Inventors Dilemma
Almost everyone dreams about being number one. Rarely do you hear about people dreaming about being anything but number one. Even in markets that support more than one winner, people still want to be number one. It’s almost human nature. Being number one brings its own set of issues and challenges. It paints a target. It gives others something to shoot for. In that sense, being number two is almost advantageous until you become number one.
People become number one for a variety of reasons. In many cases it is because they are first. In some other cases, it’s because they out execute. Being first to market may provide a slight operational cushion; you can’t be lazy, but you might not have be 120%. Taking over the number one spot definitely requires out executing. First mover sounds great. Taking over first does too; it’s a little harder and often not accomplished. But, is one better than the other? One example to look at is the Blackberry by Research In Motion.
Research In Motion invented the smartphone space. The phones date back more than decade now, and one of the earlier and more popular models had a blue shell and was nicknamed the "Blueberry." We take for granted today the ability to check emails on our phone. We can get mail from corporate Exchange servers to free web mail accounts. We can get it any time and almost in real time. We’ve become so reliant on them that Blackberry is often referred to as a Crackberry because people have them with them 24/7.
Blackberry’s are facing a dilemma. They are no longer number one in a category which they defined. According to ComScore, Google’s Android has the single biggest share at just north of 31%, up 7% from the last sampling in October 2010. In the same time frame, RIM saw a precipitous decline, now at 30% from 35% with Apple holding stead just under 25%. I just switched from RIM to the iPhone 4 on Verizon; although, I can’t say I’m happy with the decision. While the iPhone is slick and in no way short of revolutionary, it does anything keyboard based poorly – e.g., email and sms – with none of the flaws coming from it being a touch screen. The phone is incredibly restrictive to anyone used to a Blackberry and especially for any who enjoys the most basic level of customization. The RIM’s ability to customize its sound profiles is a thing of sheer beauty. With the iPhone, good luck trying to find a way to make it silent when it sends a text (without resorting to turning the sound switch to off).
In my narrow view of the world, I looked at RIM’s decline as a function of two things. The first was its inability to understand the app ecosystem along with a seemingly nonsensical model fragmentation. For example, the company introduced a new version of the same model with fewer features than the one it replaces. Could you imagine BMW updating a model but giving it a less powerful engine? The second sign of the decline came not for the technology but the quality. RIM phones aren’t sexy. They don’t really know how to do touchscreens, but who else knew how to make a phone that could withstand more abuse. It was the Timex of smartphones – insanely reliable. Good looking enough, light enough, functions well, great battery life. And, you can use it to make calls too.
Perhaps more than anything, what had us worried about RIM was its most recent commercials. Blackberry has long had one of the under-celebrated proprietary instant messaging platforms. Those who use it, love it. It handles many media types – photos and voice – in addition to just text. What makes it supremely addictive though is one little feature that no one has, a status. It tells you if the other party received your message and if they read it. "D" and "R" those magic little letters which can add excitement or heartbreak. It’s like playing with fire. Great as the Blackberry Messenger is, seeing commercials for it feels a little bit like watching a commercial for AOL instant messenger. It too was a game-changing communication vehicle, but it wasn’t going to be able to support or stop the dial-up subscription decline. Promoting it now when the company is already losing market share feels like an admission that it has lost the race. It’s too bad because the product is still superior in so many ways.
Right after making my own switch, by happenstance, I had the chance to speak to someone who spent many years at RIM. He was stuck sitting next to me on the plane a few days after having just dumped his former company’s product. Speaking to him helped reframe the challenges being faced by the company. Not that Apple or Android have it easy or that they haven’t earned their success, but sometimes it really is easier coming in later. Blackberry’s started as an enterprise product, and they still offer the most secure operating system. Apple and Android can’t come close. They also didn’t have to invest as much nor did they start at a time when the technology was so expensive only enterprises could afford it.
Unfortunately for RIM, security conscious clients aren’t enough to sustain the business. Android and Apple have hot consumer markets with subsidies by carriers to make them cheaper. Their bottoms up approach – appealing to the consumers first, many of whom are executives – is what has put the most pressure on RIM. Other companies (users of phones) are relaxing their standards, allowing the coveted business penetration by the newer smartphones. All of which leaves RIM in a quandary. They have a legacy operating system built for needs that are now not as important, and that same great security is what makes it so difficult for them to create an open app platform. It is an almost unfortunate aspect to some businesses. That they can invent a market and end up not owning it. Zenith, RCA, all the way up to Yahoo. For some the flame out happens sooner – Friendster, MySpace. Others have managed to find ways to come back like Mercedes-Benz. Is there such a thing as permanence?
