From The Sip Trunking Experts

TMCNet:  Will BlackBerry's new survival strategy work? [Strategy] [Times of India]

[February 08, 2013]

Will BlackBerry's new survival strategy work? [Strategy] [Times of India]

(Times of India Via Acquire Media NewsEdge) Senior executives of Research In Motion (RIM) may have seen and touched the future of mobile technology several years ago, perhaps around the time of the Apple iPhone launch in 2007. But they did not acknowledge it then, at least not in public. RIM was at that time the master of the smart-phone universe, seemingly invincible, with a set of dedicated customers sworn to its BlackBerry phones with the signature keyboard.

But, by 2009, they had definitely begun to think about a future different from what the company had created. They may not have known what it looked like or how to reach it, but they knew that the present could not continue for long. The BlackBerry phones had an overloaded software platform, and it would one day simply stop functioning if it kept accepting additional responsibilities.

Four years later, on January 30 this year, the company renamed as BlackBerry showed a glimpse of its version of the future to the world. It is still in the distance, not clearly visible, the path to it filled with risks. But some of its core ways are clear now to the company. Every device in this future has a piece of BlackBerry software, to which the smartphone can easily connect and manoeuvre.

In the past, BlackBerry phones were for communication. In the future, they would be for computing, commanding, controlling...The phone would transform into a device, a computer if you will, that could be used to do business, command your car, or control your health.

It would also be the centre of your entertainment, home or away. Most importantly, it would not just be for people, but for machines as well. Tens of billions of them, in fact. BlackBerry CEO Thorstein Heins hinted at this future on January 30 in New York, when he launched the BlackBerry 10 phones. The company had discarded the old and overheated operating system and developed something that was built to military specifications. To be precise, it had bought one that could do the job: from QNX Software systems, a 30-yearold company it acquired in Ottawa.

The QNX operating system had already seeped into cars, industrial control systems, medical equipment, nuclear plants and critical defence systems. It would work as a smart-phone operating system as well. BlackBerry built the rest of the new phone with more acquisitions. "It is unlike anything you have seen before," said Heins at the launch.

With this phone, and with help from the pieces of QNX that lie embedded in several devices around the world, BlackBerry hopes to be at the centre of the emerging smart-phone multiverse--and gradually win back a substantial portion of the market share it has lost in the last two years. According to the market-research firm IDC, BlackBerry has a market share of only 4.8%, down from 20% in 2009.

In the critical US market, the former leader's market share in 2012 was only 1.6%, and it no longer figures among the top five smart-phone vendors in the world. Despite the launch of a technologically sound phone, IDC predicts BlackBerry's global market share to drop to 4.1% in 2016. "I would expect Blackberry to gain some of its lost market share soon," says Kevin Restivo, senior research analyst of IDC's Worldwide Mobile Phone Tracker. "But it has got a lot of problems to solve, and its strategy is not clear entirely." Restivo thinks success in this market is no longer dependent on the phone. "All phones look the same and act the same," he says. "So, it is less about the quality of the device and more about the ecosystem." Here, BlackBerry seems to be on a long and hard climb. In spite of the 70,000 applications it put together at launch, it is battling against 775,000 applications for the iPhone and 600,000 for Android.

BlackBerry is also up against Apple and Samsung, both multi-product vendors who have an edge in this ecosystem play. So, market analysts are near-unanimous that the real competition is for the third place between BlackBerry and Microsoft. BlackBerry executives, however, seem quite confident of a turnaround in the company's fortunes. "I have no interest in the past. I can see that the future is great," says BlackBerry chief marketing officer Frank Boulben, who believes that rapid changes in market share are common in this industry.

BlackBerry lost market share quickly as its operating system was not optimised for touch screens, which became the norm. It could have been worse if rivals had connected with CIOs. "RIM had an advantage that the early iterations of the iPhone were not enterprise-ready," says Anshul Gupta, principal research analyst with Gartner India.

In the past year, CIOs increasingly left the choice of the device to the employee, who was more impressed by the slick products of Apple and Samsung than the solid yet unfashionable BlackBerry. Boulben gives another reason for the sudden fall in the US and continuing popularity in developing markets.

BlackBerry phones were not equipped to deal with 4G, and the transition to this network happened too quickly in the US. BlackBerry phones were better equipped for 2G networks, which was the dominant technology in India and some other markets, as their transition to 3G had not happened quickly enough.

Revival plan So, what could be its strategy to regain lost ground A great product is probably the first step, but it is only a small one. A close look at recent events in the company offer some hints. BlackBerry is a different company than what it was two years ago. It now has one CEO: the soft-spoken Thorstein Heins, a physicist by training who is known to make tough choices. And he did, soon after taking over. BlackBerry is leaner after layoffs and intensely focused on software. It is quicker with decisions, with one and not two CEOs. It has some serious technology capability, mostly due to a series of acquisitions.

Like Apple, BlackBerry makes both hardware and software, but it has the option to license its software platform for additional revenues. It also has cash reserves: $2.9 billion to be precise. QNX Software, BlackBerry's prized acquisition two years ago, continues to operate independently, developing software for devices. In the future, how QNX perpetrates its software into devices around the world may become as important for the future of BlackBerry as would the sale of the handset itself.

QNX has an operating system that is very stable. Software crashes were a problem for the older BlackBerry. BlackBerry 10 comes with a stable Unixlike operating system. It is equipped with a steely processor and software platform that can handle computation-intensive tasks, a feature BlackBerry intends to improve over the next few years. "This is the first step," says Boulben. "We will introduce a variety of solutions leveraging the BlackBerry 10 platform." Communicator to computer QNX Car Platform 2, shown on a Bentley at the Consumer Electronic Show this year, offers a glimpse of BlackBerry's strategy. It is a platform for connecting the phone, video conferencing, navigation, and entertainment, as QNX upgraded its entertainment systems with 4G connectivity and HTML 5.

You could dock a BlackBerry 10 to this device, and the company intends to tweak apps developed for the phone to suit the high-definition display of the car. You can search your phone book on the navigation display, control the climate, tune the audio, make a video call...It has made one operating system do everything you wanted to do inside the car.

BlackBerry's strategy of moving the phone from communication to computing becomes clear in this context: the company wants you to use your phone as your computer for all your needs. Connect the phone to peripherals, and then to the cloud, and do all your work using the phone in the office. Dock it to your car on the way back home, and use it to perform other functions needed in the car. At home, dock it to your entertainment system and use the phone to access music and video or other purposes.

As one trend pushes us towards a multiplicity of devices, BlackBerry is trying to push us in the opposite direction: to make the BlackBerry 10 platform as the centre of our lives.

Yet, the road to this future is strewn with difficulties. BlackBerry still has many friends among CIOs, and this may help it claw its way back to the enterprise. However, the BYOD trend--bring your own device, where the employee, not the employer, choose their device--may take the decision away from CIOs.

"I think they are on the right track," says Tony Velleca, CIO of the IT services company UST Global. "They have an advantage that a lot of corporations still have BlackBerry servers, but they have a perception problem to overcome." The new phone is built to remove these perceptions, which is why BlackBerry is wooing application developers like never before. "We already promise the second highest revenue for mobile app developers," says Sunil Dutt, managing director of BlackBerry India.

BlackBerry's ability to get popular applications quickly on the new phone repeatedly would determine if it can win back lost customers. The company will launch more new models over the next 18 months at the mid- and lower-ends. BlackBerry may have help to sell them from service providers in the US, where it badly needs to sell the new phone in large numbers. Operators do not like monopolies, and want to create competition and variety in handsets. They have helped BlackBerry before. Will they again Wait for mid-March, when sales of the new phone begin in the US.

(The author was in New York at the invitation of BlackBerry) (c) 2013 Bennett, Coleman & Company Limited

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