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Capital.bg | Nobody wants to buy RIM

Технологии и наука | Хорацио Дедиу: Никой не иска да купи Research In Motion RIM – Капитал.

My thanks again to Andrian Georgiev for interview questions [Bulgarian] related to RIM. My answers to his questions (in English) are below:

Q: What should RIM do to reinvent itself? Should it stray from its business-oriented image?

RIM had begun to move away from a business image already in 2005 or so when it started its “Pearl” brand and a consumer-oriented strategy. The company probably foresaw that business customers would not be enough to maintain the growth they had become accustomed to. The strategy has led to a growing popularity in Latin America and other regions like the Middle East where the product is used as a low-cost alternative to SMS for avid texters. Even in the US, many teenagers use Blackberries instead of iPhones because they can use it for the BBM service (at a lower cost). I believe that it is not coincidence that iMessage was launched.

The company’s salvation is not in branching into new markets but in establishing a credible platform. When Nokia announced that they would be the “third option” after the iPhone and Android ecosystems, they did not even mention the Blackberry. The fact that Blackberry is not seen as an ecosystem is the root of the problem.

Q: How should RIM accelerate the introduction of QNX?

QNX is a solid operating system and I believe RIM should have begun developing with it much earlier. By waiting long after the iPhone launched (and even after Android) to upgrade its OS, RIM missed a great opportunity. The foothold market the company had was wasted by not leveraging it into building a mobile computing ecosystem.

There is little that can be done to move any more rapidly now. Product development cannot be done any faster. What the company could do is to very carefully define why QNX based products are better than the competition and not rely on specifications. In other words, what jobs does their platform solve for users that current solutions don’t address? I note that this is the problem with the Playbook. It’s not differentiated on what it does to improve the life of the user.

Q: Should RIM move on with just one CEO?

The problem is not the number of managers but their view of the world. What would benefit the company is a better marketing manager where marketing is defined as understanding of user needs. Engineering expertise is not enough.

Q: What would you advice RIM to do in terms of R&D?

RIM is an engineering led company. Many successful companies rightly develop their engineering skills first because that is what allows them to create new products more quickly. This is true of Nokia and also of Apple and Microsoft in their early years. What is difficult is to allow marketing people to define products after that early phase. This is partly due to the fact that there is less respect for “Marketing” among engineers. Many see it as a “soft” discipline where there is little rigor. But this is not an accurate or fair picture. Great marketing determines what products should be built not just how they should be sold. Engineering can discover new products based on new technology becoming available, but Marketing can discover new products based on unmet user needs. Both need each other.

My advice would be to allow a way for R&D to absorb input from marketing.

Q: Do you think that RIM could be bought by a bigger company in the short-term?

Mature companies are usually bought for their assets and not so much for their vision or priorities. The opposite is true for young companies who are selling themselves to the public via IPOs. For young companies the vision or priorities of business models is seen as more important. When companies are only valued for their assets, they are usually very under-valued. When companies are only valued for their vision, they are usually over-valued.

RIM’s challenge is that nobody believes they have any vision and their assets are weak (no good ecosystem as I pointed out above.) So the price anybody would pay for RIM today would probably be far lower than what management thinks it’s worth. And since they are still profitable they won’t sell the company at a deep discount.

So my guess is that we won’t see any acquisition soon.

  • Gilligan

    One major problem at RIM is management has been delusional for some time, and they continue to be delusional in the face of an enormous mound of evidence. There huge problems have been partially disguised by selling at lower price points into developing markets. If Apple really is coming out with a less expensive phone targeted at these same markets (the rumors are flying) that's yet another blow to RIM.

    Where I live (Thailand) *everybody* wants an iPhone, but few can afford them. Many settle for a Blackberry. Every time I've had a chance to ask a BB owner if they'd rather have an iPhone every single one, without exception, said yes. If there were a more affordable iPhone here they'd be lining up from here to Cambodia and the used phone resellers would be up to their ears in blackberries.

  • Marc

    Fascinating. Great insight. I just watched that 1997 WWDC video of Steve Jobs Gruber linked to (http://quietube.com/v.php/https://www.youtube.com/watch?v=3LEXae1j6EY) and Steve makes the same point about marketing. He said you can’t sell tech. You sell what the tech allows you to do. His example was the original LaserWriter, which had tons of advanced tech in it. But Steve said all that was irrelevant to the consumer: you just showed them the fantastic printout and they wanted the product. The could figure out how to use it from there. RIM doesn’t have that. They try to sell on specifications (i.e. Playbook runs Flash) and not on what the device can actually do. Compare Apple’s far more understated iPad ads and the difference is striking.

    • David

      Years ago, I am a developer. I gave a presentation to what was then a major mobile telecom company. It was to sell them a custom project we would deliver that would allow them to generate reports of updated for their cell sites. The data could then be used to enforce service level agreements (SLAs).

      I spoke about Java, the system running on any services, application servers, being web-based could speed up deployment and ease management. The VP and his managers looked at each other and then me and said "So what?" They said we could come back in a week and try again.(BTW, how lucky was that? They really wanted this tool."

      After giving it some thought, this time I opened the second meeting with the following statement "This tool will allow you to generate a national level report at the push of button, It will do in 5 minutes what you used to do in 240 man-hours"

      Now, they were interested. You cannot sell technology. You have to sell solutions.

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

      Check out this great TED talk from Simon Sinek: http://www.ted.com/talks/simon_sinek_how_great_le

      Bottom line: People don't buy what you do. They buy why you do it. Mr. Sinek uses Apple, MLK and the Wright bros. as his examples.

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  • http://www.informationworkshop.org Mark Hernandez

    Yup! How many times does it have to be repeated that you make your money from the people who fork over the cash and/or sign up for a contractual comittment. So, what do you have to offer that would compel a customer to do that?

    I think we also need to be careful of the term "marketing" because the marketing department can also become detached from what makes a product a compelling, and they'll try to use marketing techniques to sell the wrong thing, or distract the customer with cores and Ghz, or make the same old thing sound like something new. We also know how Apple apparently doesn't do market research. They try and figure out what it is the customer didn't yet know they really wanted instead.

    • FalKirk

      I'm uncomfortable with the term "marketing", too. It seems to me that marketing people spend all their time trying to sell what he company has. They have almost nothing to do with determining what people WANT to have.

      I think Horace is talking about Steve Jobs and his uncanny ability to tell us what we want before we know we want it. I'm not sure what department (if any) is responsible for that, but I doubt its marketing.

      • asymco

        Right, people are confusing marketing communications with product marketing. See: http://en.wikipedia.org/wiki/Product_marketing

      • FalKirk

        Thank you for the clarification, Horace. May I respectfully suggest that you make your definition of product marketing excruciatingly clear in any future posts that employ this term? I doubt if I am the only one who was struggling with this concept.

  • Shrike

    Are you folding in "design" into marketing or engineering, asymco? Design is like the intersection of art and science, or liberal arts and technology. A synergistic melding of marketing and engineering. Just understanding what the market or buying population wants; and, know that they don't necessarily know what they want, even if they say so. That basically takes all 3 with a touch of the vision thing. I don't think this way is mechanized though, and requires a genius auteur.

    Frankly, I think RIM has to cut to the bone and put all their eggs into getting their QNX-derived OS out the door. This is assuming they want to win! And be a market leader with fat profits. Follow the Apple strategy circa 1999. And they've got at least another couple of years before they reach a Mac OS X 10.0 level. QNX is basically just a kernel with a Unix-ish userland. That's basically commoditized bits of software today. The easy part. The hard part will be the application frameworks. The stuff that makes the platform, and that takes 2 to 3 years, and RIM basically started from zero. On top of that, they have to guarantee easy upgrade paths for existing Blackberry applications. Abandoning them basically means guaranteed death I think. (Nokia, I'm looking at you!)

    This is the survival strategy. What the growth strategy is, I don't know. They have to find, define a product that can do that. The problems of "mobile internet" are rapidly being solved and we're more in the world of incremental refinement now. What the next big money maker is, I don't know. Maybe information management services or something to allow us to handle all this information out there.

    • asymco

      This is a good question.

      Design is neither marketing nor engineering. Design overlays both but also takes direction from both. Think of it this way: the data needed for decision making usually is not generated within a design department. The data comes either from technology roadmaps or from market research. So if you need decision support you turn to R&D or Marketing. On the other hand sometimes data does not help and you need to decide purely on instinct. You should then turn to conceptual decision making. Design needs to help in either case.

      Because design does not fit within either category it should be set up as an independent organization whose role is variable depending on circumstances (sustain or disrupt). Design needs to be infused within many decisions the company needs to make and I fear it's not a function that is properly integrated in most firms.

  • sve

    BB can not pull out of its tailspin. It is now a battle of ecosystems (devices, apps store, direct billing, cloud services). In at least that respect, Elop got the new basis of competition right. Only full fledged computer software companies can hope to compete in the future (google, apple, microsoft).

  • Tate

    Please address the issue of when someone will buy RIM quantitatively based on earnings and share price.

    If their stock remains low or drifts lower they will be bought up; it’s just a matter of numbers and timing.

  • Hamranhansenhansen

    I don't think RIM’s problem is a lack of marketing, but rather a lack of design, which is another way to say lack of imagination. According to folklore, the RIM executives did not believe the iPhone announcement was real, they did not believe the device could or would ship. They believed it would not have enough battery power and were shocked to disassemble the first iPhone and find it was about 75% battery. After 10 years of making smartphones, they did not consider "what if we made one that is 75% battery?" They did not consider a touch screen instead of roller ball? HTML5 instead of WML? Native C instead of Java? All these things are BETTER. They did not even try to do them. They were essentially re-engineering the same original pager/phone design, which they accidentally got stuck thinking of as a "BlackBerry." It would be like Apple releasing an iPhone with a click wheel because they were so stuck on making "iPods," which have click wheels. Apple was eager to redefine "iPod" away from its past because they created new designs, they imagined iPods with touch and OS X instead of yet another iPod with click wheel. If RIM had only designed a next generation BlackBerry in 2005-2007 they would have been led to QNX sooner, they would have asked many of the same questions Apple was asking at that time, and created the answers that people wanted, and they would have had a chance against Apple.

    • Jetsaway

      1000% agree and couldn't possibly say it better than you did.

  • CndnRschr

    RIM's marketing does suck – largely because they are caught between business and consumers and don't know how to market their product to both. As a consequence, they go for "lifestyle" marketing rather than solutions marketing. This has involved huge expenditures to tie in U2 and the Black-Eyed Peas. But no one remembers what they are selling. This is nuts. In BBM, they had a hot commodity – the reason younger people were buying Blackberries. Instead of pushing this feature, they advertised what they thought young people were into and there lies the disconnect. People may aspire to Will.i.am but they also aspire to 15 other artists and the list constantly changes.

    In Canada, the various media have been putting out various RIM stories but I've yet to see one of their CEO's actually give an on-air interview. They are running scared from their own (largely positive) media. Since nature abhors a vacuum, various pundits come on and pronounce the company prematurely dead in the water. With nothing to rebut these pundits, the share prices are bouncing around. As soon as the markets realise that the company is a poor acquisition target, its stock will plummet another 25%, there will be more staff cuts and the company will stifle its chance at recovery. Right now it has enough cash to get through the next couple of years until its QNX based phones start to regain competitiveness. But it is also spending cash to buy back stock. This is not sustainable.

  • FalKirk

    I would say, rather, that RIM built a great "Castle" with an almost impregnable "moat", but that Apple came along and changed the course of the river so that RIM's impregnable "Castle", while still strong and capable was no longer relevant

    RIM's tragedy is that they spent too much time improving their "Castle" and its fortifications and not enough time paying attention to WHERE their Castle needed to be.

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

    The debate on a previous thread was that management wasn't the root cause of a company being disrupted. Now RIM's management is an exception. I really don't believe RIM falling asleep is any rarer than NOK or PALM.

    • asymco

      The difference is based on whether the company is on the side of being disruptive or being disrupted. Managers that fail to improve their disruptive products are anomalies. Managers that fail to react to disruptive attack are the norm. In both cases there is failure but in the latter that failure is rewarded and considered "best practice" taught with rigor in every business school. One can hardly fault managers who are doing what is expected of them while avoiding what they are punished for.

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

        1) "Managers that fail to improve their disruptive products are anomalies." RIM hasn't sat on its hands for the past 4 years. It continued to improve its products in the ways to made it #1. However, the MKT moved from keyboard based messaging systems to touch screen/app based models.

        2) "Managers that fail to react to disruptive attack are the norm." RIM reacted by trying to provide a better keyboard based phone. It also released a touch screen phone in 2009.

        There have only been two tech companies in history that have managed the disruption buzz-saw successfully – IBM and Apple. Apple won't be sharing any of its best practices any time soon. I have observed one practice that no one other than Apple practices – that is to kill your cash cow product before the competition does. And that is much easier said than done.

        RIM's management structure is under attack because its Co-CEOs are also its Co-Chairmen, Co-founders and largest shareholders. Group think has probably been the death of RIM more so than anything else.

      • Roo.44

        It also illustrates how quickly a company in this industry can find itself going from disruptor to disrupted.

  • http://www.informationworkshop.org Mark Hernandez

    After carefully reading the comments thus far and Horace's interview again, it's all there in Horace's interview. Horace is always so comprehensive in his comments, as usual. Two things stand out to me…

    First, Paul Franceus' (@PaulMaxime) reference above to the incredible TED talk is spot on! That's a core marketing principle. Amazing. Thanks for that! Take RIM and do an A-B with the "golden circle" and see what you get as a result.

    Second, sve's comment that it's a battle of "ecosystems" is also spot on. In an app-centric mobile environment, I guess we can no longer talk about mobile devices separate from the ecosystem it may or may not sit within.

    Apple arguably has the best ecosystem in place.
    Google is assembling Android's ecosystem, haphazardly.
    Amazon will have a much better ecosystem once it produces it's Android mobile devices.
    HP/Palm/WebOS ecosystem is tiny by comparison. That will be challenging for them.
    Blackberry/QNX/Playbook ecosystem is non-existent. (They're allowing Android apps to run on PlayBook)

    The Windows Phone 7 design is acknowledging the ecosystem by making the WP7 basic design include more features (without needing apps) and at the same time showing you additional apps only related to your current activity. I still believe strongly that WP7 suffers from too much style, its learning curve is high, it requires you remember how stuff is organized, hunt for things with a lot of swiping, and it seems to have a lower ceiling of what you can load on to it before it becomes unweildy. That will be a challenge for them.

    And one wonders what are the essential elements of an ecosystem? Just apps? Music, video, podcasts, device-family interplay via the cloud, the confidence in purchasing safe and secure apps? It's an interesting question.

    But the big question is, has the mobile world changed to the point where the ecosystem surrounding a mobile device is as fundamentally essential as it's battery? Hmmmmm. Marketing, and "the marketplace."

  • Anonymous

    Looking for a place to sell your iPhone / iPod? Sell Blackberry – They will buy your used iPhones for cash. High Payout, Free shipping to send your phones, Quick Payments.