In a nutshell, BB10 looks good. RIM is doing a lot of the right things with the OS both from the consumer’s perspective and from the developer’s perspective. The question remains though whether they are doing these things too late.
The iPhone launched over 5 years ago. Android followed a year later. It’s disappointing that RIM arrogantly ignored what was happening for so long. BB10 should have been in market 2 years ago and if they had done that things would be very different. It’s especially too bad that RIM wasted time and resources launching the PlayBook when those resources could have gone into BB10. Speaking of the PlayBook, they have been very quiet about the device. Based on some questions I’ve asked it sounds like the PlayBook isn’t getting much support until after BB10 launches, at which time they plan on eventually updating it with a BB10 based OS. So, it sounds like even though both devices are based on the same QNX kernel the PlayBook OS will need updating to be BB10 compatible.
RIM and Microsoft both face an uphill battle in the mobile OS market. I tend to think that there will be room in the market for one of them to be a 3rd mobile platform but I’m not sure the market will support it. Despite their own major missteps Microsoft has some key advantages over RIM right now.
First off, Microsoft will have their new new mobile OS – Windows Phone 8 – in market next month, in time for the crucial holiday season. (The double new was intended and isn’t a typo. Microsoft moved from Windows CE to Windows Phone 7 a couple of years ago, but in a major misstep they based Windows Phone 7 on the Windows CE kernel. All those shiny new WP7 devices are about to become obsolete when WP8 launches. WP7 devices aren’t upgradeable to WP8 and all WP7 apps must be rewritten by developers for WP8.) RIM is going to miss the holiday season. They are still on track for a Q1 2013 launch which is good news but missing this holiday season is unfortunate. People wanting a new phone for Christmas are more likely to pick up an iPhone or Android or even WP8 rather than wait till next year. (Personally, I think it’s better for them to not rush BB10, it’s just too bad that they got such a late start.)
Second, Microsoft has more money. They also have the luxury of other revenue streams to support their efforts to buy market share. RIM has no debt and $2B in the bank, which sounds great, except two years ago it was $9B in the bank. RIM is burning through cash quickly and they sink or swim on the selling of phones. I don’t think RIM has the cash and resources to compete with Microsoft, Google and Apple right now and with their current burn rate they are running out of time.
Third, the smartest thing Microsoft did was working with Nokia to build WP7 and now WP8 devices exclusively. The only manufacturer with a reputation for hardware build quality that rivals RIM’s reputation for building indestructible phones is Nokia. That means RIM won’t be able to easily tout their phones over WP8 phones on the basis of hardware quality.
Finally, and possibly most importantly, the past 5 years have seen a complete erosion of the power of IT managers in large companies. Five years ago it was unthinkable that anything but BlackBerrys would be deployed in large enterprises. RIM sold directly to IT managers and catered to their needs. IT managers love RIM because they make device management easy. Except … over the past 5 years employees have been screaming for (not literally, although one wonders at times) for iPhones, Android phones and tablet devices. And these metaphoric screams have come from both employees and executives. And CEOs and CFOs started to realize that letting employees who were demanding iPhones and Android phones bring their devices to work would save them millions in hardware costs. The end result of all this is that IT managers no longer control these purchasing decisions the way they once did. So, at the end of the day, the relationships RIM has invested with IT managers no longer give RIM a stranglehold on the enterprise market.
Why am I suggesting that the market won’t support N number of mobile operating systems? The history of the mobile phone market tells us that as recently as 6 years ago there were dozens of operating systems. The answer is apps. People want apps. Apps have created a paradigm shift in the mobile phone market. The device market now closely resembles the game console market. Game consoles live and die by the size and quality of their game library. Anecdotally, my wife was telling me that at her work – and she works in a place where people are definitely NOT technical – a common water cooler occurrence is someone showing off a new app. Everyone else immediately pulls out their phone to download the app. Those with BlackBerrys inevitably ask if the app is available for BlackBerry to which the response is almost always no. The BlackBerry owners then look sad and walk away.
Apps are the key to the success of BlackBerry 10. Good apps. Apps that everyone loves on iPhone and Android. (Even better would be exclusive apps.) Apps and content.
RIM clearly understands some of these problems. One thing announced at the keynote that was largely ignored was that RIM is adding movies, tv shows and music to the BlackBerry App World. RIM also made a big deal about having Facebook, Twitter, Foursquare and LinkedIn native apps for BB10 at launch. They also announced support from Gameloft, one of the largest iOS game developers. That said, there are gaps. No Netflix app. No Electronic Arts (EA) announcement. No Angry Birds. They need all of these missing pieces to be successful.
RIM has drastically improved their developer support, their APIs, and their tools. Because iOS and BB10 both support writing apps in C/C++ I’ve heard that it’s easier to port iOS apps to BB10. If true this is good news because it should make it easier for RIM to convince developers to port there iOS apps to BB10.
The other thing I noticed is that this conference is more frugal and rather empty compared to last year. Last year they gave everyone a PlayBook and a jacket. This year we got a t-shirt and a $10 gift card only usable at a gift shop they set up at the conference. In addition, this year there are noticeably fewer people attending. The keynote was half empty. (It was sad. No one clapped. There was no enthusiasm. I know the press was positive and that’s good news but comparing the keynote to last year’s keynote or the keynote at WWDC there was a stark contrast.)
RIM’s stock got a bump on announcing that they actually added 2M subscribers (bringing the total from 78M and 80M,) and the fact that BB10 is still on track for Q1 2013, but that stock bump may get reversed quickly during the next earnings call. I’m betting that the new subscribers came from developing countries where they sell cheaper devices. This means earnings may not be what people expect. Boy Genius Report (BGR) had an interesting article about RIM adding subscribers. They point out that BBM is very popular in developing countries because it was designed to run on the old pager networks so it uses very little bandwidth and in countries where data is expensive and people are poor. Being able to communicate cheaply is important. Plus without carrier subsidies, iPhones and Android phones are expensive but BGR also points out that you can now get cheap Android devices from China and there is an instant messaging app that has become more popular than BBM in some African countries, which means RIM may be about to lose market share in the last parts of the world where they are still seeing growth.
Clearly, the company’s fortunes live and die on the success of BB10. If BB10 isn’t a hit, I believe they’re done. The developer tools and support is there and the new OS actually looks really good, but consumers want apps and it’s not clear to me that developers still believe in RIM. (In fact at this conference RIM has launched an “I Believe” campaign asking developers to help them come up with 10,000 reasons developers still believe in RIM. Clearly this campaign is a sign that RIM also worries they’ve lost the faith of the development community.) Just weeks before this conference the NYTimes announced that they are no longer supporting their BlackBerry app. What will it take for RIM to lure the NYTimes back to their platform? Phone sales. What will it take for RIM to generate phone sales? Apps.
In my last session RIM touted the health of their app market, pointing out that they have 100,000 apps in BlackBerry App World and have reached 3B downloads. Impressive numbers, but just yesterday I read that Android now has 675k apps and reached 25B downloads. That’s a huge gap and one RIM clearly wants to address. RIM is launching a program whereby if a developer writes a BB10 app and that app fails to earn $10k, RIM will give the developer $10k. It’s a good idea on their part to create incentives for developers to produce quality apps for BB10. It remains to be seen if the steps they’ve taken are enough, and if they’ll be able to compete. (The $10k offer is nice, but how much money has Microsoft set aside to lure developers? RIM is capping payouts at $10M. When Microsoft launched WP7 they gave Polar Mobile alone $25M to develop WP7 apps for that launch.)
Anyway those are my thoughts on the conference so far.