RIM's new CEO could license BlackBerry software to rival vendors

[nsane.forums]

Research In Motion rose to prominence (and domination of the smartphone market) by controlling both the hardware and software used in its phones, but the company now finds itself behind Apple's iPhone and Google's Android mobile operating system. Looking up at its competitors, RIM sees two models: Apple's, which is very much like its own, and Google's, which licenses the Android software to a variety of hardware makers.

RIM has been in turmoil as of late, losing 75 percent of its stock value in the past year. The company also suffered market share losses, an embarrassing service outage, disappointing sales of its PlayBook tablet, delays in bringing out new software, and rumors that it's an acquisition target. While RIM seems unlikely to ever regain its top position in the smartphone market, some observers have argued that licensing BlackBerry software could help it maintain relevance.

An analyst at the Jefferies & Co. investment firm sees "RIM likely agreeing to license Blackberry 10 to Samsung, HTC, and possibly others. This would help create a critical mass for the ecosystem and maintain RIM’s monthly service revenue; however, it puts more pressure on the hardware business in the short term. Longer term, it possibly gets people hooked on the RIM ecosystem and may in fact allow them to sell more BB 10 handsets (if they are able to create compelling handsets)."

New CEO, new strategy?

That quote was from the beginning of January. On Sunday night, RIM's longtime co-CEOs Mike Lazaridis and Jim Balsillie stepped down to make way for new CEO Thorsten Heins, previously chief operating officer. At that time, Heins promptly revealed that he is open to licensing the BlackBerry software to competing hardware makers, but made no firm commitment.

"Referring to other handset manufacturers using Android that have seen poor financial results as Google’s Android spreads, Mr. Heins said that it makes sense for the company to continue to develop its own software platform," a report in the Globe and Mail stated. "But he stressed that he would be open to talking with other handset makers about licensing RIM’s own QNX-based BlackBerry 10 software."

Allowing other hardware makers to sell phones based on BlackBerry software would be a big change in strategy. RIM says it is committed to its own software, even though it has taken steps to integrate Android apps into its own devices.

“I think it’s that unwillingness to sacrifice our long term value for short term gain,” Lazaridis said. “That’s why we didn’t choose Android. That’s why we decided to build the future on QNX.”

Although Heins said "[w]e didn't stand still in the last 18 months, we did our homework," the industry is still waiting for BlackBerry 10, which will work across phones and tablets. In an interview with the New York Times, Heins said BlackBerry 10 is incomplete but will be ready before the year's end—which could be any time in the next 11 months.

“Would we have loved BlackBerry 10 to be out earlier?” Heins said. “Yes, sure. But we had to manage a very, very challenging situation where we need to continue our growth based on the existing BlackBerry platform and we had to transition the company. I can’t tell you how much effort, hard work it is to architecture a new platform, build it and bring it to market within 18 months’ time.”

RIM aiming for a top-three position in smartphone market

posted to YouTube, Heins said his goal is for RIM to be one of the top three players in the worldwide wireless market. That would require moving past Symbian's market share and staying ahead of Windows Phone. "At the very core of RIM is our innovation," he said. "We always think ahead, we always think forward, sometimes we think the unthinkable."

But the pace of innovation at Apple's and Google's smartphone operating system development teams have clearly outstripped RIM's. Perhaps offloading some device manufacturing responsibility to hardware vendors would help RIM focus on becoming a better software maker, and get more appealing devices on the market.

Heins said not to expect any "seismic change" in RIM's strategy. Whether RIM decides to license its OS or stick only with its own hardware, the company will have to dramatically improve the software to compete in the consumer market against Apple and Google. RIM also must deliver on its core propositions of excellent security and management to enterprise customers, who are increasingly seeing use of iPhones and Androids in the workplace. RIM is starting to do this by offering mobile device management software for Android and iOS. With the likes of Microsoft pushing cross-platform mobile management tools, this step was necessary for RIM to hold its position in the market for business-focused mobile management tools.

With 70 million subscribers, RIM is still a company with a large customer base. But as the new CEO, Heins will have his work cut out for him in both the consumer and enterprise markets. Licensing BlackBerry software is one option. But no matter who makes the hardware, RIM must move faster in bringing out a next-generation mobile operating system.

View: Original Article