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August 05, 2011

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kevin

Tomi,

I called this decline last July based on just the numbers. But thanks for providing a plausible explanation. Also, adding to your theory, it seems to me that each new generation of BB hasn't had a big desirability factor to prompt an upgrade.

You stated that these teens have another smartphone. Is this true of a large percentage of these teens? (If true, these are some pretty rich teens.)

Also, if the keyboard becomes not such a big factor relative to other phone features (like media content and apps), then if the cool kids switch over and start using iPhone iMessage (now free as its included with any data plan), could we not see a surge in teens switching to iPhone (especially if there is a cheaper model)? I bet Apple's market research has seen this possibility. And no doubt we'll see free messaging emphasized more by Google for Android phones as well.

Guy Rosen

My teenage nieces in the UK always baffled me with their clumsy BBs, and indeed it was BBM that was keeping them there. However their crowd now considers WhatsApp to be the viable alternative (I even overheard it being called "BBM for iPhone"). Assuming WhatsApp data usage is efficient enough to be negligible within any reasonable data plan, it's become a big enough brand to pull those teens away from BBM. I also believe it (or one of the equivalents) will succeed more than iMessage which will inevitably remain a closed, Apple-only service. (Just look at FaceTime.)

The opportunity is actually Google's here - as a service-centric not device-centric company, if they provide a GOOD cross-platform mobile texting service (GTalk++?) there are billions of eyeballs to be won.

Leebase

I wonder how many of those BB toting teens are also toting an iPod Touch. As the father of 3 teens...it's the data plans the kill the concept of my kids having a smart phone. I pay $30/mo for unlimited texting, and give them basic texting phones and iPod Touches.

Lately I've been looking to score some used blackberry's to replace their cheap texting phones.

In their community of friends, BBM isn't an issue. But if I didn't provide texting for them, I might as well send them to school in burlap bags.

I don't see RIM imploding to the extent of Nokia, though. I think they have a fairly stable niche...to give them time to come up with a real iOS/Android competitor (like a Qnx phone that will run Android apps).

They seem to have some significant internal dysfunctions, though.

I think you are overly confident of RIM's hold on the enterprise. Apple is making nice inroads there with both the iPhone and iPad. At one of my clients, a blackberry shop, they are switching to iPhones simply because Microsoft exchange is cheaper than BB Enterprise Server.

Lee

virgil

Tommy, but if you are indeed right, it means that its' not too late for BB, and if they get out next year highly-desirable QNX-based phones, they may stand a chance after all.

Geri

I love the point on BBM is the hook for kids, not the device itself. I also agree with Guy Rosen on Google opportunity - and it was partly there with GTalk and now with Google+ and Huddle Google is seriously stepping into this territory with a far better potential coverage than WhatsApp or iMessage.
On top, Google push Google+ project heavily, as E.Schmidt stated it was a 500-person project! 500 Google brains only on G+. Massive!

Eurofan

Cool post, Tomi. That's why we come here, to see you do the heavy lifting, and to learn something from each other. I agree with 80% of what Lee said. Good insights, Tomi. I don't think you will be proved wrong on this one.

khim

Good theory. Much better then Nokia-related crazy tales.

But if true then Blackberry is in VERY peculiar situation: they are not in any immediate danger, but they are one step from Nokia-style boycott by operators.

The whole house of cards is built around service which can be disabled by operators any time they decide it's not all that profitable to continue to support it. They obviously signed multiyear contracts thus it can not happen overnight, but if they decide that it'll be more profitable to offer some cheap SMS plans and cancel the BIS support... BlackBerry can implode pretty soon.

So it means RIM does have time to do something but BBM by itself is not a viable long-term plan. It all depends on 3G/4G expansion, really: it's pointless to offer 3G/4G without a data plan and with data plan BBM exclusivity evaporates...

Eurofan

@khim, I thought nokia boycot by operators was Tomi's biggest crazy tale. Since Tomi made that point about the boycott we've mostly come to see the evidence supports that call by Tomi. If that's true everything else Tomi has written lately is true too, Eflop has to go for cause or be driven out by the forces of good, if they still exist. If wall street wants a competent american, put rick simonson in the ceo job and vanjoki can be his coo. we just need cool heads now in this storm not pudgy handed dumbfuchs.

essay help

Interesting info! Thanks.

kevin

@Eurofan: I don't think of it really as a carrier "boycott". I think carriers are doing a very rational thing - why should they sell a smartphone whose accompanying ecosystem has been end-of-lifed? The carriers have direct relationships with consumers; if these consumers get dissatisfied with what the carrier sold them, they'll switch to some other carrier the next time.

I still think the others (like Skype story) are crazy tales.

Eurofan

Kevin, I agree but carrier boycott is for me a shorthand way of saying all this. I don't blame the carriers for being rational actors. But thanks for the clarification.

Troed Sångberg

"It doesn't make sense to me."

It does to me - and my old post on the three categories of featurephones, smartphones and MIDs (Mobile Internet Devices).

Android and iOS are MID platforms - and the dividing factor is the active third party support (different from "number of SDK downloads" etc).

Symbian/RIM etc är smartphone platforms. MIDs are growing, smartphones are not.

(September 2009) http://blogs.sonyericsson.com/troedsangberg/its-not-about-smartphones/

:)

dirk

skype is now on android, fyi

kevin

@Troed: Yup, many here have told Tomi that iOS/Android are different from Symbian/BB many times over the last few years, but his standard response is he's just following the categories made by those who count sales. I think ignoring this distinction will lead to errors in projecting the future, and to misreading how to solve Nokia's OS/ecosystem problem.

@dirk: Yup, Verizon partnered with Skype to have an exclusive launch on Verizon Droid phones back in 2010. So really don't know what Tomi is basing his story on.

Eurofan

Kevin, Now that I am home on my own keyboard I will expand: I don't think we mere mortals are in a position to judge whether the carrier boycott on Nokia is motivated by factors beyond the publicly announced death of Symbian OS by Eflop, possible high return rates of Nokia phones [although nobody has shown this, have they], possible customer disgruntlement or risk of disgruntlement at carrier sales staff at selling them an "obsolete" phone, etc. Did MS's purchase of Skype anger carriers enough to be another reason for not promoting Nokia's Symbian products in addition to the above reasons, because the carriers want to hurt Nokia now ahead of the WP7.5 push? Maybe, I don't have a position on that, that's higher politics I don't have a feel for. To me the publicly announced death of Symbian OS is grounds sufficient for operator boycott for the reasons you have given, they have other hot phones and don't want to push dead end phones on customers for reasons of keeping good customer relations. However, I think the fact that Apple OS can support Skype apps as well as Facetime and Android supports Skype doesn't mean Tomi is necessarily wrong about carriers being angry at Nokia for aligning with MS after MS purchases Skype. For the reasons I gave in my long rant above on the price of wireless coverage in the US, somebody smart in the hand set making space is going to come out with an affordable smartphone which is like a iPod Touch with cell signal. The idea is it could be used on prepaid plans or affordable postpaid voice plans with no messaging and no data: all the messaging, all the data, and most or all the voice is carried via local wifi, whether in school, at home, in the car, at work, or in the city, etc. This product, if it is affordable, will not need subsidy to sell. It will sell itself on savings from data and messaging fees. It is an existential threat to the carrier model in the US and maybe elsewhere, I don't know about overseas.

I can see the operators not wanting one of the major players like Nokia or Apple to develop such a device. Carriers are a very big business in the U.S. in terms of political influence and profitability. Skype [and its analogs] would be a major component of such a new disruption device. Right now iOS and Android based phones are too expensive to sell without subsidy for the most part so they are not threats to the existing [US] telcom model, because as I mentioned above [at least in the US], subsized phones are always bundled with two year commitments to both voice and data plans, and everybody gets messaging too although not required to and messaging anyway is cheap compared to data so not taking messaging is not as much a threat to telcom profitability as not taking data. Data is 20-40$ in the US. Messaging is 5-10$. Assuming in both cases you already have voice. I'm not sure how easy it is in the US to just get a data plan in the US with no voice, maybe only if you are buying a mobile hot spot device or a plug in for your laptop. How easy it would be to switch such a data plan over to a phone and have a phone run on a data plan only, I don't know. That eventuality of course the telcoms have a strong incentive never to let happen.

I think the telcoms are looking at the voice/messaging/data situation closely and might very much want to weaken Nokia before it goes forward with the idea of cheap WP based phones for the masses, for example prepaid WP phones. Anyway, I don't rule it out. It's up to the regulators to prevent economic entities from colluding, since the economic incentives of big industries always push the big players toward collusion. The threat of wifi-based developed world communication or data only (web) based world wide communication is a big one to the telcoms who have tremendous sunk costs in voice/messaging.

On the knocking of Symbian that constantly goes on here, I really don't get it. Symbian Anna and whatever is next after Anna are good enough to get through 8 quarters to Maemo/Meego. The E7 running on Anna and the N8 running on Anna are good devices for many people's needs and sold without too much exaggerated hype as useful things with long battery life and good keyboards they could continue to sell into the upper end of the subsidized cell phone space. I've come to believe Nokia's original pre-Elop plan was workable and that there was no burning platform, that the four reasons Peter identified as 4 top reasons for Android returns could have been distinguishing basis for semi-successful marketing campaign by Nokia in years 2011 and 2012 as transition to Maemo/Meego began. But what would carriers think of such a promotion. How does the MS link up and subsequent Skype purchase influence carrier opinion toward Nokia. Unknowables.

Anyway, I really don't buy that iOS/Android are fundamentally different or an altogether different category of o.s. from Symbian/BB. I just think the former pair are further developed than the latter pair, because the parents of the latter pair each decided to replace their progeny with new, improved o.s.'s and so have neglected them. Anyway, I'm saying that a current Blackberry or a current [Anna loaded] E7 are reasonable choices for some consumers looking for a $200 subsidized phone, just as valid a choice as a $200 new iPhone 5 or newest Android are as choices for consumers looking for "more" in the subsidized cell phone space. Some people just want their phones to go from point A to point B as it were and are Toyota-buyer minded: reliability, consistency, battery life, call quality. The fancier things are of course supplied by iOS and Android, but so what, they also cost more. No reason for RIM and Nokia to go out of business. Betting the farm on instant adoption by old Nokia customers of WP7.5 is just trying to go out of business, especially after one year of carrier boycott of Symbian devices. Such a stupid plan by Elop, the pudgy hand waving charlatan.

As I've said before, I don't see why Apple's, Google's and Android partner's successes in the hand held smart devices space can't coexist with a health Nokia and a healthy RIM. Since my heart lies with Nokia, that's the only story I focus on. But the Space is large and many players can coexist. There are many definitions of ecosystem, but bankruptcy has only one definition. Elop blew up an ecosystem when he pulled the plug on Symbian, QT and Ovi. Elop claims to be ushering in a new econsystem in WP [no evidence other than "potential" at this point]. And Elop may well drive Nokia into the arms of the bankruptcy court by doing both of those things in the way and at the time that he did them.

What role Skype plays in all this we will probably understand much later when the history of this period is written. In the mean time it is fair to say there is a carrier boycott of Nokia products going on now for 6 months and Elop had about %100 to do with it.

Tim F.

Ending every tenth sentence with "ha ha" make your bad jokes funny, they just give the impression you have the intellect of an 8 year old.

Tim F.

CORRECTION: Ending every tenth sentence with "ha ha" DOES NOTE make your bad jokes funny...

Tim F.

Grrrrr DOES NOT

Bill

Blackberry is the new Nokia - and not in a good way. Multiple models. Marketing driven drivel leading them to launch multiple confusing models. Two operating systems. And now they've Osborned themselves.

Baron95

Business users were never hooked on Blackberry. Business users were not hooked on BES. Business users were hooked on instant email push.

Kids are not hooked on Blackberry. Kids are not hooked on BBM. Kids are hooked on unlimited texting.

What is (starting to) killing RIM is that now there are excellent push email and viable free texting on iPhone and Android. Plus those phones can do a lot more "fun" stuff - apps, movies. Plus they have compatible tablets.

All of a sudden - and it was sudden - there is really no compelling reason for business users or kids to "settle" for a poorer device just to get instant email push and free messaging.

An iPhone connected to exchange server + iMessage will do quite well.

P.S. Also note that *a lot* of the Blackberry phones used by kids were hand me downs from mom/dad from work as they upgrade. At one point, I had a drawer full of Blackberries. I gave them away to many friends and relatives.

Baron95

But, what I really wanted to hear, Tomi, is your comments on the operators reaction to BBM.

You claim operators will boycott WP, because Microsoft bought Skype. You also claim that SMS is the most important aspect of mobile and a huge source of income to operators. So, once Blackberry launched BBM to cut out the operator, why didn't they boycott RIM?

As a matter of fact, many operators ran (still run) promotions of buy one blackberry get one free and buy up to 5 blackberries for the family on one plan.

Why no boycott of RIM?

Anon

Surely the key is enrich BBM with hughly desirable features only supported by BBOS7, then ditto for QNX.

Eurofan

Baron95, I agree completely with your comment above, "Business users were never...". As far as your "But, what I really wanted to hear, Tomi, is...": When I read Tomi's assertion on this point, about the profitability of SMS to operators, like you I thought of the North American market and RIM and now WhatsApp etc and thought that doesn't seem right here. I think, though, Tomi is talking about profitability in the rest of the world. Here in North America its data that is so profitable to operators, not messaging, thanks to the iPhone effect, when the operators learned to bundle data with voice the way they used to bundle messaging with voice. Messaging is gravy in North America. Data is the meat. Voice is the pizza pie, or something. I bet for carriers in less developed parts of the world, messaging is hugely profitable, as data is in North America. But I agree with your "Business users were never hooked on Blackberry..." analysis. Tomi's "cool kids" probably acquired their crackberry addictions from their parents and began by using their parents hand me down devices.

cycnus

@baron
if you read this blog long enough, you'll know that tomi already answered that question many times. at start bb was a small player, so operator wouldn't really care that if bb provide another solution for SMS. whereas nokia were a big player.

khim

@Eurofan: fate of Nokia was decided few years ago. Not a lot of people seen it back then - but few did: Tomi'a article which explained in the end of 2009 that Android is a fad has a comment which quite literally said "Android is license free, it has multiple operators and MNO's backing it. It's reach will rapidly become very big indeed. It will overtake iPhone in 2010, it is seriously challenging incumbants; and I'd expect to see a Nokia phone running Android within 3 years (if they are still even building hardware then! ;-)"
http://communities-dominate.blogs.com/brands/2009/12/us-west-coast-drunk-on-iphone-yes-but-android-is-not-the-answer.html#comment-6a00e0097e337c883301287637dd7e970c

The biggest clue comes from Tomi himself: his logic contain mistakes which are typical for incumbent - and he was "Nokia boy" for a long time so his logic is probably typical for Nokians.
1. He absolutely refuses to even think about the fact that what he perceived as a single market/ecosystem is in fact not - this phenomenon does not adhere to existing pigeonholes of "market research" therefore it does not exist.
2. The fact number 1 leads to the myopia WRT to troubles with development: he praises the features which were important for traditional smartphone buyers in Nokia phones and laments that Nokia developers are stuck and can not produce something which will ALSO be good for "new wave" of buyers - but Nokia developers are in fact doing their best in their pigeonhole!
3. He explains again and again that this sustaining approach is, in fact, correct - because eventually Nokia WILL produce something good for both "old wave" and "new wave". This is possible but unlikely (a lot of incumbents were destroyed by disruptive change which they met with the same stratgey). In the best case they will keep small sliver of their traditional market.
4. And when disruptive collapse (predicted years ago, remember) finally arrives he blames it all on "execution" (Elop in this case).

Since well-established disruptive collapse theory explains facts so well I see no need to invent some new Elop-centered theories. Nokia's platform WAS burning already and Nokia WAS already on the road to oblivion. Of course Elop's idea to put out fire with gasoline didn't help - but it just hastened the process which was well underway.

As for this Blackberry's theory... we'll see (or not see) the supporting evidence in the coming months. If BBM users constitute their own [small] ecosystem/market which is relatively immune from iOS/Android attacks - then RIM sales will drop but only to some stable level. If RIM is disrupted similarly to Nokia... they'll be in similar freefall soon (they are not there yet because at least THEIR CEO does not use gasoline in firefighting).

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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