Canadian handset firm and BlackBerry manufacturer Research In Motion (RIM) has seen some poor harvests of late. 2011 was cold and hard, and 2012 hasn’t been any better. At mid-year the company hired JP Morgan and RBC Capital to conduct a “far-reaching strategic review” and to look for partnership options, while also announcing plans to cut a “significant” number of jobs.
But for a firm that has had reigned unchallenged over the enterprise mobility sector for as long as RIM has, the most smarting disappointment has to come from the fact that its crown is no longer secure. The Bring Your Own Device (BYOD) trend is seeing enterprises shift their focus from procurement and control to device agnostic management strategies although that trend is not yet the Canadian firm’s greatest threat. The biggest pressure is coming from a company that has built up majority market share in the enterprise PC space through software—something at which RIM has yet to prove itself.
Microsoft is a silverback in business software, where it enjoys a near monopoly on desktop and portable PC operating systems. But despite several attempts, and to its enduring frustration, the Redmond company has failed to make any real dent in the mobility space. That has never looked closer to changing than it does now, as its partnership with Nokia starts bearing fruit and other licensees begin to offer devices based on the company’s flagship platform, Windows Phone 8.
Windows 8, a broad reaching platform of which the mobile iteration is only one element, is designed to work across all of a user’s devices—desktop PC, laptop, netbook, tablet, smartphone—and its user interface for all mobile devices is based on the same Metro tiled system introduced with Windows Mobile 7. The idea is to make switching devices and working remotely as seamless and familiar as possible.
Familiarity is a key ingredient here—enterprises are averse to change—but Microsoft has got a second ace up its sleeve, an almost cast iron guarantee that it will be able to create a good development community for Windows 8.
RIM has taken note: “If you look back over the last year, we’ve launched more enterprise software services than in the past two or three years in total,” says Tim Hodkinson, director of EMEA enterprise marketing at RIM.
“Just in the last few months, we’ve launched a new version of Mobile Voice System, which is our fixed mobile convergence product. We’ve launched a new version of BlackBerry Enterprise Server and we’ve got another one coming towards the end of the year; we’ve launched Citrix Receiver client on the Playbook, Sharepoint client and a whole bunch of enterprise IM and unified comms clients. But the biggest new product in this space for us over the last few months has been BlackBerry Mobile Fusion, which was our entry into multi-platform device management.”
It’s an impressive list and one that suggests RIM is taking the fine tuning of its portfolio for the enterprise space very seriously indeed. As Hodkinson points out: “We’re starting to call it ‘enterprise mobility management’, because it’s not just mobile device management anymore. It includes heavy aspects of security management, expense management, and application deployment as well. Over the past few months, our customers have seen a renewed focus on us bringing new enterprise related product and services to market.”
The question now is whether RIM can turn its users on to these products and services fast enough to make a difference. BlackBerry 10 (BB10), the company’s next-generation platform, will not be available before the first quarter of 2013, following a series of delays. And while the analyst community does not doubt BB10’s capabilities—it all looks good on paper—this alone is not enough to reverse the decline.
Informa Telecoms & Media analyst Malik Saadi warns that 100 per cent of the nearly 80 million BlackBerry users out there are still using legacy devices, so upgrading all these users to BB10 will not happen overnight and RIM may well lose a great number of users in the process.
The future flagship OS needs to enable a smooth migration of BlackBerry users to a new environment capable of offering a superior experience without compromising the key factors upon which the BlackBerry brand is founded. But RIM has already hit one nasty speedbump in the journey to realise this vision.
The Canadian firm invested in QNX, a microkernel-based framework that can be easily adapted to the hardware it supports, with the view that it could create an ecosystem around the OS quickly. However, it proved very complex for RIM to integrate key BlackBerry applications into QNX, leading to the commercial failure of the PlayBook, the only device powered by QNX, due to a lack of email and BlackBerry messaging service support.
RIM’s alternative solution and a more suitable platform for the next-generation of BlackBerry smartphones is BB10, which brings what RIM regards as the best of BB7 in terms of the UI and services with the modularity, security, reliability and performance enabled by the QNX architecture. Thanks to these qualities, BB10 will be able to integrate and run BlackBerry flagship services natively and, at the same time, run applications brought in from other popular development environments, including Android and HTML5. With these qualities in mind, RIM aims to create a powerful cross-platform environment to take advantage of the innovation from various developer communities.
Differentiation in the smartphone space will increasingly be on the application/service layers and less on platform or hardware. So those that manage to establish a strong brand and an enticing ecosystem will be the most successful smartphone platforms in the market. This is the only way RIM can differentiate its BlackBerry offering and withstand the competition in the mobile platform space.
But if there’s a common ground for RIM and Microsoft, it’s that they both have a lot riding on software offerings that are still in their nascent stages of development.
The hotly-anticipated Windows Phone 8 (WP8) finally made its debut in early September, when Samsung and Nokia announced their first devices. Analysts at Informa believe the fresh platform is equipped with the right tools to satisfy the market’s appetite for innovation and is a challenge to rivals like Apple iOS. However, WP7 is not truly upgradeable to WP8, which will have an impact on legacy devices already in the market, putting Microsoft in much the same position RIM is with regards to BB10.
Yet analysts believe WP8 could be a game changer, winning strong support from the OEM community, including Nokia, HTC, Samsung, LG and Huawei and ZTE, which said they would not seriously engage with Microsoft until WP 8 was ready.
“Although Microsoft hasn’t told us in any great detail what’s in Windows 8 [the desktop version is due for release in the fourth quarter], the fact that there is a stronger tie up between mobile and desktop and support for tablets all makes a stronger and very good argument for enterprise usage,” says Martin Garner, mobile services specialist at analyst house CCS Insight.
Windows Phone 8 fills gaps left by its predecessor, supporting secure booting and full device encryption, based on BitLocker, as well as integration with existing device management systems for remote wiping and enforced password policies. Enterprises will also be able to create their own ‘hubs,’ giving employees a single point of access for business applications and support tickets and alerts.
Although the security features of BlackBerry are well understood and respected by enterprises, many corporations will also have invested a great deal in securing Windows desktop and server platforms, which will translate over to Windows Phone 8. And since many enterprises that have used RIM’s BlackBerry Enterprise Server (BES) have also used Microsoft’s System Centre platform, which features support for iOS and Android, waiting for BES10, which will be the first RIM platform to properly support these other devices seems less attractive.
The crux of it is that Microsoft will benefit greatly from a large installed base of enterprise users and will no doubt reap the extra rewards of a vast marketing budget to be dropped on Windows 8 in the latter part of this year.
“The device ecosystem for Windows Phone is very good and over the next two to three months we will see a rounding out of that portfolio across different manufacturers,” says Garner. “In the case of Samsung, WP8 is not as strategic as Android, but there are enough manufacturers that are struggling on Android that are now licensing WP8 as well, so expect to see a lot more balancing of this portfolio and a serious range of manufacturers offering WP8, making it a much more solid proposition.”
One option that analysts keep proposing and RIM keeps avoiding, is the licensing of BB10 to other device vendors, in order to extend the reach of BlackBerry services beyond its own portfolio of devices. Gross profit from selling BlackBerry devices is in rapid decline, while service revenues have increased consistently, making it increasingly clear that hardware is currently RIM’s weakest link. Licensing its software will enable RIM to target a wider audience and unlock new market opportunities, allowing the company to reinvigorate its position as a leader in delivering a premium customer experience and reliable and secure messaging services.
But RIM’s Hodkinson will not be drawn. “We’re looking at all opportunities. We’re very excited about our new platform and not surprisingly, so are other vendors who got sight of the platform at BB Jam and BB World, but we’ve not made any decisions yet,” he says.
Microsoft has little to lose. The company already has an installed base of enterprise users and has been ineffectually chipping away at mobility for some time now. With a promising new platform and OEM support, the company’s time may finally have come. But for RIM, the clock is ticking. Hardware is weighing the company down and its long time hesitation to go long on software may mean that what is to come is too little, too late.