23 Feb 2012

How to fix RIM & Nokia's Market Share Slide

RIM Nokia

After practically inventing the smartphone, RIM & Nokia have been decimated over the last couple of years. Their market share is in shambles (Together, they hold roughly 20% of the global smartphone market, down from about 80%). Stephen Elop and Thorsten Heins seem to be floundering (in completely different ways, strangely). In short, they're not doing well, and their shareholders are suffering for their management's mistakes.

We all know what happened to the smartphone sector, with the entry of the iPhone and Android. So, let's start off by identifying the problems for RIM & Nokia specifically.

RIM

RIM has found it increasingly difficult to match the competencies of the Blackberry OS with the likes of iOS and Android. Consumers wanted touchscreen phones, and loads of apps to select from, none of which could be offered by RIM. So what did they do? They started developing the Blackberry 10 OS. RIM wanted to make its OS competitive with Android & iOS, so it's been taking a while for them to get it out. The problem is, while RIM carefully develops its new platform (with a level of buggy Android app compatibility), Android & iOS are galloping ahead.

In this sector, if you're a laggard, you can't just benchmark yourself to your opponent, you have to match or surpass their growth and innovation. And let me be frank - that's never going to happen with RIM. The company's management & board are too conservative and focused on trying to retain their customers, to really focus on innovation at this point. This much is clear from the statements by Thorsten Heins to "stay the course" and statements from their board on how they couldn't hire "morons from outside the company" as CEO.

Nokia

Nokia had the same problem as RIM, but their approach to solving it was completely different. They hired Stephen Elop, a former Microsoft employee to head them. His first move was to announce to the world that Nokia was abandoning Symbian and moving to Windows Phone, about a year before it happened (now well known as the "Elop Effect"). Now Nokia's windows phones have been on sale for about a quarter, and while they've generally received positive reviews, the sales don't show it. Estimates say they've shipped about 1.3 million Lumias (I will have a follow up post on why this is misleading in Nokia's case). Nokia Lumia has less than a 2% market share in every market they've launched in, despite Nokia & Microsoft's advertising blitz.

Windows Phone (WP7) has been on the market for a while now, even before Nokia adopted it, and their sales have been dropping for a while now (not just market share, absolute sales). If WP7 has proven to be a non-competitive platform, why did Nokia adopt it? Their reason was "to differentiate". Clearly, they haven't. The Lumia is exactly the same as any other WP7 device, except with more marketing funds.

Their management team clearly admitted to having no backup plan. When asked what Plan B was, their response is, "Plan B is that Plan A must succeed".

Microsoft pays Nokia more than $200 for each phone shipped. Microsoft is willing to pay that out because they're desperate. They've realized a little too late that we're in a world where technology convergence will rule the day, and Google is far ahead of them. With a combination of hubris & stupidity, the Nokia board bought what Steve Ballmer & Stephen Elop sold them on.

The Solution: When in doubt, bet on the field.

Today, any smartphone vendor has 3 OS choices - 1) Develop your own, 2) go Android or 3) go WP7. Of these, Only Apple has been successful with option 1. Option 2 has been wildly successful for a number of manufacturers, and option 3 has been wallowing in the dust.

Look at a manufacturer like Samsung: they decided to adopt all 3 approaches - 1) Bada for the Wave line, 2) Android for the Galaxy line, 3) WP7 for the Omnia. They were smart, they found a winner in option 2. Even Bada has shown growing sales figures (they're ahead WP7 in sales & growth). At 3, the Omnia has not been too successful, and I've heard that Samsung will withdraw WP7 support after 2012. So, in an industry that changes this fast, you bet on the field and see what works. Once you have a winner, you focus on that.

Now, let's apply this strategy to our two contestants.

RIM

What's RIM's hook for consumers today - 1) BBM, 2) QWERTY keypads (although this is dying out quickly). I would like to add enterprise mail at 3, but with the number of companies dropping blackberry in favor of iPhone/Android every day, I would venture a guess that it's not a factor. Now, RIM could release at least 2 brands of phones, using BB OS and Android (maybe even WP7, if Microsoft pays you). On Android handsets, retain BBM as a proprietary app. Will it require code changes, probably. Could it be hacked? Sure, but what percentage of buyers, apart from us tech geeks, really do that?

This way, RIM can retain its differentiating factor, while moving to a real competitive platform. I have no doubt in my mind that those Android handsets would outsell the BB OS by a huge number.
End-result, market share, revenues, profits and stock price go up.

Nokia

Now, everyone knows what Nokia's differentiating factor is - hardware! None of us bought a Nokia because it had Symbian on it, or the best apps. We bought it because we knew the Nokia brand, and they had the best hardware & build quality on the planet. They already have 2 operating systems right now, Symbian and WP7. The WP7 phones have already been branded differently, under the "Lumia" umbrella. What exactly was stopping them from releasing a new line of Android phones? Again, they would retain the same hardware differentiation that Nokia has, while moving to a real, competitive platform. And again, these would out-sell every other line they have by huge numbers.

End-result, market share, revenues, profits and stock price goes up.

7 comments:

  1. "so it's been taking a while for them to get it out"

    you idiot.. they only bought QNX in April 2010.

    The base OS is already out in the Playbook

    In under 2 years they have a relatively fully fleshed out OS

    ReplyDelete
  2. "The company's management & board are too conservative and focused on trying to retain their customers"

    jesus christ try to read current news!!!  The board is new and half the management is gone.  All actual reports suggest there is a huge culture change at RIM

    how do you write a blog and don't even keep up to date with news?

    ReplyDelete
  3. ":Consumers wanted touchscreen phones, and loads of apps to select from, none of which could be offered by RIM"

    you idiot.. Storm 1, Storm 2, Torch 9800, Torch 9810, Torch 9850/60, Bold 9900 etc etc... guess what.. those are touchscreen phones...

    your app comment is fine though

    ReplyDelete
  4. "QWERTY keypads (although this is dying out quickly). "

    dying quickly?  provide any evidence, I dare you.

    ReplyDelete
  5. "I would like to add enterprise mail at 3, but with the number of
    companies dropping blackberry in favor of iPhone/Android every day, I
    would venture a guess that it's not a factor. "

    This one is a doozey of an idiotic comment.  Sure some companies have dropped them recently, but, what about all the companies continuing to use or new companies adopting?  Why you don't report about this?  Oh right... you don't do any research lol

    I can't believe you just said Enterprise is not a factor

    ReplyDelete
  6. What on earth are you going on about?

    1. 2 years is an eternity on the technology industry.
    2. Practically all of RIM's "new" management and board are in-house hires. So much for a culture change.
    3. Go have a look at RIM's and Symbian's market share trends. That should tell you all you need to know about the popularity of QWERTY models.
    4. Rim's touch screen phones are a joke, their current OS is clearly not touch optimized, when compared to i OS andaAndroid.

    It really just seems like three article just rubbed you the wrong way.

    ReplyDelete
  7. And you realize that the iPhone just overtook RIM's market share in the Canadian enterprise smartphone market, right? That was rim's last remaining stronghold.

    ReplyDelete