Archive for the ‘RIM’ Category

RIM Keeps Falling

Posted: December 3, 2011 in Android, Apple, Google, RIM, Tablet
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I was never impressed with the RIM Playbook. I guess others weren’t either. RIM has written off a lot of the inventory as the Playbook continues to have dismal sales figures and has to be heavily discounted to move. HP and RIM are losers in the tablet wars but the implications for RIM are bigger. The smartphone and the tablet are becoming tightly linked. With a failing ecosystem surrounding it, the Blackberry is in danger. Never mind the good Blackberry sales mentioned in the link above; the future looks gloomy. Just look at the latest market share data:

Google (Android) and Apple (iOS) are gaining market share at RIM’s expense. RIM is now a distant third and I don’t see the trend reversing.

 

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While there was some buzz, I wonder if most people fully understand the meaning of Google’s announcement that they will no longer support the GMAIL app for Blackberry. HP has already exited the mobile battle (phones and tablets). The Google announcement shows how far RIM has fallen. RIM’s tablet is a non-starter. iOS5 adds a lot of the functionality of BBM. You have to ask yourself what makes Blackberry special. If Blackberry is just another smartphone then Android and iOS are more compelling. Apple has broken RIM’s hold on the corporate world. That wall has been breached. I wish I had good advice for RIM but it may be too late.

HP paid $1.2B for Palm. Now they are dumping that and more. I have been saying that the only ecosystems that will survive are Apple, Google (Android) and Microsoft. The carnage has started. WebOS was a good OS. That doesn’t matter. It was too late, too poorly marketed and never got traction. Now it is essentially dead. RIM will follow although not in the near future.

More shocking is the announcement that HP may exit the PC market. HP leads the PC market in market share. How can they possible be wanting to exit that market? To understand why HP could even be considering this you need to look a little deeper. The laptop market is very competitive. That translates to low margins for everyone except Apple. Only Apple has a customer base willing to consistently pay a premium for their laptop product. Additionally, HP’s market share has been falling. But… here is the main reason. The phone is becoming the dominant computing device. The laptop is rapidly becoming secondary. Desktops are already secondary devices. The only way to shore up laptops in a way that would maintain margins was to develop an ecosystems with laptops as part of that. WebOS was a poor attempt at that. With the failure of WebOS, HP laptops will have to compete as just another part of the Microsoft ecosystem. That’s OK now but it will be a position that gets worse each day. If you count tablets as part of mobile computing then Apple has already surpassed HP in market share. What HP is afraid of is being trapped in a market that is losing relevance, decreasing in size and so commoditized that there is little differentiation. All that will lead to little or no profit.

The big take away from this is that it is not an isolated event. It is a part of the convergence trend I have been discussing. There will be more Titanic changes to come and they will involve more than RIM.

By now most readers will be aware that Google is buying Motorola Mobility. I started to write about this when I first heard the news but I wanted to think about it and explore the implications and potential reasons. Time is up. Here are my thoughts.

The most straight forward reason is patent defense. When Google lost out to Microsoft and Apple in the bidding for the Nortel patent portfolio it left Google in a very bad position. Android violates several of the Nortel patents. Google launched an offensive claiming Apple and Microsoft were using patents, as opposed to compelling solutions, as a way to attack Google. We must remember that Google also bid for these patents and, had they won, would have probably used them against Microsoft and Apple. Furthermore, an offer to join with Microsoft and Apple in acquiring the patents was rebuked by Google. If the purchase of Motorola Mobility is indeed a defensive play then this is nothing more than another round of that old patent game “I’ll cross license mine if you will cross license yours.” Considering the large amounts of cash Google is sitting on, this might be a very sensible move.

Could there be more to the acquisition than patents? Google has made cell phones in the past when it was jump-starting Android. But, should they be a cell phone producer? In the PC space Apple has been a small closed ecosystem compared to the loose and very diversified Microsoft ecosystem. The result was a larger, cheaper and more diversified hardware and software ecosystem for Windows (Microsoft) compared to OSX (Apple). Recall that, at one time (Apple II), Apple dominated the desktop space. The diversity of the Microsoft based environment resulted in Apple becoming a niche player. Today, despite Apple’s early lead, there is a strong possibility that Android will be the Windows of the smartphone and tablet space. I see no reason for Google to try to “out Apple” Apple. Think of the strange relationship that is going to exist with companies like HTC and Samsung. In the recent past, market pressure pushed those companies towards Google. Apple was closed to them. Microsoft Windows Phone 7 was open but Nokia was clearly customer number one and in a special, preferred customer, position. Now Google is not just a supplier but a competitor. I think Microsoft is secretly happy about all of this. It makes their relationship with Nokia look tame by comparison.

Could this be herd instinct? Apple makes the iPhone. HP bought Palm. Microsoft is in bed with Nokia. RIM makes Blackberry. Perhaps Google fell victim to the “everyone else is doing it” syndrome. Somehow I doubt it. The people at Google are nothing if not sharp. Still, it has happened at this level before.

One possible reason for the acquisition might be to push NFC. NFC requires that very specific hardware be placed inside smartphones. The Motorola Mobility arm of Google could push this. However, I think NFC can be effectively pushed without making the phones themselves. I don’t buy this as a reason for the acquisition.

That brings me to one final reason for the purchase – set top boxes. I have discussed how the real goal is a very broad and unified ecosystem. The TV is a big part of that. Google could merge GoogleTV into the Motorola Mobility set top box units. As a competitor in the set top box space they might be in a good position to drive their ecosystem. I have argued before that consumers don’t like extra boxes and hence AppleTV and even external game boxes (PS3, Wii, Xbox) are interim solutions. The one external box that has some life left is the cable box.  Google could merge the cable box, GoogleTV and Android games into one piece of hardware. Moving between cable product, internet streams and applications could be made very unified and essentially transparent to the consumer.

Summary: This acquisition is all about the patent portfolio and using it as a counter to Apple and Microsoft. However, Google is left with a hardware business that competes with key customers.

My recommendation: If I was willing to tell Apple what to do then why not another multibillion dollar company that is highly profitable? So Google, here is what you should do. Sell off the mobile device arm of Motorola Mobility but keep set top boxes. Keep all of the patents and just license them to the entity acquiring the cell phone business. Finally, merge GoogleTV into the cable box and make GoogleTV fully compatible with Android games. Use your new found cable box presence to drive a broader ecosystem that is more unified than what consumers have now.

At WWDC Apple announced an improved AirPlay in iOS5. I have broken this out for a separate post because it has gotten little attention from the mainstream press and has huge near and long term implications. The key new feature to focus on is AirPlay mirroring. In the near term this is all about corporate penetration. Mirroring works on the iPad 2 and allows you to display the screen on a separate device; for example a TV with Apple TV attached. This is another step towards using the iPad as a presentation device. All that is needed is a wireless receiver that can be hooked to the projectors now standard in corporate meeting rooms. That would allow cordless mobility using the iPad as a small, easy to hold, presentation device. There is a lot of near term potential here. This is about way more than a few extra iPad sales. Apple has always been viewed as a consumer company. The iPad is changing that and the result is big. RIM had the iPhone locked out of the corporate market. Recent security improvements on the iPhone together with the iPad being adopted in the corporate market has changed that. The result is that RINM is losing its hold on the corporate world. Driving the iPad deeper into the corporate world will extend this and prevent the Playbook from getting traction. The iPad has the potential to be the de facto corporate presentation device. Apple just needs to listen to me and make the wireless battery powered AirPlay display adapter. Throw in transparent collaborative syncing of files and corporate presentations just got a lot easier and slicker.

In the long term AirPlay mirroring takes on even greater importance in an entirely different way. First, you have to move AirPlay mirroring to the phone. Then add in a data link over Bluetooth. What you now have is the ability to merge the phone completely into the automobile. This will take a lot of work to be done in a way that is clean and aids rather than distracts the driver. As a simple example, however, imagine playing movies stored on your phone on a display in the car. Another example would be using the GPS and navigation software in your phone to display a map and directions on the display in your car along with voice guidance through the car’s audio system. Commands would be given through controls on the steering wheel and voice commands. This is a small but important step towards making the phone the dominant computing platform by a wide margin.

At WWDC, Apple announced iMessage. This is a direct attack on BBM. BBM has been a cornerstone RIM product. BBM has been about what makes a Blackberry different. Ouch! At every turn Blackberry seems to lose relevancy and it’s ecosystem gets passed. The Playbook is getting a lot of ad time right now but the Samsung Galaxy Tab 10.1 is just about to hit stores and it will be a much better tablet for those who eschew the Apple ecosystem. I hate to keep repeating myself but I see little from RIM to give me hope. All I see is a painful decay. In and of itself iMessage is just another small evolutionary step towards convergence and transparency similar to the nice moves Microsoft made in Mango. For RIM it is another big blow.

I didn’t publish anything Monday or Tuesday. I was busy digesting what was coming out of WWDC and E3. I won’t regurgitate the standard stuff covered better by sites such as Engadget. Rather I want to comment on what people missed or only put down as a footnote. However, I do need to go through a few big items. First, WWDC is notable for no new hardware and few surprises. Little made me go WOW! The cloud is taking on more importance. However, a lot of this has already been done by Microsoft and Google. What Apple brings, get ready for it, is better transparency of use. If you are willing to buy into the Apple ecosystem then you get data transparency in return. The same goes for Microsoft and Google but the Apple approach is more automatic and, here is that word I overuse, transparent. This is an ecosystem war. Who gets left out? Well, I’n not buying any stock in RIM.

Everyone is talking about what the cloud will do. Here is what it won’t do. Right now no one has it syncing apps or present device status. That means when you move from one device to another you don’t just pick up where you left off. Your data will be there but you will have to open an appropriate application and load the data. If you don’t have an appropriate application installed, for example Excel, then well… it won’t be installed. So, all of the new stuff  coming out is a step in the right direction but just a step.

I liked Apple’s Match announcement but it just highlights the bandwidth limitations that make a pure cloud existence less than thrilling. The bandwidth issue is one of many reasons I am less than thrilled with Google’s Chromebook concept. Also, you will have to be careful with iCloud to make sure you really have your photos backed up since they only remain in the cloud for 30 days. In the end the cloud is great for syncing and sharing but i don’t want it to be my only data storage location.

As far as E3 is concerned there was the usual plethora of game announcements. On the hardware front Nintendo showed an early version of the Wii U complete with graphics generated on Xbox 360 and PS3. Yes, you read that correctly. Some of the example graphics were actually generated on competitor’s platforms. What’s notable about the Wii U isn’t the fact that it has a faster processor or 1080p graphics. The big deal is the new touch screen controller. It lets you play without using the TV set or if you do use the TV, have a second display. Wait, isn’t this just like what I was suggesting for Apple? Oh yeah, the Nintendo controller includes accelerometers and gyros just like an iPhone. Nintendo is on the right tract. However, Apple, Google and Microsoft are all coming from stronger positions if they will just see it and actually attack this space.