Why RIM Should Not Pull Back From The Consumer Market

RIM BlackBerry

This morning, it was widely reported that RIM, the maker of Blackberry smartphones, is to pull back from consumer markets for its devices. According to those reports, RIM is to re-focus its efforts on business users, where the device’s strengths such as security play more strongly.

The reports were based on comments made by recently appointed CEO Thorsten Heins, during his announcement of RIM’s quarterly report in which shipment and earnings figures fell below analysts’ expectations. I suspect that Heins’s comments about the consumer market have been misinterpreted – and indeed, subsequent clarifications issued by RIM suggest that claims that it will withdraw from the consumer market are, in fact, misleading.

It clearly makes sense for RIM to re-focus its efforts on its core strengths, and on its enterprise customer base. But in my view, it would be a mistake for RIM to lose sight of the consumer market as a consequence of that re-focus. RIM’s initial reactions to this morning’s media stories suggest that it sees things the same way.

Superficially, the idea of pulling back from consumer in order to re-focus on enterprise might seem to make some sense. But once you start thinking at the next level down, you realise that the specifics of pulling back from the consumer market are highly problematic.

Firstly, there’s the question of what specifically it means in practice to “pull back from the consumer market”. Does it mean: stop selling Blackberries through mobile operators’ retail channels? It would seem suicidal to choke off that channel to market. Perhaps it means stop selling low-end devices? That looks a little less self-defeating at first, but we think it would also be a mistake, as I shall explain in a moment.

Maybe RIM intends to kill BBM? It would seem perverse for RIM to kill its only recent product or service innovation that has been an unqualified success. Maybe RIM intends to kill App World? Given that the range of apps available for a device has become one of a device’s principal selling points, that would be risky, to say the least. And if RIM does not intend to stop doing any of those things, then what exactly might it intend to do, in practice, that would constitute “pulling back from consumer”?

Let’s look at this a slightly different way. The Blackberry’s glory days lasted up to the mid 2000s. Then Apple’s iPhone came along. Ever since then RIM has been letting Apple decide what game it should be playing, and not winning that game. It happened first with all-touch phones (the Blackberry Storm versus the iPhone), and then it happened with application storefronts (App World versus the App Store), and most recently it happened again with media tablets (Playbook versus the iPad).

So maybe RIM should stop playing Apple’s games, and start playing its own games instead. In that context, one possible manifestation of “pull back from consumer”, namely stop making low-end devices, makes even less sense. Apple does not make phones for the masses: Apple makes expensive devices for affluent buyers, and has made very few exceptions to that strategy during its history. (The only substantial one that springs to mind is the iPod Shuffle.) Low-end devices are not Apple’s turf, so if RIM wants to stop playing Apple’s game – and that would certainly make sense – then that would indicate an increased focus on low-end devices.

Lastly, let’s consider this not as RIM pulling out of existing markets, but as RIM re-doubling its efforts in its core market, the enterprise. Even in that context, “pull back from consumer” looks illogical when you think about it. The major trend in enterprise procurement today is Bring Your Own Device (BYOD) or, to use its rather instructive shorthand name, “consumerisation”.

In other words, rather than the enterprise centrally selecting and buying devices, enterprise employees select and buy their own devices, and enterprises make them work with corporate systems. It’s called “consumerisation” because it means increasingly that enterprise devices are being bought by consumers.

That being the case, it would be a strategic error for RIM to start relying on central purchasers to buy its devices at exactly the time that central device buying commences a long-term decline. And if RIM did make that mistake, it would be an especially ironic one. After all, the Blackberry’s success was founded partly on BYOD: powerful corporate executives bringing in their new Blackberry, giving it to the IT guys and saying: “make it work”.

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John Delaney joined IDC in 2008 as research director of the Consumer Mobile service. In this role he is primarily responsible for research into telecoms and media services aimed at individual end users. A well-regarded industry commentator and analyst, John is a frequent contributor to the business news media and is a regular speaker at industry events such as seminars and conferences. Before joining IDC, he was a principal analyst in the consumer practice at Ovum. He has a BSc in physics from the University of Warwick.

  • RIM’s PR company in the UK sent me this email response to John’s post:

    PatrickSpence, SVP & Managing Director, Global Sales & Regional Marketing, RIM said:

    “The claim that RIM has said it will withdraw from the consumer market is wholly misleading. Whilst we announced plans to re-focus our
    efforts on our core strengths, and on our enterprise customer base, we were
    very explicit that we will continue to build on our strengths to go after
    targeted consumer segments. We listed BBM, as well as the security and
    manageability of our platform, amongst our strengths.”

    Thorsten Heins RIM CEO confirmed on the call:

    “Whilst we announced we would refocus on the enterprise business, we also stated part of competing in the ‘bring your own device’ segment is to create a compelling consumer offering.”Ahead of the BlackBerry 10 launch and throughout the remainder of our FY13, it is critical that we drive BlackBerry 7 sales to sustain the subscriber base. To do this we plan to aggressively incentivize sales of BlackBerry 7 smartphones to both drive upgrades from older BlackBerry products to BlackBerry 7 and to attract feature phone customers to BlackBerry 7 for their first smartphone experience.”We have new BlackBerry 7 devices scheduled to come out in the next few months to reinvigorate our position in the key entry level smartphone segment, to support our efforts to continue growing our subscriber base by upgrading feature phone customers to smartphones.”We will seek partnerships to deliver those consumer features and content that are not central to the BlackBerry value proposition, for example media consumption applications.”