What BlackBerry 10 Really Means for RIM
May 2nd 2012 5:58PM
Updated May 2nd 2012 6:02PM
It is an important week for Research In Motion (NAS: RIMM) , as the company's annual partner conference gets under way in Orlando, Fla. The Canadian mobile-phone maker is taking the opportunity to show off its new BlackBerry 10, which is due out later this year, and passing out thousands of prototypes to app developers attending the expo in the process.
This is all part of the BlackBerry maker's plan to execute a turnaround as it struggles to keep up with Apple's (NAS: AAPL) iOS and Google's (NAS: GOOG) Android platforms. Offering free prototypes of its new smartphone was the first smart play we've seen from RIM in a long time, though I doubt the big reveal will be enough to save this dying company.
A network effect
The move gives developers a head start on building applications ahead of the BlackBerry 10 launch later this year. Still, RIM's fall from grace is as much due to its devices as it is about the lack of a media ecosystem to support its handsets. Apple has the App Store, while Google's dubbed its new marketplace Google Play -- and these rich ecosystems give the iPhone and Android devices a huge advantage in drawing in consumers over BlackBerry.
I doubt that RIM will ever fully recover even if it does everything right going forward. The company needs to take back market share from Apple and Google if it wants to have a fighting chance. However, for that to happen it needs the support of developers. The odds don't look good, according to research firm IDC, which revealed that just 16% of developers were "very interested" in creating apps for BlackBerry devices, compared with 79% for Android and 89% for the iPhone.
In a seemingly desperate attempt to reverse its market-share losses, RIM is not only giving away prototypes but also bribing developers with an app guarantee of sorts. The company is promising app makers a minimum of $10,000 for their creations. As reported by Mashable, if your app doesn't generate that much in sales, then RIM will cut you a check for the difference. Yikes.
It will be a major challenge for the majority of BlackBerry apps to rival sales on platforms like iOS and Android, because RIM has a much smaller customer base. Today, Apple and Google jointly command more than 80% of the smartphone market. At last check, there were upwards of 315 million devices running iOS around the world -- all of which redirect to Apple's App Store. Based on statistics provided by the Mac maker, that translates into an average download rate north of 45,000 per application available in the App Store.
Bad for business
The BlackBerry 10 will be one of RIM's first devices without a physical keyboard. Instead, the new smartphones will feature a touchscreen interface similar to rival Apple and Android products. One of the touted characteristics of this virtual keyboard is its ability to learn the key patterns you press to help make typing more accurate -- again, something my iPhone already does.
Poor timing of its new smartphone launch is another problem for RIM. The company will have to contend with the highly anticipated debut of a next-generation iPhone, Microsoft's (NAS: MSFT) Windows 8, and new Samsung Galaxy phones.
It has taken RIM nearly three years to build out BlackBerry 10. Meanwhile, competitors took that time to deliver millions of competing devices. Even Nokia (NYS: NOK) made a meaningful return to the U.S. mobile market last month with the release of its Lumia 900 smartphone. The launch showcased a strategic partnership with Microsoft, as the two companies attempt to corner the enterprise market. With Windows 8 showing up later this year, the new duo could hurt RIM by eating away at its business-customer base.
More of the same
I love a good turnaround story, but this is not it. Investors want to see RIM return to its innovative past, yet the company continues to disappoint. I appreciate RIM's push to make it back on top, but tying its hopes entirely to BlackBerry 10 is a case of too little, too late. It is going to take much more for RIM to get developers back into its bed.
While you'll want to wait for the BlackBerry 10 launch later this year before counting these guys out altogether, I'm surely not holding out hope for a recovery. Instead of putting yourself through the frustration of playing RIM, I invite you to discover one tech stock that's innovating its way to profits. Get instant access to the free report from The Motley Fool titled "The Only Stock You Need to Profit From the New Technology Revolution".
At the time this article was published Fool contributor Tamara Rutter owns shares of Apple. Follow her on Twitter, where she uses the handle @TamaraRutter, for more Foolish insights and investing advice. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Google, Nokia, and Microsoft and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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