When companies bottom out, they can either sink and disintegrate — or rebound. Research In Motion executives are making the case that rather than stay buried beneath the success of iPhones and Droids, their BlackBerry brand has actually begun a climb toward technological and consumer relevance in North America again.
As CEO Thorsten Heins and his fluid corps of top lieutenants prepared to meet stern-faced shareholders at RIM’s annual meeting on Tuesday in Ottawa, they’ve got a lot of explaining to do. Several days ago, Toronto-based Research in Motion announced larger-than-expected first-quarter losses, the planned layoff of 30 percent of its staff, and a delay in introducing its crucial BlackBerry 10 until early next year.
No wonder Heins and other top executives were out in force in an American Fourth of July Week, launching a public-relations blitzkrieg behind the seemingly fantastical idea that a comeback for the brand not only is possible but is inevitable.
RIM’s U.S. Managing Director Richard Piasentin told me that BlackBerry is basing its hopes on a number of factors of varying importance: the power of the coming BlackBerry 10 platform for mobile computing as well as smart phones; an intense refocus on RIM’s historical base of business customers; expansion in realms such as automotive telematics; and a marketing and distribution strategy that may take the brand in some new directions but is still being defined. BlackBerry largely has relied for distribution on wireless carriers’ retail outlets and a presence in general-merchandise retailers.
“We’re very focused on what we have to do both in the short term and long term, and very explicitly, in the context of a solid foundation, we’re here for the long haul,” Piasentin said. “We’re making very difficult decisions to make sure our operating model supports that perspective and are configuring our organization accordingly.”
Piasentin asserted that BlackBerry is going through “a transition — and that’s what it is — that all tech firms go through. The cycle gets repeated in every tech company out there. The difference between the good ones and the great ones is the way that they execute through it.”
The time BlackBerry must lay claim to any mantle of greatness, of course, is right now — when its executives probably would even be happy with a hold on mediocrity. With Apple iPhones, and other smartphones running Google‘s Android software, having gobbled away at BlackBerry’s market share over the past five years – and RIM clearly still reeling as it tries to find its footing — many outside experts already have forecast the demise of the BlackBerry brand.
Things certainly didn’t reflect well on the current appeal of BlackBerry a couple of weeks ago when I visited the lone U.S. standalone retail outlet that is totally dedicated to the BlackBerry brand. It’s a store in northwest suburban Detroit that is close to a cluster of office parks containing the kind of business customers who used to be rabid for “CrackBerries.” Yet on a weekday morning recently, the store was completely empty except for salesman Nathan Speidel, a lone figure behind the counter.
Twelve miles away, an Apple outlet in tony Somerset Collection mall in Troy, Mich., was buzzing like a digital beehive. At one particular moment there were 42 consumers in the store, which has about four times the square footage of the BlackBerry outlet. And there were no fewer than 21 blue-shirted Apple representatives counseling all those people on their purchases of iPods, iPhones and iPads – four staffers alone behind the store’s “Genius Bar” counter to answer Apple owners’ toughest questions.
To say that the scenes at the two stores recently were a metaphor for the divergent fates of the two companies would be to vastly understate the case.
Of course, how this lone outpost performs is only one indicator of the consumer appeal that BlackBerry has steadily, yet stunningly, lost over the last few years. Whether Heins and his totally reformulated leadership team have the strategy and wherewithal to pull out a comeback seemingly remains an open issue only to them. Most industry analysts already have essentially thrown a sheet over the body, saying that BlackBerry is finished as a consumer brand.
“That’s the way I see it,” said Harry Wang, director of mobile research for Parks Associates, a Dallas-based market research firm.
But Piasentin insisted that BlackBerry can still rely on the loyalty and interest of the core business consumer in a software platform that has always emphasized their needs and has offered them “quality and reliability and capability.”
BlackBerry also is redoubling its efforts to gain share of business and share of mind in long-time core constituencies of “enterprises, governments and the developer community,” he said. “The security promise of the BlackBerry infrastructure and brand allows developers and mission-critical clients to think up new and interesting applications in trusted environments,” he said.
Automotive telematics could be one fruitful area for any hopes for business renewal by RIM. More than 9 million cars have already been shipped with the brand’s QNX software, a telematics platform that is used in one form or another by most major auto brands. More than 5 million of those vehicles were shipped in North America, and about 40 percent of all vehicles sold in the U.S. rely on QNX.
QNX’s main expertise has been in the area of rear-seat entertainment, a sub-segment that BlackBerry admits is shifting with passengers’ use of tablets and smart phones. So BlackBerry’s new focus for QNX is cloud and device connectivity and the application platform, including traditional in-car instrument clusters, radios and navigation systems and connectivity to smart phones and other user devices.
Automotive connectivity might make for a good target. Though some automakers, such as Ford, were quick to recognize the imperative and the opportunity of in-vehicle connectivity, the industry as a whole has been uneven in its effectiveness in this developing arena, and even Ford has stumbled. Apple’s recent demonstration of some telematics possibilities for its Siri software was one illustration of the broad allure of this segment.
Heins has been trying to demonstrate BlackBerry’s automotive chops. At the BlackBerry World 2012 conference in May, the CEO himself took the wraps off a 2012 Porsche Carrera that had been outfitted with a prototype of a BlackBerry 10-based platform. He said the car itself was “a connected ecosystem” that included a telematics unit, dashboard applications, and screens in the back seats for videoconferencing — or gaming.
“These are not four different devices,” Heins pointed out to the assembled BlackBerry mavens. “They’re all run from one single, mobile-computing platform, which is BlackBerry 10. That is the power of BlackBerry 10.”
Piasentin declined to rule out distribution options as Research in Motion strains toward the delayed debut of BlackBerry 10 next year.
Despite the fact that the only BlackBerry-brand store open in North America is the one in Michigan, operated since its opening in 2007 by an outfit called Wireless Giant, Piasentin didn’t say his company wants to shut the store and declined to comment on the possibility of any more stores in North America. “These kinds of locations provide us the ongoing opportunity to evaluate retail-store concepts,” he said.
He was more affirmative about the handful of airport-kiosk stores, which also are run by Madison Heights, Mich.-based Wireless Giant. “BlackBerry is a brand that is very strong with folks who travel often, and they’re dependent on those devices and services to keep them on the move.”
Julie Uhrman, Ouya’s founder, seems shocked that the company’s in this field all by itself. “The ironic thing is, when I pitch people, the most common response is ‘Huh. Yeah, that makes a lot of sense, I can’t believe no one’s done that,’” Uhrman told me in an interview. “And I think it’s because it is such an entrenched business.”
