This past Thursday, RIM's co-CEO Jim Balsillie spun his best story, explaining why RIM would be able to compete in what he called the "Superphone" market space. Balsille also tried to clarify why the RIM's financials were not in line with Wall Street expectations, presenting a rosy picture in just a few quarters from now.
Unfortunately for Mr. Balsillie, renaming smartphones as "Superphones" won't change the Blackberry makers problems. RIM's margins are shrinking, and the physical keyboard market is limited. Making matters worse, RIM's efforts to counter the iPhone with their touch-screen Storm lineup has been a complete failure. RIM's best days are behind them. To make this perfectly clear, 2011 is the beginning of the end for RIM.
comScore's latest survey reveals Blackberry's slow decline, and trends like this can't be easily overturned in a few quarters as Balsillie suggests. RIM's decline in share has been in the making since the iPhone launched in 2007. RIM (and others) failed to understand the threat iPhone posed to the smartphone market, where incremental change had been the norm. RIM had defined what a business smartphone should — a phone with easy email and texting abilities. With the iPhone Apple redefined the smartphone market as a powerful computer in your pocket that's also a phone. Four years later RIM still is strugglng to achieve relevance in the new iPhone era they didn't define.
Scrambling to catchup to Apple and Google, RIM acquired QNX Software Systems in April, 2010. RIM's purchase of QNX is an attempt to leapfrog their aging and slow Blackberry OS. While the Blackberry OS seems destined to stay with the old guard Blackberry designs, QNX is to lead the next generations of Blackberry devices. Unfortunately, Jim Balsillie all but killed their new QNX platform by announcing that the QNX-based Playbook (tablet) could also run Android 2.3 applications. The idea of adopting such a strategy is not only desperate, but it's eerily similar to IBM's OS/2 Warp history, which RIM seems to know nothing about. Understanding OS/2 Warp's history is critical to understand, as it could be history repeating itself for RIM.
During the mid-80's IBM and Microsoft worked together to create IBM's OS/2, but Microsoft was also developing Windows. By 1990 the partnership split, with Microsoft's Windows 3.0 taking off, while IBM's OS/2 was caught lagging behind. In 1994 IBM released OS/2 Warp. Many new state-of-the art technologies were included in OS/2 Warp, but IBM's killer feature was that OS/2 Warp could also run Windows applications.
For developers, the main question was, "If OS/2 Warp could run Windows applications, why write applications for OS/2 Warp?" That was the quick end to OS/2 Warp. Developers chose Windows and OS/2 Warp wasn't able to deliver enough native applications to compete. Based on what Jim Balsillie outlined during Thursday's financial conference call, the situation for RIM appears eerily similar. Android developers will quickly ask the same question that Windows developers asked of OS/2 Warp and come to the same conclusion: There is really no reason to develop for the QNX Playbook, since the playbook will run Android 2.3 applications. Therefore they should continue to focus on Android and iOS development.
Many unknowns still exists, and it's not yet known how the Playbook will handle Android 2.3 applications. Has Android has been shoehorned into the QNX OS, or will Android applications run in some painful emulation mode? However it works out, RIM can't expect developers to come flocking to their new OS as long as it maintains Android application support.
From the consumer's perspective, it may appear to be a nice feature for the Playbook in supporting Android 2.3 applications. But the immediate question will be "Why not just buy an Android tablet instead?" From developer to consumer RIM has done themselves no favors by supporting Android applications, and it is likely to be the key reason in which Playbook dies a quick death. However sleek and clever the QNX OS may be, so once was the state-of-the-art OS/2 Warp — it didn't matter then and won't matter now.
RIM, once the inventor of a mobile, easy-to-use, corporate email solution, now finds itself grasping at straws with a bold face and a massive mistake on its hands. The only question remaining of RIM is whether they will be left dangling in the wind, or if Microsoft will buy them out to gain direct access to their business customers.
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