Smartphone Form Book 2012 part 4 - For RIM its Deathwatch

This is part 4 in the Form Book of the smartphone battles of 2012. I am proceeding in order starting from the biggest and have done so far Samsung, Apple and Nokia. Today we look at the 4th largest smartphone maker: RIM the maker of the Blackberry. And the word for RIM in 2012 is.. Deathwatch.

I do love Blackberry. Regular readers of this blog know that I am a passionate user of SMS and am notorious for massive Twitterfloods and do all sorts of online activity from my smartphones including blogging. So I love my QWERTY keyboards. And I have cheered the Blackberry on, on this blog and elsewhere. But somehow last year the wheels came off the Blackberry train. Now the Canadian brand is on dire straights.

Lets first clear something. A myth. And for this we have to go back just a little bit. The conventional wisdom - repeated ad nauseum by most so-called 'experts' is that the Blackberry was killed by the iPhone. That sounds very reasonable. The Blackberry was big and growing. Then along came the iPhone and now the Blackberry is on its deathbed. Yep. That sounds reasonable, until you examine the facts just a little bit more closely.

The iPhone launched in the summer of 2007. I pointed out in my Apple Form Book article that the iPhone has had two stages in its four-year life span. The first two years to 2009 the iPhone grew dramatically, setting a world record in fact in how fast a new smartphone brand was gobbling up market share. Then since 2009 the iPhone market share stalled and has essentially plateau'ed. So far so good. Now, if the iPhone killed the Blackberry, we should see a big decline in RIM's market share from 2007 to 2009, right? Lets go to the evidence. In 2006 before there was an iPhone, Blackberry had 7% market share in smartphones globally. That GREW in 2007 and GREW in 2008 and GREW in 2009 up to 20% market share. So while iPhone grew market share - so did Blackberry! And then when Apple stopped growing market share, THAT is when Blackberry started to fall in 2010 to 15% and now for 2011 RIM will have something like 11% for the full year.

It was not the iPhone that killed Blackberry, it was something else. And how could the iPhone kill the Blackberry - the Blackberry was a business-oriented smartphone while the iPhone was a consumer-oriented smartphone. The Blackberry had a QWERTY keyboard with on touch screen and the iPhone had a touch screen with no QWERTY keyboard. The iPhone was ultra cool and sexy, the Blackberry was about as ugly as a phone could be. The iPhone was a design classic and object of desire. The Blackberry was an utilitarian tool. The iPhone worked with pre-installed apps (remember early on there was no App Store) while the Blackberry required access to Blackberry's secure messaging server. If the iPhone was from Venus, the Blackberry was from Mars. No, it was not the iPhone that killed the Blackberry.

What happened in 2010? Android is what happened in 2010. HTC and Samsung and Motorola and LG and SonyEricsson etc etc etc came with smartphones - very many of those with QWERTY slider keyboards too. Android killed the Blackberry (just like it was Android that stalled the growth of the iPhone market share).

So please do not write that Tomi, its obvious that the iPhone killed the Blackberry, that is why Blackberry cannot survive unless it copies Apple blah-blah-blah.

WHAT IS THE MATTER

A few years ago, it seemed that the Blackberry was truly immune to any kind of assault from any smartphone rival. A survey as late as 2009 by Ostermann found that 75% of US business/enterprise users with smartphones had Blackberries. As the enterprise type of customer would need to do IT integration and would typically be concerned about security matters, once you have your platform installed at one company, it is not easily replaced. That customer base was very 'safe' for Blackberry. Most companies did not want to introduce risks from un-approved smartphones so the IT departments would insist that only approved smartphones were used - and especially in the USA that meant Blackberries. TBI research also in 2009 found that 80% of US business/enterprise customers insisted on using only one smartphone platform - again this was by a wide margin Blackberry.

The nice thing about business/enterprise customers is, that you don't need to sell to them every quarter as the fashions change. The negotiations might happen once per year, more likely only once every few years. So this was a particularly steady, reliable stream of business for RIM.

But the smartphone market was shifting away from business/enterprise type of smartphones to consumer-oriented smarpthones (a trend started by Nokia and its N-Series, but exemplified especially in the severely lagging USA smartphone market, by the iPhone). RIM could hold onto a reliable repeat customer base but wasn't able to capture the growth that was now happening on the consumer side.

And then something wonderful happened on the way to Waterloo. The SMS-crazed youth discovered the Blackberry. Some probably received older Blackberry models as hand-me-downs from parents who had them from work, and because of the QWERTY keyboard, the Blackberry found instant affection. The utility trumped any worry about the outwardly appearance being 'uncool' and like a boring businessman's phone. Then came the discovery of BBM. Most teens struggle with their calls and messages allowances. But using Blackberry Messenger, any short messages between any two Blackberries were completely free. That seemed like free SMS.

The perfect answer to the budget problem of a youth's telephone bill. And when the cool kids in class got Blackberries, of course they formed a messaging clique that only sent BBM messages between each other. If you wanted the cool kids to communicate with you, you could not ask them to pay for messages and send you SMS texts. You had to beg your parents to get you a Blackberry, so that you too could have use BBM.

Blackberry caught a youth wave of smartphones. Its no surprise that a Canadian survey of university students in 2008 found that 95% of them had a Blackberry, that being RIM's home country. Perhaps more surprising was a 2010 survey by Phones for U that 75% of all UK youths between ages 16 to 24 had a Blackberry! Similar data is coming in from all over. I was just in South Africa last month and we had a youth panel at the conference. When the youth panel was asked what they think of an iPhone, they said its nice, they could consider it as the second phone, but its quite expensive. Obviously for all the primary phone was a Blackberry.

What more could you ask for? You own the corporate/enterprise customers on long-term locked contracts of fleets of phones, and you have captured the vast majority of the youth segment - the key to long-term business. If the global average for replacing smartphones is 11.5 months now, for the youth its far less than that. Ideal!

And there is a third wave in mobile. The shift to the Emerging World markets. China has just taken over from the USA as the biggest single country market for smartphones and in 2011 for the first time more smartphones were sold in the Emerging World countries than in the Industrialized World countries. The markets of China, India, Indonesia, Brazil, Mexico, Russia, Pakistan, Egypt, Vietnam etc are all craving for more mobile phones and increasingly those are smartphones. And the astonishing facts are from very many of them that the Blackberry is one of the bestselling smarpthone brands, in many of those countries like Indonesia and India - the preferred smartphone brand totally dominating the iPhone or Androids, rivalled only by (now obsolescent) Nokia Symbian smartphones (often also with QWERTY keyboards).

It seems like RIM has caught the right waves. Why is it then, that their sales are cratering? First, the economic downturn hit Blackberries. When the business enterprises had to cut costs, they would postpone purchases of not vital technology. If you already had a smartphone, and normally they might replace it in 2 years, now because of the global economic crisis, that was postponed perhaps to 3 years (or until you lost your phone or it broke). Replacing phones with newer models was not mission-critical for most business users.

Then along came the App Store. Suddenly all sorts of apps started to appear especially on the iPhone, especially in English (USA being Blackberry's strongest business/enterprise market) and soon offering similar functionality to the very expensive business apps that existed for the Blackberry. As the Marketing Departments started to insist on iPhones, the dam was broken that many IT departments held that 'only one smartphone platform' would be tolerated. Many brought their personal phones to work and used them even without the knowledge of the bosses.

Meanwhile Facebook happened, YouTube happened, Twitter happened and Angry Birds happened and there were plenty of reasons why employees really wanted to have modern touch-screen and large-screen smartphones, rather than the Blackberry. And many companies started to make the rules less strict about what smartphones were allowed. This eroded further new sales of Blackberries to the enterprise market.

The far worse phenomenon was BBM. The Blackberry Messenger service was the 'killer app' for the youth to want to have a Blackberry. It very soon became the 'must have' device. But BBM works on any old Blackberry. As the Blackberry was not usually cutting edge on most other features from screen size and touch screen to camera resolution etc - where the youth would often have two phones, they would make their 'other' phone the one with all the hot tech. The old Blackberry was just fine for BBM (and SMS with those people who didn't have a Blackberry). And thus the youth could buy iPhones and Androids but hold onto older Blackberries. RIM could not capitalize on the rapid replacement cycle of their passionate customers, in fact, the youth would delay replacing Blackberries.

And for the Emerging World market? Apart from China, the other Emerging World countries tend to have very modest or truly tiny smartphone markets (while growing fast). So their cumulative size (apart from China) is not enough to compensate for losses in North American and European sales. And why China is different? Chinese carriers/operators did not like the Blackberry for all sorts of reasons (bypassing SMS revenues as one, Blackberry's extremely powerful security another). So the market share of RIM in China was miniscule.

This was all before we take the Chinaberries, cheap knock-off clones from China that look like Blackberries that are flooding markets from India to Indonesia. Then we have lots of smartphones that are pretty good Blackberry clones from the Nokia E-Series to African brand Mi-Phone which tend to sell at prices well below the Blackberry. 

Meanwhile RIM introduced its first touch screen models to considerable market disappointment. RIM is losing in the consumer apps races especially to Android and the iPhone. And it is developing a new OS which is not shipping on its initial schedule but is severely delayed. Meanwhile RIM for some bizarre reason took its eyes off the ball, and went on a silly tech detour to try to sell tablet PCs which cost RIM focus, marketing effort and ended up hurting profitablity. And to try to keep profits in control, RIM then cut vast amounts of staff, unfortunately exactly at the time they were desperately needed to capitalize on the one-time global customer give-away that Nokia gave as a gift to its rivals in 2011, with the Elop Effect. Where Samsung and Apple and SonyEricsson and Motorola etc all benefitted greatly from Nokia's abandoned smartphone customer base, RIM failed miserably in capturing any of them. The sad fact is, that almost any ex-Nokia E-Series user should have naturally gone to Blackberry.

Incidentially the little blessing that RIM had, was that Apple didn't release a QWERTY variant of the iPhone. That would probably have killed off RIM in 2011.

So what do I see for 2012? Its really all bad news. The shift away from single-OS clients at enterprise customers is continuing. Many more enterprise/corporate customers are now implementing 'bring your own phone' policies so that their employees may use their own phones. And the lock that the IT departments had is very widely broken already so Blackberry is getting ever less return business from its primary USA customer base. The consumer users in the USA have long since shifted away from Blackberry.

With the youth, the same holds. The three-year old Blackberry works just fine with BBM. No need to buy a newer, but still under-spec'ed smartphone from RIM when much sexier phones are available from HTC and Samsung and Apple and SonyEricsson etc. And what growth can be found in the Emerging World is so slight in the big picture, that it won't even stabilize the loss from the US and European markets.

That is before we count the numerous countries that challenge RIM's security systems and threaten blocking all Blackberries. So many users and enterprise customers fear that having Blackberries might be a risk of being shut off some day. This is particularly true in countries which are not democratic. And finally, the big global Blackberry shut-down last year for several days, which hurt the trust in Blackberry's 'secure' systems probably irretrievably.

I do think that the new OS for Blackberry will come too late. The Blackberry has high loyalty and satisfaction on business users and apps, and with the youth market but neither of those will replace existing Blackberries with anywhere near global replacement cycle speeds. And now the growth is elsewhere. The businesses and youth already have smarpthones, its more mainstream family users who now are getting smarpthones. And they are not falling in love with the quirky and indeed ugly-looking Blackberries with their tiny screen sizes and modest cameras (and relatively high prices).

That is why I say deathwatch. I am afraid that the news for RIM will continue to be grim all year, the share price will continue to plummet. We already heard that there were several companies that considered buying RIM and as the share price falls, more interested ones will emerge. I do expect that RIM is next to be sold (before Nokia even, because RIM is a simpler company in terms of products, and is smaller and less costly to buy). 

Who would buy RIM and why? I could very well see any company that sees its main business in the enterprise/business area of IT to think that Blackberry could be a great fit, so think Dell, Lenovo (and would have been perhaps HP had it not bought Palm). Yes, Microsoft definitely before it jumped into bed with Nokia but equally not now, would be foolish. Perhaps an Intel or someone like that. Could also be some handset maker who wanted the brand and sales organization - perhaps for a ZTE or Huawei etc as a kind of premium brand. I think the prudent buyer values the youth market and Emerging World market far ahead of the enterprise clients but I am afraid it will be sold to some IT company who thinks the synergies with IT for business customers will be worth it (like maybe a Lenovo). That to me is the lesser opportunity in RIM.

But I will truly be surprised if RIM survives this year as an independent company to 2013. Ok, we've done Samsung, Apple, Nokia and RIM. Next up, HTC. Coming later Google, Microsoft, Sony..

Comments

[Hoista]

What about carrier influence? BBM takes away some of the SMS revenues, however historically, blackberries are the most bandwidth efficient mobile devices and the more blackberries in use means less capex expenditure to increase cellular capacity is required by the carriers. The carriers won't want RIM to die off so quickly considering how bandwidth inefficient the current crop of smartphone OS's are.

[Dipankar]

Good post Tomi, but of course, you cannot deny that the iPhone had a part to play in "unpopularizing" Blackberry's.

[sean]

Hi Tomi; just a quick comment re: youth and Blackberries, writing as the father of one such youth. Android certainly killed the Blackberry (not the iPhone, it as always been too expensive for said youth to even consider) - six months ago the BB was 'her life'; now, when compared with her father and mother's new Samsung Galaxy variants, the BB is 'old crap'.

That said, the *other* thing that has killed the BB for the youth is 'WhatsApp', an Android app that allows BBM-like functionality while owning a beautiful Samsung - both my in-house youth and the students I teach are in the process of abandoning their BBs because, like you say, they've only used them for the free communications; if they can get that same free communication using a mdern smartphone, they most certainly will!

@Dipankar: "you cannot deny that the iPhone had a part to play in "unpopularizing" Blackberry's" - if you stick to analysing facts and data, rather than received opinion, you can very easily deny this, because it simply isn't supported by any data.

[Bill Wessel]

@sean: although you could make the point (and indeed Toni hinted at it) that the iPhone did "unpopularize" Blackberry in enterprise. It certainly looks to have been one of the driving forces behind IT departments having to open up their phone policies. Particularly as it would be senior executives who would lead the charge on this.

When combined with upgrade cycles and how these are affected by global economic conditions, together with the reduction in costs for enterprise if business users provide their own handsets, it creates a very unfavourable situation for RIM. If only they had managed to launch a vaguely compelling handset, but it looks like we're waiting to the end of the year for that.

It's a very good point about services like WhatsApp. RIM seem to have been very complacent about the chances of competing services emerging and somewhat naive about the fashion-led nature of the youth market.

[HCE]

Just as a quick followup to Lee's excellent points. I went to one of the online smartphone databases and did a few quick queries to see how many smartphones available today have keyboards and how many do not. There were a total of 400 Android models in the database and only around 100 had hardware keyboards of any kind - which would leave around 300 models that were touchscreen-only. A quick check of Windows Phone smartphones reveals a pretty similar ratio between touchscreen-only phones and phones with hardware keyboards. Of course this isn't any kind of scientific survey but it I think it is reasonable to conclude that touchscreen-only phones significantly outnumber phones with hardware keyboards.

Regarding what exactly is killing RIM - let me rephrase things a little and say that the iPhone *paradigm* is what is killing RIM. Before the iPhone was released, the smartphone landscape looked quite different. The iPhone was the first smartphone that featured capacitive touchscreen, a multitouch gesture-based UI that was purely touchscreen based and a near desktop-quality HTML experience. A year after it was released Apple added the App Store. Today everyone is copying that model.

It is interesting to note that when the iPhone first came out, most companies stayed in denial for quite a while before finally realizing that the carpet had been yanked out from under their feet. The only companies in the phone space that reacted instantly to the iPhone coming out were Google and Palm - and they essentially copied Apple's playbook (with a few changes along the way). Palm were way too small to make any difference but Google were able to make themselves a dominant force in the industry.

Everybody else was late to the party and is suffering. RIM is really, really late. Their QNX-based OS won't be ready until late in 2012 and may even slip into 2013. By the time it comes out, RIM's market share may be so small that it won't make much of a difference. The introduction of the iPhone was a major paradigm shift in the smartphone industry - similar to the one that took place in the PC industry when Graphical Interfaces were first introduced. The ones that quickly adopt the new paradigm will survice - everyone else is on very shaky ground.

- HCE

[darwinphish]

RIM's growth and early success occurred in an environment where mail servers did not natively support push-email and most users were on 2G networks. In that environment, having proprietary server software to enable push email and to compress data gave RIM a big competitive advantage.

In 2007, Microsoft added push email support to Exchange and by 2009 or so the vast majority of Exchange servers had been upgraded to support this. The iPhone did not support Exchange ActiveSync until the 3GS was released in 2009. Before then, no one considered the iPhone a serious email device, certainly not when compared to a BB. By time the iPhone 4 was released, many would argue that an iPhone using ActiveSync provided an email experience on par with a BB, and for some, superior. Most Android phone also support ActiveSync, which is also used by other mail servers.

Running a BB server is now seen as an unnecessary hassle and expense. In fact, if you do not already have access to a BES supported email account, using a BB for mobile email can be quite expensive, especially when compared to using an iPhone or Android device.

[Tory Burch]

It's nice when the gang shows up .

[access 2010]

It was not the iPhone that killed Blackberry, it was something else. And how could the iPhone kill the Blackberry - the Blackberry was a business-oriented smartphone while the iPhone was a consumer-oriented smartphone. The Blackberry had a QWERTY keyboard with on touch screen and the iPhone had a touch screen with no QWERTY keyboard. The iPhone was ultra cool and sexy, the Blackberry was about as ugly as a phone could be. The iPhone was a design classic and object of desire. The Blackberry was an utilitarian tool. The iPhone worked with pre-installed apps (remember early on there was no App Store) while the Blackberry required access to Blackberry's secure messaging server. If the iPhone was from Venus, the Blackberry was from Mars. No, it was not the iPhone that killed the Blackberry.

[Manu]

Nice read.
However, I feel both iPhone and Android army is responsible for destruction of RIM's marketshare (Remember- We don't discuss profitability here :P)
As you've yourself said:
- iPhone took mindshare by having apps like Angry birds, YouTube etc in consumer space. And through economical & efficient solutions in enterprise segment as aptly pointed out by earlier commenters.
- Android grabbed RIM share by hitting at various price points, form factors including qwerty phones & availability on as much carriers as RIM possess.

Kindly excuse me for over simplifying your complex theory

[Earendil Star]

Yet to see a convincing rebuttal of Tomi's arguments.

Despite all the (unsupported or anecdotal) allegations in the previous comments, and as Tomi stated, the real demise for Blackberry started happening in 2010, when the iPhone market share was already stagnating. This does not mean -of course- that ALL former BB users shifted to Android, but that overall this had a greater impact for BB. For the iPhone to be the main responsible of the BB demise would mean that Android should be HUGELY popular with new smartphone adopters (i.e. Android share growth must be more than proportional with former non-BB users to make the maths add up), which really seems unlikely.

Furthermore, nobody is denying that Apple was the real game changer with the introduction of the iPhone and its keyboard-less large capacitative touchscreen approach. Yet, that disruption came for all. Android switched from its initial BB approach to an iPhone approach and it succeded, beating Apple itself. BB was simply unable to achieve that.

As for other explanations, such as "The iPhone was only on few carriers..."? So what? Can't an iPhone fan switch carriers when her plan expires?
Or: "2011 is the first year the iPhone...", yeah, ok, I already saw that ground is being prepared to say "2012 is the first year the iPhone...".

BB is a company having problems, no doubt about that. They tried to jump on the consumer bandwagon, possibly overlooking their corporate clients.
This strategy paid off at first, and at the beginning the BB was seen as a cool status symbol gadget, with the plus of the messaging element associated to it. I remember the (consumer) coolness factor tied to the BB Pearl when it launched, for example. Yet, when the paradigm shifted and the cool factor went to the all screen iPhone approach, things changed and BB was unable to capitalize on its previous success and on its strengths.

Yet, BB is fighting its difficult battle relying on its own strengths, as it should be, and at this point, given all the delays in execution (time to market of new products / platforms, etc.) it probably needs a new management team, possibly a single CEO. Luckily for BB, MS already went for Nokia, so there is no danger there of being forced to adopt the least successful of all phone OS in the wild and become one of its many OEMs. And not because Nokia is the best WP OEM (this is just MS sponsored marketing BS to support its newly acquired Nokia division), but because being a simple OEM can never be profitable like owning one own's ecosystem.

Let's hope in a management change for the better, with improved execution (shorter time to market), refocusing on corporate clients (Nokia E-series market, anyone? + push for corporate playbook use), and capitalising on its strengths (protected communication protocol, etc.) by reinventing them using the most recent ideas, instead of trying to go without soul the Apple path.

The only other option is to be sold in pieces... exploiting the current patent craze... although it would be a sad outcome, overall.

[HCE]

@Earendil Star

I don't think anyone is saying that Android wasn't in any part responsible for the mess that RIM is in. So I am not saying Tomi is completely wrong. I certainly agree that if Android did not exist then RIM would be in a lot better shape than it is right now.

Where I differ from Tomi is in his assertion that iPhone had no effect on RIM. As Lee says - if there was no iPhone and Android was the only competition that RIM had then chances are it would be in good shape right now.

It isn't as if the iPhone directly took a lot of sales from RIM. The point is that the iPhone brought about a paradigm shift in the smartphone market. Google's early strategy with Android was to mimic the Blackberry - chances are that had the iPhone not come out, most Android phones would be Blackberry clones and RIM would be thriving.

However, when the iPhone was introduced Google was the only company to instantly recognize that things had changed in the smartphone market and the iPhone's UI was the way to go. Every other company stayed in denial for a couple of years before reacting - and paid for their inaction big time.

- HCE

[Tomi T Ahonen]

Hi all, am starting responses in small sets

Hi Hoista, Dipankar, sean and Bill

Hoista - good point about carrier influence. The BBM got into the networks somewhat under the radar, as it was treated as an 'enterprise' solution, where often there is both hardware and software, and the contracts are sold with various data bundles etc. As RIM pitched the original Blackberry as an email solution - at a considerable data price premium - the carriers liked it. It wasn't until the youth took to BBM that the carriers started to think, what is happening. Now they are calculating is a youth consumer better to have on a Blackberry where the heavy volume of messaging is cannibalized (but some remain on SMS) or is it better to not offer the Blackberry and risk the rivals stealing that lucrative customer segment.

Dipankar - you're right, most of all (in North America and Europe and Australia, not elsewhere) the iPhone did change the perception game. Apple is brilliant at that, distorting the reality.

sean - thanks! Yes I hear that all over. I think your kids are typical of what is happening and why its the Android side which started to take the youth. We have to see how the iMessenger service may do more damage now from Apple's side.

Bill - good points, we agree obviously.

Thank you all, keep the discussions going, I'll return with more

Tomi Ahonen :-)

[Hoista]

@Tomi so in a nutshell - contributory factors for the deathwatch for RIM is because
a) Enterprise is shifting away from owning the mobile device for its employees and allowing employees to us their own phones.
b) BBM as a youth market cannibalizes carrier SMS revenues reducing incentive to push blackberries.
c) Apps such as WhatsApp, Line, Talkbox etc. give the youth a 'newer' phone with an equivalent low cost messaging system so they can shift away from BBM.

[Tomi T Ahonen]

Second set of replies

Hi LeeBase and Baron

I will address this response to both of you, since you both talk about market share. Market share in telecoms is something I truly know about, I led the team that set the world record for taking market share from the incumbent carrier/operator under fully open competition, and I wrote the world's fastest-selling book about mobile, which was essentially a handbook on how to gain market share. That is why I obsess about market share on this blog, it is of great interest to my customers and readers of this blog.

Market share is not why a company does well or not, it is a sign of who is doing well and who isn't. Market share is a great (but not only) measure of competition, so market share is (one of the) best way(s) to compare one rival to another, because the total is always 100%, regardless of whether that industry is growing itself, or declining. That is why we indicate political votes as percent of votes, not absolute votes for example - it is 'market share' of all votes cast, regardless of whether in this election the total votes cast was bigger or smaller than last time etc.

When one rival gains, and another loses, it is most fair to claim the winner took market from the loser. It doesn't matter if there were market constraints (Baron) like factory production bottlenecks or carrier availability. It doesn't matter if the iPhone was or wasn't preferred by enterprise (Lee). The fact is, that in market share, when the iPhone grew strongly - so did Blackberry. In market share the total is always 100%. Apple DID steal market share from someone, but that was not Blackberry. In 2007 - 2009 the companies that lost to the iPhone were Palm, Windows Mobile based smartphones, the non-Nokia based Symbian makers and also Nokia. From 2010 to 2011 when the iPhone did not take significant market share, that is when the Blackberry lost market share, the one who gained was Android.

Blackberry did NOT lose to the iPhone, and Blackberry DID lose to Android. The facts are indisputable. What the causes were for it, what were factors that made it 'better or worse' for either Apple or Blackberry or anyone else (enterprise, carriers, youth, factory bottlenecks etc) doesn't matter. They are the reasons why or why not. The fact is that the iPhone did not take Blackberry customers in 2007 to 2009 and most Blackberry customers who were lost in 2010 to 2011 went to Android.

There will always be some exceptions to the rule but the facts are clear. If you find some kids who switched from a Blackberry to iPhone in 2011 (Lee) then the evidence is OVERWHELMING that most Blackberry users who switched in the past two years, went not to the iPhone, but rather went to Android. So if we surveyed those who changed, your case is a minority and the majority is my case. The math does not lie. Market share is the scoring of the battle and when Apple gained, so did Blackberry. When Blackberry declined, the iPhone did not gain (to any significant degree) but Android did gain massively. If you want to argue this point with us here, Lee or Baron, please address THIS response to you two, ok, don't repeat the boring old arguments here from now on in this thread. We can argue why it is happening, that is good. But if you want to argue that market share is invalid somehow, that is then pointless. Market share is always 100% and it is (one of the) best measure(s) of rivals in the same market.

We can of course discuss other measures like revenues or profits or loyalty or replacement rates or lifetime value of customers (arguably a youth customer loyalty is more valuable over time than an elderly customer etc) or enterprise/consumer etc - but the market share argument to me is pretty pointless.

Does that make sense?

Tomi Ahonen :-)

[darwinphish]

Tomi:

I believe both yours and Baron's arguments about market share have validity. I think one of the Baron's points was that even though the smartphone market share war is global, the battles are all regional. I don't have all the numbers in front of my, but my recollection is that RIM began losing market share in the US in 2007 but this was offset by increased global sales. Anyone who follows smartphones in the US (and similar markets) knows the iPhone is taking sales away from RIM. However, this has been hidden in the global numbers where, yes, Android is now killing RIM.

Also, the primary driver for RIM's loss of market share has not been user switching from a BB to an iPhone or Android device, but because RIM is failing to attract new users. Its the denominator that is killing RIM. All sellers compete with non-consumption and one can not assume, for example, an iPhone purchaser would have bought a BB if the iPhone was not available. Every non-BB smartphone sale decreases RIM's market share even if the purchaser was never a potential RIM customer.

[cycnus]

Hi Tomi,

Great article as always :)

I was wondering if you had some insight on how to save RIM? Should RIM go to android and bring BBM to android?? Would any android user use BBM instead of What's app or GTalk if RIM use android?

I also see the android success among youth (one of BB main market) because android offer affordable Phone+GammingDevices, so that it offer better entertainment value, and could also do What's App (BBM killer) for the youth... so this youth doesn't need to ask their parrent for Nintendo DS or PlayStation Portable. (Convergence devices?)

[cycnus]

Hi (again),

I think american so-called expert like to bully regarding apple vs. google. They like to over-hype apple. I don't understand whether they were brain washed by apple so that they really think apple is the best, or they just don't do their homework like you did.

It's great to have real great expert like you write to write that Android kill RIM.

Thank you..

[Earendil Star]

As I had indicated in my previous post (8 January), I believed that RIM needed a change in management, and possibly a single CEO.

This is exactly what we now have. I wish the new CEO all the best in his efforts to overturn RIM's current predicament and to make the comeback it deserves.

What pleases me most, is that the board decided to tap an internal resource, and to confront the difficult situation with its own forces.

This is exactly what Nokia should have done, if it wanted to -or at least, attempted to- remain relevant as a major player in the smarthpone market.

I am not saying RIM will necessarily succeed, but at least it will try to regain its strenght, and if the cards are played correctly, I believe this may be achieved.
If this is so, RIM will be back with the possibility to exploit and gain from its full potential, whithout needing to share most of its profit with third parties.

Just contrast this with what happened at Nokia!
With the appointment of THT Elop, its board practically decided to abandon the race while in first position, as if it had totally lost faith in the company's own capabilities and without even trying to react.

This unfortunate decision will have momentous consequences for Nokia, having confined itself to be an *exclusive* OEM for MS (the smallest player in the wild).
Since when being a monopsonist OEM is better than being an all round and independent manufacturer in total control of its own ecosystem?
Since when has relying on a single third party for its future been beneficial to a company that chose this path?
The answer is simple: never.

RIM now stands a chance to make a comeback.
Sadly, for Nokia, this is no longer possible. RIP.

[Nike Free]

Winner of twenty-two American Music Awards and thirty-eight nominations, more than any other female solo artist in history.

[Access 2010 Download]

The nice thing about business/enterprise customers is, that you don't need to sell to them every quarter as the fashions change. The negotiations might happen once per year, more likely only once every few years. So this was a particularly steady, reliable stream of business for RIM.