BlackBerry's last chance

Research In Motion (RIM) is in serious trouble. This is not news - analysts have been writing the Canadian firm's obituary for a couple of years, pointing to its stock price, which shed 95% over four years, and its market share, which slumped from over 60% at its peak to just 3%, and is projected to fall even lower.

According to Gartner research director Roberta Cozza, RIM's market share is expected to shrink to 1.4% by 2016.

In emerging markets like SA, the company enjoys much higher penetration, but even those numbers are deceptive - the company's entry-level Curve range, with low-cost messaging and Internet, is popular among consumers, but enterprise users - RIM's traditional bread and butter - are demanding much more from smartphones than the Canadian firm has been able to offer.

RIM is counting heavily on those enterprise customers to turn its fortunes around, with plans to woo them back into the fold. New CEO Thorstan Heins clearly articulated that business focus last year, and the upcoming suite of products is clearly aimed at attracting corporate users. RIM has reinvented itself from the ground up - phones, operating system, ecosystem, enterprise management tools... the lot.

Arthur Goldstuck, MD of World Wide Worx, says the signs are encouraging. "I'm very enthusiastic about the operating system (OS), BB10, and the software ecosystem. More than ever, RIM has focused on the software and development side where historically it was a hardware platform. But it was always a technical approach, whereas now it's a user-oriented approach."

But the pieces all have to gel, he says. "It's not about them being better than Apple. They have to deliver on numerous levels, coming up with the value proposition that goes beyond saving money on data." Especially with broad pricing adjustments expected on BlackBerry data services after the BB10 launch.

A great deal of attention is on the new BlackBerry 10 handsets, though the phones themselves are only one part of RIM's complete product overhaul. But it can't be denied that the world is indeed eyeing the handsets closely: no matter how good BlackBerry Enterprise Server (BES) gets, if the phones aren't sexy, RIM is doomed.

Analysts expect the new BlackBerrys to compete with the top-range Samsungs and Nokias on features, sex appeal, specifications... and to carry similar premium pricing. Whether there will be any BB10 replacement for the popular entry-level Curve is questionable - BB10 is expected to have higher hardware requirements, Cozza says, and the company is likely to focus on high-margin premium devices, even if that means abandoning the long consumer tail.

From leaked photos and demos of the new OS, BB10 has all the hallmarks of a very good environment. Goldstuck has used it extensively, and gives it a solid thumbs up.

A critical piece of the puzzle will be the apps ecosystem, though possibly less so in the enterprise space than among consumers. So long as the major players - the cloud services, virtualisation vendors, management tools and productivity apps - are present on the platform, users may not feel the app shortage, and there definitely will be a shortage. RIM has been staging frantic (and quite successful) efforts to encourage independent software vendors to port applications in the build-up to the launch. Unless one of the other big players pulls a lock-out stunt, like Google withholding Google Maps from Windows Phone users, RIM has some breathing space here.

Back in the bad old days when interoperable corporate e-mail wasn't, integrating messaging was a major chore, and BES was widely popular among companies that could securely and reliably extend their messaging to mobile users. So popular was the concept that "CrackBerry" became a nickname for the devices, coined due to legions of business users glued to their mail-on-the-move.

But fast forward a decade or so, and integration really isn't that hard any more. These days, if you can't get your e-mail on your phone, you're doing something wrong. BES has to grow up to stay relevant, and the new version does exactly that.

BlackBerry Enterprise Server 10 is not about integrating existing e-mail, calendars and contacts, though it does that too. Now, BES brings device management, and not just for BlackBerrys. BES 10 can manage deployments of BlackBerrys, Apple iOS phones and tablets, and Android devices. It is above all a realistic upgrade, taking cognisance of the changing demands of corporate mobile solutions, managing both tightly controlled mobile deployments (RIM's strong suit) and bring your own device (BYOD)-friendly environments.

The management tools in BES promise to sit seamlessly alongside conventional IT policies, integrating with Active Directory, applying group policies, and securing data. Whether it can compete with Microsoft's own device management initiatives will be a key question over the next 12 months.

But will that bring customers back to RIM? Cozza thinks not. "I don't think BES will drive sales," she says. "There's some value for vertical markets, such as companies with very stringent security requirements. But we're seeing a major rethink in what enterprises should invest in, and whether BlackBerry fits. I don't see the value, especially if other platforms improve their security to match. With Android, security is still a challenge, but there are third-party products that address that."

With consumerisation came BYOD, and the mingling of work and play. This is, not to put too fine a point on it, a security disaster. It's a nightmare for IT departments, security chiefs and risk managers, who have had to bend to the inevitable influx of personal devices, and now struggle to adapt and apply management policies. Device management, authentication policies and remote-wipe capabilities help, but there are still concerns, and that's where the third major part of RIM's enterprise strategy fits.

BlackBerry Balance is a framework allowing a device to mix personal and corporate information. Apps and data are kept completely separate, even though the dividing line may be so thin as to be transparent. A unified inbox, for example, keeps messaging together, but users can be prevented from copying and pasting text from a work e-mail into a personal account. Corporate data can be remotely secured or wiped, without touching the user's personal information. That capability will be attractive to both IT managers and end-users - that's the sort of sweet spot RIM must nurture in order to win back hearts and minds.

Will it work? Can the enterprise features attract customers in large enough numbers to restore RIM to, if not its former glory, at least a position of health? The new RIM shows promise, but there are several obstacles in its way.

Microsoft is one of them. The software giant has bet heavily on its unified interface across PC, tablet and smartphone, and it badly wants the mobile side to work. If it doesn't, the firm's entire PC OS business could be in long-term jeopardy. But Microsoft also has its sights set on the enterprise - fighting the legions of Apple fans and the slew of cheap Android devices flooding the consumer market is low-margin, high-risk stuff, and that's neither Microsoft's nor RIM's target market.

From Microsoft, we expect to see a strong focus on enterprise management, security, productivity applications (Office is one of Microsoft's trump cards), integration and that unified user experience. Gartner expects the strategy to work, with Microsoft expected to snatch 12.5% of the smartphone market by 2016, with that growth coming almost entirely in the enterprise. If RIM is to gain market share, it has to be at the expense of Microsoft, which won't be giving it up without a fight.

Again, Cozza is critical of RIM's chances. "We expect to see RIM versus Microsoft in an enterprise niche, with the rest of the market going to iOS and Android. And I think Microsoft is better positioned right now to take advantage of this, with Windows 8 offering a consistent story from PC to tablet to smartphone. And Windows 9 is on the horizon."

A deeper problem may be the company's dwindling market share. Like it or not, fashion matters in the smartphone industry, and BlackBerrys have been out of vogue for some time. If BB10 turns out to be a dud, and RIM's share of the pie continues to shrink, it will have a hard time convincing developers to continue to build apps for the platform. That could turn the downward trend into a death spiral - no apps means less demand among users. Less users means less incentive to develop apps. RIM knows this, and its cash bounties for developers and "port-a-thon" programmes have seen the number of apps closing on the company's promised 70 000 at launch. But with the Apple App Store and Google Play store both breaking the 700 000 mark, that's still a long way off the pace. It may not matter: RIM has committed to having 90% of the top 200 apps ported at launch, a more important target to hit.

There's an interesting possibility for the BlackBerry ecosystem, and that is app curatorship. RIM's QNX operating system and app framework makes it quick and easy to port many Android apps, but the BlackBerry app store is strictly curated with submissions tested and vetted. Google has come under fire for a lax approach to excluding malicious apps from its platform. RIM could find itself offering an app store with a cleaner selection of Android apps than Google itself, a strategy similar to that enacted by Amazon with its Kindle app store.

"Users really look at apps," Cozza says. "There's no more differentiation in e-mail. We're seeing BBM shrinking in Europe, with the cross-platform alternatives like WhatsApp."

RIM may have simply left it too late to recover. Its downward momentum has been growing, and the competition is growing fiercer by the day. BB10 looks promising, but this year is likely to see the arrival of the next version of Android ("Key Lime Pie"), the Samsung Galaxy S4, the iPhone 5S and 6, and refreshes to Nokia's Lumia range, the flag bearer of the Windows Phone world.

"RIM has to produce a miracle with BB10, but that won't be enough. It needs to do it again and again and again," Cozza says. But you can't write it off just yet - the company is mid-way through a massive reorganisation and refocus, and it could still surprise the analysts.

That reorganisation started with the departure of founders and co-CEOs Mike Lazaridis and Jim Balsillie, in January last year. New man Thorsten Heins introduced deep job cuts and cost-cutting measures, and has successfully strengthened the company's financial position. RIM has plenty of cash on hand to fund its relaunch (and it will need it), and its stock price has risen consistently since its low point under $7 late last year. RIM is well known as an engineering company first and foremost, and it has the ingredients to turn things around. Now, it's all about execution.

With the smartphone market as big as it is, RIM doesn't need to aim for dominance. A healthy third-place would be enough, Cozza says. "But they need to aim for at least double-digit market share to remain viable."

This is crunch time for RIM, no question. If BlackBerry 10 takes off, we could see the embattled 20-year veteran RIM making a surprise comeback and the triumphant return of the CrackBerry in business. If it flops, "we could be facing a world without RIM", Cozza says. This will be the year the enterprise users vote on RIM's survival.

Slicing the pie

Gartner's smartphone projections through 2016 paint a dismal picture for RIM.