2010. 12. 2. 09:44
[Business]
The story.
Research in Motion is a leading manufacturer of wireless devices. The Canadian company’s breakthrough product was and continues to be the BlackBerry. However, the business faces a number of strategic challenges. RIM has seen its stock performance stagnate while rivals such as Apple and Google have performed strongly and started to erode its market dominance.
The challenge.
A number of strategic shifts in the smartphone market have affected the company adversely.
First, Apple has fundamentally changed the sector with the launch of the iPhone. The device has established a dominant position, especially in the consumer segment, and is now making inroads in the corporate market that has traditionally been BlackBerry’s dominant space. More recently, Apple has entered the tablet PC market with the iPad.
Second, the sharp growth in take-up of smartphones using Google’s Android operating system is also eating into BlackBerry’s market share.
These two challenges have had a double-whammy negative impact on RIM as both volume growth and margins have eroded with increased competition.
How is RIM responding.
While some investors and analysts have called for a dramatic change in RIM’s operations, others fear that the company will dilute its core competence by trying to compete with the iPhone and the Android platform.
Instead, RIM has taken a multipronged strategic approach. First, the company has strengthened its presence in the enterprise market by introducing a number of new BlackBerry models, many of which have improved touchscreens to make the user experience more akin to competitor devices. It has also trumpeted the data security of BlackBerrys, which offer heavily encrypted communications services.
Second, the company has made strides in getting its “App Store” off the ground. While it still lags behind the iPhone and Android app stores, it has reached a critical mass with more than 15,000 apps, which at least gives it a presence.
Finally, RIM is entering the tablet market with the expected launch of the PlayBook in early 2011.
Key lessons.
First, the danger for any company with a blockbuster product is a sense of invulnerability. The BlackBerry has been a gold mine, given its dominance of the enterprise market for wireless technology. However, as the success of the iPhone and Android platforms have proved, this is not enough in the long term.
Second, companies must not just stick to their knitting – especially when everyone else learns how to knit. This is especially true in the technology industry, where the parameters of business change quickly and disrupters are constantly challenging established players.
RIM must learn to make its products not only effective and powerful but appealing as well. For a long time, RIM relied on the assumption that companies would require employees to use the BlackBerry platform, an assumption that has weakened over time.
Third, companies need to consider all potential competitors. Both RIM and Apple are guilty of focusing too much on each other, and being slow to recognise the growing threat from the Android platform.
RIM will have to compete both with the style and finish of the iPhone, as well as the open-source driven flexibility and lower cost of Android.
The verdict.
RIM’s multi-pronged approach should help it prevent further declines in market share and consolidate its position.
In recent years, avid BlackBerry users were tempted by the iPhone. Now, the BlackBerry line has all the multimedia functionality of the competitors, along with its core strength of security.
The company’s recent marketing strategy showcasing the multimedia and social networking functionality of devices also suggests that RIM is serious about expanding its consumer market share.
Finally, RIM is making a serious attempt to enter the tablet market. While it is unlikely that the PlayBook will overtake the iPad in terms of volume sales, it could be the Apple’s most credible challenger as it is aimed at RIM’s core business users.
- Financial Times, 1 Dec 2010
Research in Motion is a leading manufacturer of wireless devices. The Canadian company’s breakthrough product was and continues to be the BlackBerry. However, the business faces a number of strategic challenges. RIM has seen its stock performance stagnate while rivals such as Apple and Google have performed strongly and started to erode its market dominance.
The challenge.
A number of strategic shifts in the smartphone market have affected the company adversely.
First, Apple has fundamentally changed the sector with the launch of the iPhone. The device has established a dominant position, especially in the consumer segment, and is now making inroads in the corporate market that has traditionally been BlackBerry’s dominant space. More recently, Apple has entered the tablet PC market with the iPad.
Second, the sharp growth in take-up of smartphones using Google’s Android operating system is also eating into BlackBerry’s market share.
These two challenges have had a double-whammy negative impact on RIM as both volume growth and margins have eroded with increased competition.
How is RIM responding.
While some investors and analysts have called for a dramatic change in RIM’s operations, others fear that the company will dilute its core competence by trying to compete with the iPhone and the Android platform.
Instead, RIM has taken a multipronged strategic approach. First, the company has strengthened its presence in the enterprise market by introducing a number of new BlackBerry models, many of which have improved touchscreens to make the user experience more akin to competitor devices. It has also trumpeted the data security of BlackBerrys, which offer heavily encrypted communications services.
Second, the company has made strides in getting its “App Store” off the ground. While it still lags behind the iPhone and Android app stores, it has reached a critical mass with more than 15,000 apps, which at least gives it a presence.
Finally, RIM is entering the tablet market with the expected launch of the PlayBook in early 2011.
Key lessons.
First, the danger for any company with a blockbuster product is a sense of invulnerability. The BlackBerry has been a gold mine, given its dominance of the enterprise market for wireless technology. However, as the success of the iPhone and Android platforms have proved, this is not enough in the long term.
Second, companies must not just stick to their knitting – especially when everyone else learns how to knit. This is especially true in the technology industry, where the parameters of business change quickly and disrupters are constantly challenging established players.
RIM must learn to make its products not only effective and powerful but appealing as well. For a long time, RIM relied on the assumption that companies would require employees to use the BlackBerry platform, an assumption that has weakened over time.
Third, companies need to consider all potential competitors. Both RIM and Apple are guilty of focusing too much on each other, and being slow to recognise the growing threat from the Android platform.
RIM will have to compete both with the style and finish of the iPhone, as well as the open-source driven flexibility and lower cost of Android.
The verdict.
RIM’s multi-pronged approach should help it prevent further declines in market share and consolidate its position.
In recent years, avid BlackBerry users were tempted by the iPhone. Now, the BlackBerry line has all the multimedia functionality of the competitors, along with its core strength of security.
The company’s recent marketing strategy showcasing the multimedia and social networking functionality of devices also suggests that RIM is serious about expanding its consumer market share.
Finally, RIM is making a serious attempt to enter the tablet market. While it is unlikely that the PlayBook will overtake the iPad in terms of volume sales, it could be the Apple’s most credible challenger as it is aimed at RIM’s core business users.
- Financial Times, 1 Dec 2010
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