Musthafa Ebadi
Is RIM The Next Nortel?
by Musthafa Ebadi on August 25th, 2011

Tuesday, July 12, 2011

As shareholders of Research In Motion Ltd. prepare to meet tonight in its home base of Waterloo, Ontario I started thinking what has really impacted Canada's biggest and best smartphone maker that has seen the nearly US$80-billion it once commanded in market capitalization just three years ago plummet to a comparably meager US$15-billion today.

I started to capture my thoughts and I realized that RIM's decline has been a function of several factors. I have detailed few of them here:

Competition:Three or four years ago there was nothing called Android, Nokia was restricted to people who wanted a mobile phone (not Smart Phone) and while iPhone was cool to have consumers and businesses were not sure about its long term sustainability. RIM had monopoly in the world of Smart Phones that it has started to lose slowly and gradually.

Data Plans: I remember four years ago as a senior manager of a large contact center in Ottawa, Canada I didn’t have a data plan because it was too expensive both for my company to arm all its managers with one and also for me at a personal level. With the advancement of technology, ease of access, and price drop in cost of data plans today my 20 year old brother who is in his 2nd year of University has a Smartphone (albeit iPhone 4) with full Data access in his back-pocket.

The ease of affordability of Data Plans was a significant turning point in Smart Phone industry for it created a new market that all cellphone makers tried to transition from a traditional mobile phone to a Smart Phone ultimately making them a competitor of RIM instantaneously.

Ineffective Marketing: I don’t claim to watch a lot of TV but do watch few hours a day (more during the hockey season) and to date I have not seen a catchy, or effective BlackBerry ad. All their advertisements and their marketing is focussed on features and benefits that are way to technical or complicated for an average user.

No Innovation: Over the last 4 - 6 years RIM really hasn’t come up with an innovating solution/product that can wow the market. Time and again every new product release of RIM is over hyped and time again it falls below the expectation. They have always over promised and but under delivered. If I look at my Blackberry Bold 9760 that I got less than two months ago and look at the Blackberry Curve that has been in the market for over 5 years I really don’t see any distinct difference right away.

BYOD: For those not familiar with the acronym it stands for Bring-Your-Own-Device. In the last 9 - 12 months this phenomena of bringing your own device has gained a huge steam and businesses are now shifting from forcing a blackberry on the desks of each employee who is entitled to a company phone to letting their workforce choose what type of device they want to bring. ( I do believe that this shift in paradigm will soon extend to laptops, monitors, and tablets) but it is in full force now in a lot of organizations when it comes to Smart Phones. The adoption of this program - even at the mobile phone level - by any organization is cutting into RIM's dominance in that organization and many other organization around the world overnight.

This to me is the biggest reason for RIM's decline. As stated previously the lion's share of RIM's business was driven by the corporate users who were all using RIM's Blackberry device as dictated by their IT department. Now that they are given a choice and they rather bring a "cool" (innovation), popular, and easy to use device instead of the secure, reliable, and traditional BlackBerry.

Above are the five reasons why I think RIM is where they are, and if they don’t change the course it might even get worse. I will propose few solutions that can bring RIM back to its dominance in this blog tomorrow so stay tuned!

Personally I am a proud Canadian and will always champion Canadian products and solutions but in my opinion RIM does need to come up with a game changing strategy or it could no longer be pride of Canada and potentially become another Nortel. Its like leading a hockey game for 40 minutes by a score of 1 - 0 but now at 50th minute trailing it by 2-1, you have 10 minutes to score atleast a goal, hopefully 2 to get back in the game or win it but if you wait to long the time might just run out.

Lets hope for the sake of RIM, its work force, its diehard fans, Canada and Canadians they can turn this game around!

Visit tomorrow for my take on proposed solutions to change the course of this ship.

Thanks for Reading!

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