Innovate or perish

Anchors and guests at Bloomberg TV and CNBC programs have lately been trying to dissect what happened with RIM or Research In Motion, a former tech darling best known for the iconic BlackBerry. Over the past year, it had been eclipsed by Apple’s iPhone and the other smart phones powered by Google’s Android operating system.

Reports have it that the iPhone now outsells the BlackBerry on its home turf in Canada. I know that place where the BlackBerry was born… Waterloo, Ontario, not too far from Toronto. I was with a group of Asean journalists that received an extensive briefing and plant tours of what Canada calls its techno hub, their version of America’s Silicon Valley. What I saw was impressive.

But that was about 10 years ago… more than a lifetime in techno years. One of the major companies we visited, Nortel, another Canadian techno super brand is no more… likely out innovated too.

RIM was Canada’s crowning glory. Everyone we met at Waterloo was proudly singing praises to the BlackBerry and its founders. It was easy to see why. It enabled people to quickly access their e-mails wherever they are. BlackBerry Messaging kept you securely in touch with anyone anywhere in the world similarly equipped. Even US President Barack Obama swore by his BlackBerry.

So, what happened? In so many words, RIM failed to innovate. And it also forgot customer focus. Or more precisely, it ignored the challenges of the new smart phones, confident that it had a solid perch in the market.

In a sense, other iconic companies thought that way too just before their demise. Kodak comes to mind. Or more recently, Sony, now fighting for dear life. In the fast moving tech market, the prevailing rule still is: innovate or perish.

It also didn’t help BlackBerry when its Internet services crashed October last year, with no immediate explanation from RIM on what happened or how long services would be down. Tools including the Internet, e-mail, Twitter, BlackBerry Messenger and Facebook, were unable to send or receive data. Users from Africa, Asia, Europe and the Middle East were most affected.

Many BlackBerry users took the outage good spiritedly. “It’s thoughtful of BlackBerry to honor Steve Jobs by having two days of silence,” one tweet joked. Another user also joked: Do you know what the iPhone said to the Blackberry? “iWork”. Said another: Someone stole my BlackBerry yesterday. It has since been returned.

The Financial Times reports: “The title of a Barclays analyst note about Research In Motion, the Canadian maker of BlackBerry smart phones, said it all: ‘Grim and getting grimmer.’” Continued the FT: shareholders have seen the stock’s value plunge 64 percent in the past year, shrinking its market capitalization from a peak of $78.32 billion in May 2008 to just $7.25 billion. US market share dropped from 42 percent in February 2010 to just 15.2 percent last month.

Once synonymous with business, BlackBerry has lost its grip. The FT thinks “RIM’s senior management underestimated the impact of the iPhone. The FT quoted a professor of strategy from the Tuck School of Business: “They looked at the iPhone and dismissed it just like Nokia had done.” RIM, like Nokia and Motorola, were caught offguard, the FT said, when change came upon the mobile world.

It wasn’t that difficult to miss the signs of impending decline. My son loved his BlackBerry but even he couldn’t resist the new iPhone 4S when it was launched last year.

RIM should have seen it coming. But RIM allowed itself to be complacent. Things got so bad that the co-chairmen who founded RIM, had to resign. Now they also resigned their board seats altogether to give way to a total reappraisal of where RIM is. The new CEO even raised the possibility of selling the company, assuming there are willing buyers.

Apparently, there are two major changes in the market RIM ignored: the attractiveness of smart phone functionality with regards to accessing web-based services; and in the corporate world where RIM is strongest, IT departments started allowing employees to bring in their own devices. Thus, consumers, as opposed to corporate IT departments, started to dictate which devices drive business use.

Because 52 percent of businesses allow employees to BYOD (bring your own device), it is the typical consumer, and not the IT administrator, who BlackBerry must now woo, Digital Trends observed. As one report puts it: “While BlackBerry represents a median of 70 percentof company-purchased smart phones in use now, that percentage plummets to 25 percent when respondents look ahead 24 months.” 

By failing to innovate, RIM forgot the consumer. They lost their once significant technological advantage in things like push e-mail and mobile security. “What’s happened over the past few years is that Apple and Android have caught up with them… They definitely had something special maybe three or four or five years ago. It really feels like everybody has caught up.”

Here in the Philippines, BlackBerry seriously damaged its brand by introducing less than capable models through the telcos. Their Curve model that was provided to me by Globe sucks big time. It is total frustration trying to get any website on it and it frequently freezes when I try to respond to mail or even just to browse Twitter or Facebook.

My wife who uses an iPhone 4s is able to use Facetime to see and talk to our children and grandchildren abroad for free… and effortlessly update her Facebook status. I can only look in envy.

Is there hope for the BlackBerry? If you listen to the analysts on Bloomberg and CNBC, RIM is a Kodak in the making. And who wants be left holding an orphan mobile device? They are doing nothing to inspire confidence for the company’s and the brand’s survival. A tough new German-born CEO who lived through the demise of Siemens’ mobile phone unit is now in full control.

When Bloomberg’s Businessweek magazine asked him “if RIM managers can make the tough decisions needed to keep pace with the alligators and hammerheads in Cupertino and Mountain View”, he replied: “Canadians are very cautious. It’s a good human attitude, not hurting anyone, being really careful. That was something I had to learn here.” Germans, he said, tend to be more blunt. He said that in order to steer the company back on track he is willing to play the role of the hard-charging German.

Businessweek surmised that “RIM’s best hope for navigating safely out of the valley of the shadow of death is to convince business professionals that they don’t have to abandon their BlackBerrys in search of things like faster Web browsing and better apps, but that they ought to trade in their trusty BlackBerry for a new one.”

But, Businessweek warned, it will be tough. RIM must now face competitors with deep pockets. It doesn’t matter if RIM still has $2 billion in cash on hand. It has to face Apple with its $40.9 billion war chest, Microsoft has $26.7 billion, and Google has $11.1 billion. And in emerging markets, RIM will be under increasing pressure from low-cost, discount handset vendors. Serious threats abound on the high and low ends of the market, Businessweek concludes.

The German born CEO described his mission well: to effectively differentiate the BlackBerry in a way that consumers will find attractive. “Now if you go exactly where your competitors are, you’re dead,” he says. “If we try to be Apple, we will fail.”

Innovation and customer focus. Things companies today cannot afford to forget.

A bedtime story

Man in bed with wife, slides his hand slowly across her back and shoulders, down towards her legs, moves back towards top and stops.

Wife gasps: “Why did you stop?”

Man: “Found my BlackBerry, you can go to sleep now.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco