Posted in Concepts, Marketing
18/05 2010

Has the Blackberry a future?

RIM was once the king of the smartphone jungle. Everyone wanted to have a Blackberry, it was the killer device to have. With the launch of the iPhone everything has changed.

 

How does the Blackberry compare to other Smartphones?

There are really three areas where Blackberry is considered by many to be superior to the iPhone: email, security and the physical keyboard. In all other respects I don’t believe anyone would argue that the Blackberry is better: ease of use, navigation, settings, aesthetics.

Yet, even in the areas where Blackberry is considered strong, this is debatable. Take Blackberry’s email. All of the messages you receive on your device are passed through RIM’s servers. These servers strip out any unnecessary content to show you just the message. This was essential before the advent of 3G technologies, but today is arguably unnecessary. From a user experience, this means that the emails you receive are missing their formatting and are not particularly attractive. My personal experience is that BlackBerries often place you a month behind in your email list requiring a ton of scrolling just to get to the top of the list.

All in all, the iPhone actually offers a better email experience than the Blackberry.

The Blackberry comes in two principal form factors, with a keyboard and as a touch solution without one. Whether you need a physical keyboard or not comes down to personal preference. In the case where you desire a keyboard, then arguably you’d be better off with one of the Android devices that offer it.

Blackberry’s big failing is its user interface. It’s confusing to use and difficult to navigate through. Once you’ve used an iPhone or even an Android device, you aren’t going to want to go back to the Blackberry. It’s a big failing.

 

Application Ecosystem

Blackberry has been able to accept third party applications since long before the iPhone appeared. Yet the number of apps available still remains minuscule compared to both the iPhone and Android app stores. Blackberry has an estimated 5,000 apps, Android 40,000 apps and the iPhone 200,000.

This is a huge problem for RIM. The number of applications available relates to the functional value of your phone. The more applications, the more chance you’ll find what you need and the greater the chance of finding higher quality applications. It’s the law of numbers.

For a consumer, considering a smartphone device, what are you going to choose? The platform with the largest or smallest number of apps? You’ll go for the largest number of apps right? So the iPhone becomes the logical choice. Therefore developers will be more likely to choose to develop for Apple’s device because of the high number of people buying that device. It’s a snowball effect that RIM is missing out on.

 

Why hasn’t the Blackberry more apps?

It is imperative for RIM to increase the size of its app store to be able to rest in the game. Unfortunately, that’s going to be really difficult. As mentioned before, developers will choose to develop primarily on the iPhone as that’s the largest market. Moreover, Apple is bending over backwards to help developers make money from their work. The introduction of their new iAds advertising service is designed with exactly that in mind.

The Blackberry platform is also more expensive to develop for than the iPhone. There are two main reasons that this is the case: form factor and security.

Over the years there have been many Blackberries, with different screen sizes, different processors and software and different input methods. There are already tow big families, keyboard and touch. Therefore, developers need to take into account a lot of different things to make their apps work properly on the Blackberry. That variety costs developers in time and money.

Secondly, the inbuilt security aspects can make Blackberry development more difficult and costly. This is not necessarily a bad thing, but it exists.

Blackberry users don’t install as many applications as iPhone users, and they don’t pay for as many, so the revenue from applications is lower than on the iPhone app store. Thus with lower revenue and increased costs, why would you choose to develop for the Blackberry over the iPhone?

 

Who are Blackberry Users?

Blackberry was traditionally sold to companies to give to their senior employees. RIM has built a whole toolset to allow IT staff to easily manage their user’s Blackberries in a secure an efficient manner. This is the typical enterprise company, very conservative and risk averse. They will be using Blackberries well beyond the moment they finally dump IE6.

The other user groups that RIM are actively targeting are consumers, but not the same ones Apple is after. Apple provides premium products to well-off consumers and hence charges a reasonable sum for their phones. These consumers have the disposable income to spend on apps and other content from the iTunes Store.

RIM, on the other hand, is selling to the bottom of the consumer market. Its Blackberries are often being sold at a low price or being given away for free. These users are looking for a bargain and are less likely to spend on apps going forward. RIM is also doing well at selling in developing countries with a similar strategy.  Hence, RIM’s sales figures look very good, but they are built on sand in many ways, whilst Apples are good solid consumers happily locking themselves into the iPhone system.

Once you have bought apps for your phone, how likely are you to change platform and have to buy all your applications again? Not likely!

 

Which Phone Should You Buy?

It’s increasingly clear that if you are choosing a phone today, you should go with Apple. Unless you really, really need a physical keyboard there is no compelling reason to choose Blackberry. If you do, you’ll be limited in the number of applications available to you and may be locked into a platform that slowly dies away.

Let’s imagine you have an aversion to Apple, or to AT&T, Apple’s partner in the US. Should you choose Blackberry in that case. Well no,  an Android platform would make more sense. Although it’s not as mature as the iPhone platform, Android does at least offer a large number of applications and has some wind in its sales. Android has many of the same fundamental problems as the Blackberry, but has at least a development community behind it who are producing applications. The same cannot be said of Blackberry.

 

What should Blackberry do to remain relevant?

For a company in RIM’s position there are three choices that it faces:

1. Go niche – find a highly profitable market segment, for example high security government communications, and establish an unassailable technological lead there. RIM would then be able to charge large amounts of money for its devices.

2. Compete with Apple – to remain attractive to higher income users, RIM needs to expand the number of applications available. To do this it needs to ensure its tools are easy to use and consider reducing the number of different form factors developers need to support.

3. Go cheap – there is a bottom of the market, for phones that are less than $100 dollars. RIM can compete there with the likes of Nokia, Samsung and LG. It’s a tough job in the commodity end with low margins.

I expect that RIM will end up fighting on two fronts, cheap and niche at the same time. It’s hard to believe that they will be able to execute a strategy where they can compete with Apple.

 

Product Management Lessons

The success of the app store was hard to see coming, even Apple hadn’t expected it. As Product Managers, we need to be constantly considering what our competitors are doing and be ready to pivot our plans to respond. Interestingly, this is one case where Apple did listen to its customers, where customers had a better vision than Apple. So even a company that famously does no market research has learnt the importance of listening to customers.