Is RIM set to dominate the mobile device management market?

By Chris Umiastowski on 24 Oct 2012 11:54 am EDT
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Yesterday I attended BlackBerry Jam Enterprise in Toronto, along with fellow CrackBerry writer Zach Gilbert. It was a good opportunity to hear RIM's perspective on what they're doing in the enterprise and how they are different.

We interviewed John Mutter, Enterprise Mobility Architect at RIM. But we also managed to chit-chat with several attendees including some of my former colleagues from the financial community, who were in attendance (Great to see all of you!)

Overall, I really like what RIM is doing in the enterprise. The strategy makes sense, and solves some big headaches for the enterprise CIO. But I can't help feeling concerned about communication and execution, as I'll explain.

Back in January, at CES, RIM talked about building an Enterprise app store. Yesterday I had my first chance to see a live demo running on Dev Alpha hardware. RIM, through the power of BES 10 and Mobile Fusion, will allow enterprises to host their own app store. This means corporations don't need to send their code to someone else's store to be published. It means nobody can dictate how the UI should look, or how the app should work. They get to call their own shots. They can enforce version control, user control and pretty much every other imaginable security policy right from a single dashboard controlled by an IT guy.

This is appealing, and while Mobile Fusion offers some management capabilities to non-BlackBerry hardware, the enterprise app store is likely to support only BlackBerry hardware for now. I think that's fine. It will probably be many years (if it even happens) before things get standardized enough to allow an app to be deployed and managed on a variety of end-user mobile device platforms (Android, iPhone, etc). In the mean time, CIOs who want to control their own app store may have to just pick a platform and stick with it. RIM is making it easier for customers to stick with them. The app store, the capabilities of BES 10 and Mobile Fusion, and the built-in capabilities of BlackBerry Balance all offer compelling advantages to customers.

RIM's primary goals with BlackBerry Jam Enterprise is to make sure their corporate customers understand where they are going with BlackBerry 10, and to make sure developers are equipped to start building enterprise apps. That's why they are handing out more Dev Alpha hardware and helping developers to install the dev tools on their laptops right there at the event. 


Another quick look at BlackBerry 10 including BlackBerry Balance

I think that's smart, and worth doing for sure. But it also tells me that the attendees at this event are not decision makers. They are not the people who will chose an MDM platform for a large organization. And it's these influencers that RIM really needs to be swaying.

In our interview with John Mutter, we also discussed the hugely important BYOD trend in today's market. RIM has an interesting (and sensible) position on this: The BYOD trend actually helps RIM by bringing more smartphones into the Enterprise. Employees are buying them and bringing them to work. In some cases, no MDM strategy is used, and these devices are connected (to email only) via ActiveSync. But in other cases, the corporation opts for an MDM strategy, so a higher penetration of smartphones, via BYOD, gives a company like RIM more opportunity to collect revenue on Mobile Fusion.

One thing that worries me is communication within RIM's enterprise division. I heard from multiple sources that this whole BlackBerry Jam Enterprise Edition tour felt like it was hastily thrown together. I say this because it seems plenty of people on the Enterprise team (who should know about it) didn't know it was even happening. By itself, that doesn't bother me too much. But it builds upon a trend of concerns I'm hearing from my own industry contacts. People with good track records for getting things right are telling me that RIM's overall enterprise strategy is not being well communicated internally or externally.

When communication is lacking, that's often (but not always) a sign of poor internal alignment on strategy. I don't want to cast harsh judgement on the company, but they need to step up their game. It all comes down to marketing, and there are no good excuses for weak performance.

Finally, although this is an overall RIM issue, not a specific enterprise issue, everyone is still wondering what RIM's business model is with BlackBerry 10. Currently, with the J2ME platform, RIM collects $1 billion per quarter in service revenues from carriers. This revenue has a very long history, dating back to the initial release of BlackBerry service over a decade ago. The switch to BlackBerry 10 provides an easy catalyst for carriers to renegotiate with RIM.

RIM often reminds stakeholders that it has over $2 billion of cash and no debt. My worry is simple: Imagine if RIM saw a 50% drop in service revenues. They'd suddenly bleed an extra $500 million per quarter. They'd run out of cash in just over one year. That could destroy the company.

I have no idea how big this risk really is, unfortunately. And RIM has done absolutely nothing to help investors understand their perspective on what's happening. Obviously some of this service revenue should be re-sourced directly from enterprises. I think Mobile Fusion should be run as a SaaS business. But will it?

RIM is showing us good progress. No question. But I'm not satisfied with their overall communication with enterprise customers, and I still feel very much in the dark about how they'll deal with pressure on service revenues over the next year.

29 comments

kingbernie06511

At least in NA, the RIM name has become a punchline. Until they restore their street cred with polished, competitive BB10 phones, I wish them good luck at exploring new opportunities (in this case iOS and Android devices management), they will need it....

len5

RIM and dominate should probably not be used in the same sentence ever again.

HabsSuck

I think you should grow up

green_ember

That's why I like this site. You get actual news, good or bad, with relevant observations. The rest of tech media should try this approach

zeratul65535

+1

Keeps me coming back too

whitbags

Very insightful piece. Pulling the threads over poor internal and external comms together and then seeing where that potentially takes RIM. The successful release of BB10 may be a side note in the RIM's future. Their ability, or otherwise, to get their ducks in a row over Enterprise could be the real story.

Fingers crossed for them.

veeru789

We don't edit....LOL

Great article Chris as always.

blackhawksfan75

I agree with a lot of what this article is saying. RIM has to let the end user know, whether it is the consumer or the entreprise sector, what is going on with BB10. They are getting hammered (not in a way that I like to get hammered) in the mobility market. Okay their overall subscriptions are up but is that mainly due to the smaller markets such as Africa, South America, and the like? WP8 is this week. iPad mini is next week. Where does that leave RIM? Still four to six months away from releasing anything hardware wise and by that time could be competing against the SG4. So time is of the essence right now.

I will say this. The one area where BlackBerry has a huge advantage over Windows Phone 8 is carrier support. Whether it is a timed exclusive or not I do not know, but in Canada Rogers is the only provider who has the rights to the new Windows 8 devices, whereas BB10 will be fully supported across all providers.

The potential is there but there is more execution to be had if RIM has any hope of regaining market share in the mobility industry. I like what I have seen since Thorsten took over as CEO and I understand completely about their decision to release a product that is 110% complete, but they got to stop dragging their heels.

When you read any tech blog when a new device is released they do comparisons on similar products, correct? How often do you see a BlackBerry product? For example a PlayBook in regards to the iPad mini? That's right or very seldom. No where. They are being compared to Android version such as the Nexus 7. You would think if RIM had any credibility the PlayBook would still be conversed in these comparisons.

Superfly_FR

Nice article, sharp (severe ?) but fair, as usual. Insightful.

@Chris

Regarding revenues, I believe RIM is expecting a bunch of new ones with connected (QNX) devices, like car infotainement/monitoring (I mean from device to maker). Of course, many more to be added ... in the near future. Automotive sector is a 11 million (QNX) devices/year potential ... And could add revenues both for RIM and the carriers that would handle data transmission (another "carrier friendly" plus ?).

About enterprise communication, I believe we only see the (public) first round (large accounts may have had "private" sessions ?). So far I know we won't see BES10 before April/May 2013, so that RIM may want to keep discrete about it ... I know concurrence is already in the starting blocks (ex:CITRIX), may be early to widespread details ?
P.S : Not a word about SAAS/Cloud is an example of what leads me to this statement.

POView

interesting enterprise insights. the question is: how much has really changed at RIM in less than one year?

beavertail2

Chris,

I will look for any improvement in enterprise communication tomorrow here in Ottawa. To see if any of your constructive comments are soaked in.

Mobile commerce will be a new revenue source based on NFC. BBM ecommerce will be another on the consumer level.

BB10 is a two phones (personal and work) in one enabled by Balance. An unique proposition to solve the conflict between CIO wants security and workers want to do more on the personal side. BB10 is a perfect BYOD smart phone.

I advocate Balance-3 to make an unique proposition to consumers. What is Balance-3?
Make a third sandbox or silo for financial transactions for consumer. This absolutely will enable ecommerce and enable consumer to sleep at night, not having to worry about some Android malware eg coming in from the personal sandbox which is what CIO so desperately wants to keep separate. So Balance-3 is three smart phones in one (personal / financial transactions / work).

RIM needs to act like a start up with $2.3B cash!

POView

the e-comm possibilities are signinificant, BBM with a "PayPal" type payment feature via RIM and its network.

IqWaN

a lot of hard work required... a long and a rough road lies ahead..in'sha'Allah RIM should be able to pull this off... not going to be easy, but not impossible as well...come on RIM... you can do it... i'm with you!

IqWaN

BB 9780 white os 6
pin:236154FD

BB Playbook 32gb os 2.1.0.1032

lnichols

Communication has been RIM's biggest issue for a long time. People/companies don't know what their devices are capable of, what is coming, or what they are working towards in the future. Also they should have an Army of sales reps in the Washington DC area, bring in a semi full of BB10 devices for an around town mobile roadshow, and be showing everyone what BB10 will be bringing to the table very soon. We are already seeing the cracks in the government stronghold growing with the recent decision by ICE to go iOS for 17,000 devices and terminate Blackberry support. They need to be pounding these Government IT managers with questions like "What are you going to do if you have a major breach because you switched to another platform?" and "Will Apple/Google provide you the support, and do they have the expertise that RIM has for secure communications?". If RIM loses the Federal sector, it will be done in NA!

Joe257

I agree service contracts with carriers are helping, but RIM is at a low point in sales this year -- all their products, including the PlayBook is over 1 year old! With BB10 sales will pick up and the service revenue will not be as big a factor. Please don't paint a doom & gloom picture that they'd run out of cash in one year. Otherwise, your article was a fair assessment.

Note that RIM is changing rather quickly, and even the mobile enterprise world is changing. Some folks following and supporting BES will need to get a refresher once BB10 devices are out. Even RIM's competitors have no clue where the market is going except to say that BYOD is here to stay. None have a vision like RIM does, and BB Balance and Mobile Fusion is by far the best attempt to address BYOD as I've seen from anyone.

martinjdub

I've had the pleasure of attending a number of RIM Enterprise and Innovation forums over the years and I can say that this years event was well attended and the posivtive energy from us the customer was "night and day" compared to a year ago.

It tells me RIM is on the right track on many matters.

#BB10Beleive

chefioannis

Great article voicing my sentiment. For a communication company they do a horrible job of communicating. Hopefully the worse case scenario regarding carrier revenue does not occur.

Wilkerson4492

Here in my opinion are the biggest hurdles faced by RIM:
1) Marketing in North America to restore brand awareness. I was on a flight the other day sitting beside a software sales person using my Playbook and he turned to me and asked if it was the new Kindle. I told him it's a Playbook and he asked me what a Playbook is. If people that sell software are not aware of your hardware, how do you expect the general public to be aware of it? Everywhere I go in the US and show people my Playbook they love it but have no idea it exists.
2) Marketing in North America to restore what I call the BB cool factor. Lets face it, as per recent articles the perception of the BB is such that it is not a must have cool brand. RIM really needs to highlight all the things that are considered cool about other devices and prove that BB10 can do the same thing. They then need to take it one step further and show what they can do their competitors cannot do. I like to refer it as the “we can do that…they can’t do this” marketing campaign. Just having business people talk about why they prefer BB will not be enough to restore its cool factor.
3) The availability of content. The unified Blackberry World (or whatever it will be called) needs to have the same access to content that is available on other platforms. I love my Playbook and while I don’t use a ton of apps I do read, listen to music, and watch movies/tv on my Playbook a lot. While currently there is a decent music catalogue, the movie/TV selection here north of the border is somewhat lacking. If I can go to iTunes and buy say for example the last season of Sons of Anarchy, I want to be able to have that same experience on my BB devices.
It does scare me if the people that are making the decisions re what devices to use in an enterprise environment were not made aware of this seminar. A good example of where managers need to be made aware and reminded of the BB advantages is a company of a close friend of mine (a fire suppression company). They just switched from all BB to all Apple based phones and he hates it. He had dropped his old BB phone several times and it still worked, he used BBM all the time, and the old BB phones had the MikE service where the technicians could use their phones like Walkie-Talkies when they were testing fire suppression systems on multiple floors of a high rise. One guy has already dropped and broken a new phone (they have had them for a couple of weeks). The reason he said the bosses made the switch is because some sales guy came in pushing the apple stuff and sold them on an application that lets the bosses sit in the office and locate the phones via the GPS so that they can see what floor the technicians are on and if they are moving or sitting around (so basically a micro-managing tool). I am not sure how many broken phones it will take before they realize their mistake but I am confident they will. The cost of guys having to call each other and stay in contact via a phone call over just “MiKE-ing” up the guy a few floors down to say “device X has been triggered, can you read it back the control panel” when testing the various suppression devices will be crazy. They have jobs that go one for days so instead of just the short usage of the MiKE service, they will have multiple guys using extensive minutes to remain in touch all the time while they are testing. Maybe they were able to negotiate an unlimited data plan, I have no idea but I still think is an example of where RIM needs to be more aggressive in letting existing and potential new customers be aware of BB10 and what it can do.

Knightcrawler

@Chris

Insightful article as always. In regards to your point about communication, has anyone from the CB team considered a more proactive approach?

I dont know about the rest of the gang, but Kevin at least has a bit of a rapport with Thor and some of the other senior management at RIM. Is it possible to bring this up at the next opportunity, and ask them directly whether it's being addressed, and how? Even if they dont have an answer for you, at least it will be brought to their attention and we might see a change in their approach for future events.

Just wondering how likely a possibility this is?

gomad235

(New to the board)

Thanks for the insightful article. I think the vast majority of articles posted about Rim (not here) have been extremely negatively biased. I see a lot of opportunity for the company and investors. I have invested a lot (for me) recently so I'm backing up my belief in their turnaround with my hard earned dollars.

Pros

The obvious (2+ B cash, 80 million subscribers)

Some that don't seem to get enough publicity -

A fan base and following only surpassed by Apple for a unified hardware / software platform

End to end solution for the Enterprise from Connected devices, network management, secure network infrastructure (I don't think any other company can match this, maybe Microsoft?)

Possibilities of machine to machine communications offered by QNX.

True multitasking (Meego and WebOS are the only other platforms that I'm aware of that had this and now they're gone but they didn't have the installed base and following that Rim has)

Cons
Last generation software, cool factor (I personally think this is ridiculous but Apple and their billions of dollars in sales say otherwise)

Well reported delays

A 100% functioning as demoed in the videos, first quarter 2013 to market, BB10 can solve these problems. That Rim meet those two condtions is absolutely critical.

If only 10% on the existing customer base upgrades to the BB10 phones assuming a conservative $120 increase in selling price that's an extra $1B in revenue. If they can keep increasing their subscriber base as in the recent past that could be another $1B.

I tend to pooh pooh the idea that the world will end because they're missing the holiday season. How many people exclusively buy phones only during the holidays?!

Like I "said" I'm new here. What do you others think?

nabil114

The Chris Umiastowski should work at RIM for the strategies of the products. The Martyn Mallick is a technical guy. The RIM needs to bring someone that understands the technology and the business.

I would be buying the company that provide the security of the mobile. I would suggest this strategy when the RIM is the profitable.

The RIM is positioned to dominate the space in the security of the mobile.

- Rezaur Rahman

hurds

How do you/we know who good your insight is on RIMs communication? Aren't these Jams for developers?? And you're expecting to see communication with corporations? Do you think RIM has ever advertised their communications with corporations? Do you think thats a good idea and something corporations want to be talked about publicly?

I feel like if RIM invented the wheel back in the day we'd have people going, 'oh, well, you did that, but you know, you could have done it this way or that way, and I'm not so sure you're doing a good job, you could have communicated with me more about it, your message to me as an investor needs to be more clear cause I dont get it.

Food for thought. RIM bought Ubitexx in May 2011. Before as far as I know they did ZERO MDM for other phones. This is likely a huge new revenue source for RIM. Im sure theres a huge market of business that was ONLY BYOD that RIM can now support.

These articles often come off not really being about financials but a worried investor wanting his hand held and ever single thing explained by RIM with zero uncertainty. Unfortunately thats not how things work. You invest at your own risk. People seem to feel too entitled in my opinion. RIM cant and won't explain every little thing to investors and I sometimes wonder if this 'communication problem' is more you aren't getting the info to make you feel comfortable (read the last two paragraphs). This market changes rapidly and its showing everyone is having trouble keeping up. If you can't see what RIMs doing, have inside info on this 'poor communication' and are unsure theres an easy solution, sell your shares.

BBNation

Based on one of this comments the current single encrypted connection to BBs is not going away and it will be used be manage alll BBs and use standard https connection to manage non BBs devices. If that is the case the enterprises will love it.

kfh227

Regarding the potential of bleeding cash, don't forget that when a company has no debt, they can always take on debt. So even if they burn through all their cash, they do have a potential cash stream via debt. Could do a bond offering also. Or they could borrow from someone with invested interest in the company with alot of money *cough* Prem Watsa *cough*

FWIW: I think in the first year of BB10s life we'll see half a billion burnt on advertising alone.

Shadberry Bold

RIM has to capture the 18-25 year old demographic and use a celebrity endorser to draw the masses. Yes it's shallow, but it will get the desired results. I am in that age demographic and I am #blackberrybychoice. I've had my share of droids and iphones but I am noticeably more productive with my BB9900. I use my 64GB playbook as a hybrid for entertainment and work. But RIM has to make BB10 fashionable for the next generation target audience in order to have a sustainable future. Personally I believe RIM should not concern themselves with jumping from last to first. They should focus on getting traction ahead of the number 3 player which is Microsoft/windows phones. Then jump into the apple google ring. Just like their descend was gradual their ascend will be the same as well if not even harder. I am a HUGE RIM supporter but it will take working smarter and harder to regain supremacy. No shortcuts. That is what caused the problem to start with. They got complacent with the legacy ecosystem and made marginal improvements while competitors redesigned what a smartphone could be.

BB10 Keys to success:

Marketing(its not what it is...it's what it looks like) / Celebrity Endorser: Aziz Ansari

QNX Os

Apps/ Stability

Enterprise security

daivivo

Question is : how can blackberry mobile fusion compete with those big guys like cisco and huawei in the BYOD market??

PostMortem

Chris, I think you mentioned it in the last Podcast that you were in, but why is it so far fetched that RIM's current Network infrastructure could stay the same as it is "officially" available today (maybe enhanced, but not dissolved or discarded)?

I know that the current (BETA) models are relying on Active Sync, but couldn't it be possible that they're relying on it for now because they are/were working on how to tie in the new Hardware with their infrastructure? For all we know, they are only using Active Sync as an intermediary until their own solution was fully ready.

I think you're right in being concerned, but perhaps they're intentionally not being very vocal about it because they do not intent to change it when the official roll out happens. I only say this because it is very difficult to imagine that they're going to get rid of that revenue.

Nice article by the way.

Rootbrian

Great insight Chris. I agree with the commenter above me.