Repairing a broken RIM

RIM has announced that Jim Balsillie and Mike Lazairidis have resigned their position as co-CEO and co-Chairman, and that RIM’s board of directors unanimously named former chief operating officer Thorsten Heins as president and CEO. Barbara Stymiest, CEO of the Toronto Stock Exchange will become independent board chair.

Heins already faces a number of significant challenges. Rim continues to struggle against rivals, especially in the US market. Product launches have been flawed, and the roadmap forward is unclear. Heins himself is seen as a fresh set of hands to run the business, but is not widely viewed as the visionary leader that RIM needs to reset the bar a failing brand.

If Heins is to capitalize on the opportunity, and for RIM to have a genuine chance at regaining momentum, his first step will be to stabilize initiatives already underway and prevent any short term missteps. It will also be critical that Heins quickly brings serious management and creative talent to the table – quelling some of the fire sale rumors and giving shareholders confidence in a long term strategy.

Read more in these articles:

WSJ

Engadget

InfoWorld

“All but death can be adjusted” – Does RIM have the desire to win?

Emily Dickinson eloquently portrayed how dynasties can be repaired – and the only thing exempt from change is ultimate demise. For many years, RIM was the undisputed leader in mobile email and messaging. They set the industry standard and created the performance benchmark, and helped propel mobility into the mainstream of business. Unfortunately, recent media almost exclusively focuses on their diminishing market share, bad management, poor tablet strategy, and how the Blackberry brand is entangled in a downward spiral of obsolescence.

These observations have strong elements of truth – RIM is being taken to task by hungry, agile competitors with a clear vision for the global mobile ecosystem. It needs to reengineer its brand, product portfolio and go to market strategy in its entirety to compete. Nothing can be left “as is”, since this is honestly how they arrived in their current state.

As early as 2006, before the formal launch of the iPhone, RIM had already buried its head in the sands of arrogant market leadership. Whimsical quotes about the challenges of typing on a glass screen, security issues, carrier-friendly efficiencies and other “obstacles” for iPhone adoption were launched from the RIM marketing machine. When the iPhone did launch, it garnered nearly 20% domestic market share in less than six months. Soon after, Apple was selling more iPhones monthly than RIM moved in an entire quarter. Alarms were sounding. Apple had, for all intents and purposes, completely reset expectations of the smartphone experience. RIM missed this crucial point, focusing instead on historical demand patterns and accomplishments.

Instead of taking tangible action to address new competition, the market was treated to more quotes on elusive strategies yielding little result.

“I wouldn’t underestimate the amount of research we’ve done on user interfaces and technologies. We are not afraid to reinvent ourselves.”

We’re still waiting for reinvention, and it may be too late. Apple and Google are nimble, cash-rich and willing to innovate rapidly. They are well positioned in adjacent markets to fully exploit opportunities far beyond handsets and the OS. Paramount to their success, they understand clearly the role of the product, consumers, developers, and the larger revenue-generating ecosystem surrounding their platforms. Even Microsoft is posturing for a strong re-entry into the marketplace and is slowly building credibility through enhancements to Windows Mobile. It’s next release due this fall, Mango, integrates multiple points in the Microsoft product portfolio – and represents a giant leap forward in Microsoft’s global approach.

RIM needs to follow a similar path.

The road to recovery starts with changes at the top, most notably the RIM leaders we see publicly every day portraying a reality that is well removed from the truth. No one can dispute Mike Lazaridis and Jim Basille played key roles in building RIM to fantastic levels of success. Unfortunately, given at least four years of public miscues and product challenges, it is time for change. Rebuilding the brand and creating a new organization will require fresh leadership, signaling acknowledgement of the issues and potentially slowing the downward pressure on RIM’s stock.

RIM also needs to quickly hit a “product home run”, developing a handset or tablet that creates genuine emotion and loyalty. The PlayBook is not that device. Historically, RIM has been part of the all star team in terms of game-changing handsets that push the industry forward: the StarTac, BlackBerry 957, RAZR, Nokia 9000, the “Blueberry”, iPhone and others. All of these products were surrounded by stellar marketing that created fanatical consumers. More important, they were products that worked well, delivered as promised, and were surrounded by organizations with vision and focus.

Ironically, the biggest opportunity for RIM to recover may lie in the Blackberry suite of software and infrastructure services. Blackberry Enterprise Server, MVS, Pushcast, hosted infrastructure and even Blackberry messenger represent a massive installed base of touch points to be monetized. This could be the saving grace, if they aggressively pursue interoperability and invest in their developer community with strong corporate commitment. Enterprises are ready to open the door to app stores and secure consumerization, unified communications is poised for critical mass, and messaging continues to grow at hockey-stick trajectories. RIM is uniquely positioned to be disruptive, and it’s time to take the restraints off the employees who see the opportunity and can make it happen.

Time is running short for course-correction, as the organization grows more attractive every day for acquisition. It would be healthy for the marketplace, and beneficial to consumers, to have a strong RIM competing for business globally. It would also be good to see a world-class organization regain its culture of innovation and succeed.

Verizon to announce iPhone offering today

According to multiple sources, including the Wall Street Journal, Verizon will formally announce later today the carrier will begin offering the Apple iPhone at the end of January. This will mark the end of AT&T’s exclusivity deal with Apple regarding the devices, but also represents a pivotal moment for both AT&T and Verizon in terms of Wall Street and network performance.

The impact to AT&T could be substantial given the network capacity and quality issues that subscribers have reported, leading to frustrations that could result in a switch of service providers. Quarterly churn numbers could jump significantly if there’s a mass exodus from AT&T, but that’s not likely. A vast majority of AT&T’s installed base of iPhone users are tied to family or corporate plans, making it more difficult to switch without prohibitive financial penalties.

The network capacity and quality issues caused by an overwhelming amount of data traffic on AT&T’s network could replicate themselves on Verizon’s network as well. While Verizon maintains their network is ready to handle the demand, there’s no guarantee and no way to predict what actual demand will be. For example, several studies have cited that Android users (the bulk of Verizon’s non-Blackberry smart phone portfolio) use more data than current iPhone users on AT&T’s network.

Perhaps the most significant difference (and differentiator) in the network offerings of AT&T and Verizon is the ability to talk and use data simultaneously – an advantage AT&T has leveraged in the marketplace since launching 3G services. This functionality is important to many subscribers, and may prove problematic for Verizon if the majority of potential new subscribers are not aware of the technology difference.

The most interesting metric to observe, if the announcement happens as planned, will not be the bleeding of customers from AT&T to Verizon – it will be the battle for market share between Android, Apple and RIM in the Verizon customer base.

Given the announcement is still pending, Telwares believes:

- Verizon will announce the iPhone with an unlimited data plan, attempting to lure dissatisfied AT&T users across carrier lines and attracting smart phone upgrades within their installed base of subscribers.

- Verizon will have 7 to 9 million iPhones in its subscriber base by the end of 2011.

- Verizon will not experience the network issues that AT&T has endured; all service providers are now beyond the shock factor of data usage from smart phones, and Verizon has the advantage of the lessons learned from AT&T’s deployment.

- AT&T’s quarterly churn numbers will be moderately impacted, but will not drastically impact stock price during 2011.

Smart Phone Sales Projections Raised

Mobile phone vendors are projected to ship 55.4% more smart phones this year than they did in 2009, according to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker.

IDC raised its projection 10% from its previous forecast after several new models were released recently, including the BlackBerry Torch, EVO 4G and iPhone 4, the research firm explains in a press release. Device vendors are now expected to ship 269.6 million smart phones this year, up from the 173.5 million sold in 2009.

While a majority of those devices will be sold to consumers, enterprise IT departments will continue to see increases in the number of requests they get to support individually purchased smart phones.

Android and iOS devices have stolen market share from traditional players like RIM and Microsoft, and Android is on track to be the fastest-growing operating system over the next five years, IDC’s study reveals.

Android will cut into Symbian’s share, but expect Symbian to retain its leadership in smart phone sales, IDC says. Windows Mobile is projected to regain lost share and BlackBerry devices will retain their current level of popularity, while iOS phones will decline gradually, the study finds.

The smart phone market will remain fragmented, supporting as many as five operating systems during the next five years.

The booming yet fractured smart phone market makes it even more critical that enterprises understand, evaluate and take action on their mobility strategies including device procurement, policies, liability models and expense management, Telwares’ mobility experts add.

Enterprises should also be actively planning on the integration of mobile end points into their overall network strategy. More devices are hitting the market every day that can support and satisfy end-user computing requirements, and this will have a drastic impact on planning, sourcing, implementing and managing next-gen networks.

RIM and Nokia Fight Back after Apple Press Conference

Apple CEO Steve Jobs had to know he was opening a can of feisty worms when he accused RIM, Nokia and other handset manufacturers of the same antenna design flaw that’s haunted the launch of Apple’s iPhone 4.

Users report dropped calls and weakened signals when holding Apple’s iPhone 4 a certain way. Jobs defended the phone at a July 16 press conference and offered free “bumpers” to prevent signal disruption.

Jobs tried to deflect criticism by characterizing antenna problems as a challenge faced by the whole wireless industry, and then pointed to alleged similar flaws with the BlackBerry Bold 9700, HTC Droid Eris and Samsung Omnia II.

It took only hours for RIM to defend its BlackBerry antenna design:

“Apple’s attempt to draw RIM into Apple’s self-made debacle is unacceptable,” say RIM co-CEOs Mike Lazaridis and Jim Balsillie in an official statement posted on Crackberry.com. “Apple’s claims about RIM products appear to be deliberate attempts to distort the public’s understanding of an antenna design issue and to deflect attention from Apple’s difficult situation.”

“RIM has avoided designs like the one Apple used in the iPhone 4 and instead has used innovative designs which reduce the risk for dropped calls, especially in areas of lower coverage,” Lazaridis and Balsillie continue. “One thing is for certain, RIM’s customers don’t need to use a case for their BlackBerry smart phone to maintain proper connectivity. Apple clearly made certain design decisions and it should take responsibility for these decisions rather than trying to draw RIM and others into a situation that relates specifically to Apple.”

Nokia also fought back with a statement. As reported by Engadget:

“We prioritize antenna performance over physical design if they are ever in conflict,” Nokia says. “Antenna performance of a mobile device/phone may be affected with a tight grip, depending on how the device is held. That’s why Nokia designs our phones to ensure acceptable performance in all real-life cases, for example when the phone is held in either hand. Nokia has invested thousands of man hours in studying how people hold their phones and allows for this in designs, for example by having antennas both at the top and bottom of the phone and by careful selection of materials and their use in the mechanical design.”

It’s unlikely that we’ll see the end of the antenna scandal soon. In the meantime, Telwares’ mobility experts urge enterprises to take the same measured approach to deploying the iPhone 4 as they would any other brand, carrier or platform. There’s no fundamental need for a change in direction for any enterprise evaluating the merits of deploying the iPhone to its user community.

Telwares instructs enterprise organizations that have already deployed the iPhone 4 to closely scrutinize their commercial agreements with AT&T to determine device support from multiple channels, how they can approach implementing the remedies Apple has outlined with minimal business interruption and the contractual implications where the need to terminate specific services exists.

NTP Sues Apple, Google, HTC, LG, Microsoft and Motorola

The company that sued BlackBerry maker RIM for patent violation and incited enterprise panic in 2005 is at it again.

Richmond, Va.-based NTP Inc. filed suit July 8 against Apple Inc., Google Inc., HTC Corp., LG Electronics Inc., Microsoft Corporation and Motorola Inc. in federal court. NTP alleges the six companies infringed on eight of its wireless e-mail delivery patents and wants the companies to pay licensing fees for using the technology.

There’s precedent from NTP’s suit against RIM: The BlackBerry maker was found to have willfully infringed NTP’s patents and the verdict was affirmed on appeal. RIM paid NTP $612.5 million to settle its patent infringement lawsuit in March 2006, which included a perpetual, fully paid license going forward.

If the court finds NTP’s new claims to be valid, the six manufacturers and developers named in the suit must pay the fees or cease use of the technology.

Telwares believes settlements and fees are the most likely outcome. As in the RIM case, NTP has little interest in stifling smart phone sales or use; its revenue will come from licensing fees.

So enterprises shouldn’t worry about losing their iPhones, Android handsets or Windows Mobile phones. The real question is whether licensing fees will increase device and service costs for enterprises, according to Telwares experts.

NTP is a privately held intellectual property firm and claims its founder, the late Thomas Campana Jr., invented wireless e-mail in 1990. NTP already has licensing agreements with RIM, Good Technology Inc., Nokia Inc. and Visto Corporation.

“Use of NTP’s intellectual property without a license is just plain unfair to NTP and its licensees,” says Donald Stout, NTP’s cofounder, in the company’s press release. “Unfortunately, litigation is our only means of ensuring the inventor of the fundamental technology on which wireless e-mail is based, Tom Campana, and NTP shareholders are recognized, and are fairly and reasonably compensated for their innovative work and investment. We took the necessary action to protect our intellectual property.”