding those advantages in time, if not in short order.

    Maybe kik.com, a cross-platform BBM-like system, will do it soon or it won’t, but it’s a reasonable bet that single platform software implemented advantages will be less and less of an advantage as competitor platforms ramp, cross platform services proliferate and RIM no longer holds a dominant share in the markets.

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  • xavier

    I have to deal with BBM maniacs in my company… there actually are people who won't pick up the phone nor check their voicemail until the cows come home, so if you need them now!, it is BBM or nothing.

    As an iPhone user, whatsapp has been my sole deliverance. At one point last year, it actually looked like I may have to drop the iPhone and get a BB just because of the BBM-clique thing, but whatsapp saved the day.

    Turns out most of the BBM maniacs had at least 1 friend/SO/daughter/whatever on iPhone already that forced them to have whatsapp, so they already had it installed.

    • dchu220

      "there actually are people who won't pick up the phone nor check their voicemail until the cows come home"

      You just described me and most of my friends.

    • Pendolino

      someone finally mentioned whatsapp. I’ve observed the same phenomenon and once people who were shackled to bbm due to a lack of alternatives found whatsapp they were finally able to move to iPhone freely.

      I’m wondering how this will now impact blackberry’s bbm fueled growth.

      interesting view on facetime as well although apple don’t seem the type to make it work crossplatform the way whatsapp would.

  • http://www.sgtowns.com Stuart

    I live in Thailand and the BB is huge here. They have successfully marketed it as a hip cool device that you can use to chat with your friends. I find this amusing since it is considered to be such a corporate device in the US. But it seems that almost everyone under the age of 30 who can afford a BB, has one. iOS and Android have a much, much smaller share of the market.

    • xavier

      I know. BBM is the critical app that sells millions of BBs, particularly in LDCs.

      Apple just lets BB ride freely and grow in such markets by not offering itself or helping along somebody else who might offer a competitive/superior solution.