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BlackBerry wins or loses based on the consumer, not the enterprise.

BlackBerry Store
By Chris Umiastowski on 21 Nov 2012 11:07 am EST
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If you speak to RIM investors, there seems to be a lot of them who believe RIM can recover by delivering a strong offering to enterprise customers. I disagree. I'm not saying the enterprise doesn't matter, but I am saying that if BlackBerry is to succeed, it must succeed with consumers first.

But why, exactly, to some folks seem so intent to believe that BlackBerry can recover by dominating the enterprise? It's because of the company's history, and a lack of understanding, by some, on how the market has evolved.

When the BlackBerry solution hit the market in 1999, it was built for the enterprise market. Individual professional consumers could buy it and use the desktop redirector software to transfer desktop emails to the BlackBerry handheld. But the big growth came from BES-connected hardware in larger enterprises.

There was no real consumer market for the product at this point. The BlackBerry wasn't even a phone yet. It was a US / Canada only product running on a specialized packet data network.

By the time RIM launched its consumer offering, BlackBerry Internet Service, complete with webmail and integration with various ISPs directly with RIM's network operations center (NOC), they had amassed about 850,000 enterprise customers. That was 9 long years ago!

Growth in RIM's consumer market was explosive right from the start. This growth came quickly because RIM was signing new carrier deals all over the world, and creating specialized promotions to attack local markets, including Latin America, which is where the company successfully focused much of its effort at the time.

When the iPhone hit the market in 2007, RIM was already in the middle of a massive consumer growth cycle, but its enterprise business was still much bigger than its consumer business. When RIM reported fiscal 2008 year-end numbers (March 2008), they had 9 million enterprise subscribers and only 5.6 million consumer subscribers.

The iPhone wouldn't stop BlackBerry anytime soon. The growth they were experiencing was immense, global, and the sole driving reason for the company's overconfidence. While iPhone consumer price points walked from $599 down to $199 (after subsidies), BlackBerry consumer growth continued.

One year later, based on fiscal 2009 year end numbers, the consumer business had finally taken the lead. RIM had about 13 million BIS subscribers, with a total subscriber base of about 25 million.

The growth of the consumer subscriber base kept outpacing the enterprise side of the business. By February 2010 the consumer subscriber base had more than doubled again, massively overtaking the enterprise customer base.

Today, RIM is still growing its subscriber base in many international markets, while it is losing subscribers in North America. They've stopped reporting the split between enterprise and consumer. But most people who've been following the company as long as I have estimate that the consumer subscriber base makes up 80-90% of the 80 million subscriber base. That's a HUGE chunk.

Most of the media doesn't understand this. If they did, they'd realize just how stupid it sounds to suggest that RIM is giving up on the consumer market. Yet that's exactly the kinds of headlines we saw following RIM's results after Thorsten Heins took over as CEO. He was misquoted, which could only have happened due to a complete lack of understanding, by the media, of the BlackBerry business.

So the countdown to BlackBerry 10 is on. We're excited. It looks sharp. The developer relations team is making real progress. I mean heck, they managed to get Plex to port their awesome media client to Playbook after we slammed them for making BlackBerry the butt of an April Fool's joke. If we can get Netflix, Skype, Instagram and other big name apps at launch, we have a platform consumers will take seriously.

What about enterprise? I am not at all convinced that RIM has their act together here. They talk a good talk about Mobile Fusion, BES 10, and BlackBerry Balance. But I'm not sure they've got the right leadership in place to execute. And as we all know, execution is key.

But it's all secondary to the consumer market. RIM absolutely HAS to convince consumers to want its phones. This is what will inevitably drive the enterprise market to continue to support BlackBerry with the same strength as we've seen over the last decade.

67 comments

Jimcmf

We are up to .... 83.5M on board ..... and growing !

RJMullins

Another point is the BYOD trend that many enterprises are adopting, this is turning the enterprise buyer into a consumer buyer now that they can use their own phone in the office.

scalemaster34

BYOD is becoming very popular especially in smaller business.

But the real key is OTHER platforms have offered enterprise customers the ability to create applications that make the employees more productive, and also apps that their customers can even use to interact with them or make purchases from them.

Look at WINDOWS, it really became the standard when it became widely accepted by consumers.

I've heard many state the RIM could make it as just a niche platform... maybe RIM could be the next IBM?

DuexNoir

+10

Exactly. The line between solely Enterprise and Consumer is blurring with BYOD.

~I am BlackBerry by choice~

workerb

I was thinking about this too. The BYOD trend will drive the platforms enterprises adopt. Which is actually turning consumer buyers into enterprise buyers.

On a separate note, I wasn't sure what the segue was from paragraph 12 to 13. One minute the author is talking about how the enterprise isn't the make or break field of play. The next he's talking about the countdown to Blackberry 10. That whole paragraph 13 should have been moved or removed.

killa4luv

Exactly. The enterprise space is dying as a distinct market.

ciscobear

Well written Chris....very good points.

MaxxJag

I was going to say the same thing as RJMullins, but he beat me to it.
At least to also curb the potential loses from BYOD they might lose to other devices, they opted with the BlackBerry Fusion. Which allows enterprises to put some security on other devices.
"Free" money from other vendors. Everybody wins!

hcmci06

Has there been a video of what the phone app will look like? How contacts are searched for etc. Not having used one of the full touch BB devices I was wondering how making a call to a contact worked.

gbester

Given the attention RIM is paying to games developers, it appears that they agree with your analysis.

W Hoa

75% of all 'apps' downloaded, whether iOS or Android, are games.

masqueofhastur

Yep, the reason I bought my first PDA was to play games, because at the time my parents disapproved of game consoles (same reason I bought a PC instead of a Dreamcast). Now, conveniently, smartphones are the primary mobile game platform.

That's why an all-touchscreen BB10 device is so important. A keyboard is still a big deal for a segment of the population, and BB is the only player in the HW keyboard market, which gives them another edge, but really, it's the games they need to get.

digtech

You have my count as a consumer! FTW RIM.
**BlackBerry by choice**

Paunngaq

Excellent points Chris!
Would you care to elaborate on your thoughts about enterprise where RIM doesn't have their act together? I find this intriguing because like you said investors think it's all about enterprise and not the consumer (obviously they are wrong like you said).
Also how would you shake up the leadership on the enterprise part for RIM to succeed?
Is it necessary for RIM to focus any attention towards enterprise these days?

Cheers,

jsocan

Perhaps Chris was referring to the last remaining old guard (the lady from AT&T) in the C-suite?

blackberryto

Completely agree except that enterprise wins can lead to early adoption in big numbers. One of the reasons I think you are seeing more stories about organizations moving from BB to iOs or Android is because they know that with BB10 on the horizon they need to make a decision to either move over to BB10 or to something else. Not much point sticking with the legacy BBOS for to long - it will be supported, but clearly will be secondary to BB10. So although I agree BYOD is a big part of where things are today and without consumer support, BB10 will not succeed - the big early wins enterprise support can bring can not be underestimated. Let's be honest, if RIM had some of those enterprise wins with the Playbook, which Balsillie continually hinted at in advance of the PB's launch but never seemed to come to fruition, the Playbook's sales numbers would have likely not have been so putrid. Chris, to be quite honest, if you think that RIM does not have their act together in enterprise, hard to imagine how they will win with consumers. Enterprise is their bread and butter, they need to get that right. Thankfully, I am not as skeptical as you in this regard. The losses in the enterprise have been relatively small to date, and with BB10 launch just around the corner that suggests to me that their enterprise customers are at least hopeful and intrigued enough to see things through to the launch and see how things develop. RIM has to be complemented for achieving that given the constant negative press for the last few years.

RootingForRIM

> Completely agree except that enterprise wins can lead
> to early adoption in big numbers.

And enterprise adoption would put BB10 devices into the hands of users who might not otherwise have purchased a Blackberry, only to find out they really like BB10 enough that they become early advocates, helping to build word-of-mouth.

AfroZepher

If this is in fact the case, I believe BB10 will give RIM continued growth in the consumer markets they are doing relatively well in and will definitely stave off a lot of the market lost in enterprise but when it comes specifically to the North American (particularly US) market it is looking more and more like a Hail Mary. . . IMO. . .

Ebscer

When people find out that I am a BlackBerry developer, they are always a bit surprised to find out that I mostly just ignore the enterprise side of the market...

joforg

It seems to me that basically the consumer push has to gain traction to at least a 2.5 position. So a strong enterprise product will maintain some status if it manages byod effectively, but mostly I think that would just make it more attractive as a near term sale.
If it doesn't recapture some emotional attachment on the consumer side the bulwark won't be strong enough to stem the the oncoming tide and challenge the current media positions…..
then it goes to sale to someone who needs an upgrade to their OS, better compression, and a more complete messaging platform. We'd all have to get id's on the iOS forum….

bigbunny78

i would say they are taking a hybrid approach. They have a very strong consumer presence in their developing world markets and they continue to deliver consumer targeted marketing.
In North America they have largely abandoned any direct marketing to consumers, hard to say what will happen as they ramp up for launch in Jan13.

I would anticipate that they would keep the consumer focuse outside of NA and focus on enterprise initially in North America and "test the brand" in the hope that excitement spill over into the consumer space. Don't forget that there is a lot of wealth in the emerging markets and if RIM can parlay their low cost image w/ a premium product they should see some adoption of high end devices.

RootingForRIM

> What about enterprise? I am not at all convinced that RIM has their act
> together here. They talk a good talk about Mobile Fusion, BES 10,
> and BlackBerry Balance. But I'm not sure they've got the right
> leadership in place to execute.

Chris, care to elaborate on those statements?

PatrickMJS

Chris, I'm wondering what you meant about RIM not having the right leadership in place to execute on the enterprise side?

I agree with your main point that they must focus on the consumer side. They could open BB stores. They could flood the airwaves with ads and product placements. They could make the UI more "intuitive" and "easier" to use.

But all of this effort needs to focus on making the product attractive to consumers. In my discussions with smartphone users of all types, most people seem to prefer something that is cool, fun and stylish. Superficial as that sounds, it is what sells.

One small case in point. At a beach BBQ at night a few weeks ago, we needed some light so I put on my Torch flashlight app. It was nice and bright and did the job. But when a friend put on her android flashlight app, it made a cool, futuristic sound and everyone said "oooh, what's that, wow!". It didn't matter that the light from her flashlight was weaker; it got all the attention. Go figure.

Another case in point: at dinner last weekend, we wanted a photo of the wine label. Both my sister-in-law and I pulled out our phones. She used the iPhone5 and got a crummy picture. My Torch got a sweet, legible photo of the label on the first try. She simply couldn't believe it and said it must be because of the ambient lighting. (Both were taken with auto settings and no flash.). She repeated what we've read on the forums numerous times here that "she had heard the iPhone took the best pictures of all smartphones.". The BB message of quality is simply not getting out there to consumers.

Sooo... where is the new RIM CMO? I assume they have kind of given up on the legacy BBOS 7, 6, 5... and are saving their ammo for Jan-Feb-March. If so, I sure hope they have someone in Hollywood working on new product placements. And someone else on Madison Avenue working on a flood of tv and interweb advertising that is catchy and effective, like a lot of the i-ads and android ads. And someone else making SURE both skype and netflix are there on launch.

Harley Kid

I agree with several of your points. First, flooding the media with visually and mentally appealing commercials and ads will leave the subliminal message in people minds. Providing the apps that the consumer "can't live without" will tend to bring in the younger crowds looking for games and netflix etc. RIM stocks seem to be reflecting the consumer sentiment regarding the future success of its new platform. Your comments regarding the photo resolution is spot on ... I have been using a new model android after sending two blackberrys through the washer (damn cargo pockets) and I have compared the resolution of my girlfriends 9850 compared to my Motorola compared to the i5, and the Torch wins hands down. IF RIM can influence enough people in their "target market", then the success of the new OS is sure to be just what I/we have been waiting for.

Rootbrian

You need to remember that RIM can't get skype or netflix in, UNLESS microsoft/skype developers make the application.

morganplus8

I'm not sure I agree with the authors contention here, RIM is actually doing a great job on all fronts and is much better equipped to regain Enterprise than anybody else out there today. And they are doing it while working with limited scale. RIM just has to deliver a great phone experience and they are going to buy time to massage the business model. A great phone with social functions captures all market segments, not just Enterprise. RIM handed Enterprise to other makers by stepping back and developing a refreshed OS and hardware line. Apple will have to do this as i OS is ancient by todays standards.

I see RIM selling a ton of phones to the retail sector, who in turn adopt it as their BYOD tool. The lines are getting blurry here and RIM knows that whether they state it or not. That is way BB 10 is social feature rich. The stock price is up 58% from the lows of only a couple of months ago because the world is drawn, kicking and screaming, toward RIM again. Analysts have tried to crush it using the media as their tool, its not working any more. RIM is mapping out a broad strategy to launch to both consumers .... and Enterprise by default.

janeka

Consumers don't want anything that has BlackBerry on it.

Bold_until_Hybrid_Comes

You used to be a respected member of these forums. What happened???

mnhockeycoach99

She turned into a bitter old troll that spouts negative bullisht about RIM on every iBGR article that is posted. It is rather pathetic if you ask me.. like a scorn psycho ex-girlfriend hell bent on getting even with the guy that broke her heart.

Bold_until_Hybrid_Comes

That's sad. Janeka it doesn't have to be like this. You don't have to change so dramatically. We would still welcome you back if you had a change in heart.

mnhockeycoach99

I agree.. I used to actually enjoy reading her comments.. both on CrackBerry and on iBGR (mostly bashing the RIM trolls and Geller's Apple nutswinging).. but now she has turned into one of those pathetic RIM trolls she used to rip on..

Puz_zled

ibotomy. That's the only explanation. It comes free with the use of......istuff

mnhockeycoach99

Glad to see that you are not only spouting your garbage on iBGR but you have infested CrackBerry as well...

Rootbrian

I wonder why the mods haven't taken any action.

kupfernigk

As a minor point, US consumers are not the only buyers of equipment in the world. Here in the UK, Blackberry retains a lot of market share and the carriers keep offering new plans with BIS. I would argue that RIM could actually survive with no US involvement at all - the rest of the world is a lot bigger.

cfx_will

why so skeptical about enterprise? care to shed some light on this?

ciscobear

Consumers don't want anything to do with this Java OS.

THBW

What are you talking about?

mnhockeycoach99

You realize BB10 (the topic of the article) isn't a java OS.. right?

Bold_until_Hybrid_Comes

This article has nothing to do with a java OS.

Bold_until_Hybrid_Comes

Umi where is that picture for this post from? Is that a blackberry store?

HabsSuck

Chris what's your concern regarding the Enterprise segment? What is RIM not doing?

Darlaten

And as a consumer, I really hope that RIM will see the value of creating App Cards that sell at places such as technology stores, grocery stores, and so forth.

This will make it easier for those people who do not have/do not want a credit card to purchase apps for their new phones; as well as make it easier for young people without credit cards do so as well. Not to mention it makes for great impulse buying items which is why so many of the gift cards for the PS3, Xbox360, Itunes, and others to name only a few are always by the checkout tills of stores.

App Cards also help sell the notion that there are apps for Blackberry - something that is still hard for people to comprehend.

SDTRMG

I do agree they need these cards, but I know they have it set up where you can buy an app and pay with your carrier bill

Rootbrian

Prepaid credit cards are available to teenagers and minors, they're reloadable too and there's also paypal, which doesn't take much to setup and link a bank account to and then, they're all set.

nabil114

I agree.

- Rezaur Rahman

PostMortem

Chris, your article (although well written) confuses me. So from your perspective they won't be ready to deliver on their BES10, Balance and Fusion solutions? Why is it that you feel so strongly this way? Everyone's wondering, don't just write the articles, give us at least one comment.

I know that you feel that because of how the Dev units work, you don't see how they will gain revenue, but why do you not think they will be able to execute?

moa999

Other thing that has hurt BB is BIS - whilst a great feature it is an "add-on" that makes BB plans appear more expensive than other devices.
Also BB has not struck deals with many of the MVNOs that have sprung up in Europe, Australia (and I think the US) which limits BB users to the major networks.
Buy a new iphone/android/windows phone, pop a new sim in and it works.
Buy a BB and it doesn't

w0qj

It now looks like if you wish to run any Apps on BB10 at all, you *must* subscribe for an expensive BIS plan as a consumer.

There are a number of countries around the world (especially in Asia) where the consumer need to pay for an expensive BIS plan (40% more expenisve) to get the full BB10 experience.

How can RIM hope to entice consumers to switch from Andr*id and iPh*ne who are used to cheaper internet access, to a 40% more expensive BB10 BIS data plan??

Many of us dyed-in-wool BlackBerry fans would pay for such an expensive BIS plan, but for the average Andr*id and iPh*ne consumer, I would suspect many if not most would refuse to pay for such expensive BIS plans, which is required to get the full BB10 experience.

So what are the solutions?

1) Reinstate generic internet data plan allows consumers to get the full BB10 App experience?

2) Reimplement pay-as-you-go internet data/voice plans to get the full BB10 App experience?

Unfortunately if RIM wants to win back consumers from the Andr*id and iPh*ne fold, the voice/data plans need to be much cheaper...

Puz_zled

Sorry, but you are out to lunch on your pricing. My 9900 plan which has 1 gig data monthly, with Bell Is CHEAPER than my wife's iClone plan. BTW I know I don't need nearly that much data for the Berry but I keep it so I know for sure I can always bridge to my Playbook any time and have lots of surf time.

Rootbrian

ahem, carriers are the ones who set the prices for all of their plans. RIM doesn't.

anonymous983475983475

" If we can get Netflix, Skype, Instagram and other big name apps at launch, we have a platform consumers will take seriously. "

It would be big news to announce the availability of these apps on BB10. Would probably give the stock a pop. Launching without these will hurt.

Rootbrian

They can only announce it IF those companies make those apps. if those companies don't make the apps, it is NOT rim's fault.

jsocan

The BB10 L-series phone can open door for RIM to a whole lot more consumers - from China. That is if the full touch phone allows inputting Chinese characters by hand-writing like on iPhone. That will remove the barrier the BlackBerry QWERTY phones have. The potential of the growing affluent middle class in China will dwarf that of the US market .

w0qj

Not just from China, many of the foreign (overseas) countries that RIM has customer growth needs hand-writing input.

I for one sure hope that the BB10 N-Series (with physical keyboard) will also have handwriting input.

My friend refused to buy a Bold 9900 because it did not have Asian hand-writing input! He bought an iPh*ne insead.
(He was upgrading from a Bold 9000, so RIM lost a customer).

ferre_kun

i really hope RIM will be willing to give more attention to their consumer base. they will have attack from every directions, i hope they will cooperate not only with carriers, but also with governments. because when it comes to politics, governments tends to be very 'regulating'. and this is what is happening now in my country.

i've just read a very discouraging regulation from my government. from now on, any electronic system provider (i don't know if that's the right term) will have to build their data center and disaster recovery center here, that include big players like google or RIM. they will be given a year to build it. so far (i googled it just now) RIM only have two data centers, one in canada, one in U.K. if RIM doesn't build data center here, they may loose all users here including me if my government ban blackberry to be used here. but if they subdue to this demand, this can be set as example and can lead to other country demanding for their own data centers.

i really hope RIM will deal with this quickly and spend a bit more of their resources to lobby my government, and come up with win win solution.
source: inet.detik.com/read/2012/11/22/131246/2098216/399/rim-google-diberi-waktu-setahun-bangun-data-center-di-indonesia

3Dee

To bang an old drum - for BB10 to succeed in the consumer market it must have all of the major and most popular apps available at launch, and must continue to get the new and most popular apps at the same time as iOS and Android. RIM have talked a very good talk with developer relations and apps, but it seems a cause for concern that for all of this talk we have no indication of closer platform parity. I really hope that RIM is doing everything - everything - to try to ensure that BB10 users will feel as catered for as users as other platforms. This doesn't just mean making the big name apps (Skype etc) available at launch, but it means BB users being able to download the latest big thing in gaming without having to wait for a BB clone, and users going on to websites like ESPN and being able to download BB versions of their apps.

If the apps aren't there, I find it hard to see how RIM makes a compelling case for large scale consumer adoption. Sure it's not the be all and end all (see: Microsoft), but in addition to a great product, a value proposition and a great user experience, apps must be there.

Rootbrian

Got to remember that it's not RIM that makes all those apps, it's the DEVELOPERS that make them. If those developers don't make the apps, we won't have them in App World.

the brother

where the heck was this photo taken?!?!? need me a BB back pack ASAP

#swagme

Android Market for QNX

Good post, Chris! These days, BYOD has pretty much made the enterprise market an extension of the consumer market. Consumers will make or break BlackBerry. These days, the enterprise market just follows the consumer market. If Blackberry appeals to consumers, they will gain back some of there enterprise business.

ck23.bb

I want this shop in Philippines! Give me more of BB!!!! =p~