BlackBerry is not dead

Rumours of the death of BlackBerry have been greatly exaggerated. But, BlackBerry maker Research in Motion (RIM) is not exactly thriving either. This is a company facing very serious challenges (which have been widely chronicled).

Three months ago in Orlando, new CEO Thorsten Heins debuted the operating system on which RIM’s future hangs: BlackBerry 10. Ahead of BlackBerry World, it was clear that the launch of this new operating system (which RIM calls a mobile computing platform) was RIM’s last throw of the dice.

The reviews of what we know about the platform so far have been overwhelmingly positive. But, most of the early coverage has been overshadowed by Heins’s decision to delay the launch of the new platform and devices from the fourth quarter of 2012 to January 2013. The knee jerk reaction was that this meant RIM was toast. And then smart folks and analysts realised that this discipline of not releasing an unfinished product had been missing from RIM in the past (and indeed would be more damaging than shipping in November).

If you believe everything you read these days, you would think that BlackBerry has no more enterprise customers, no more consumer users, almost zero market share and is close to shutting shop.

Thing is, we’ve become so used to the US-centric view of the world thanks to the likes of Techcrunch, AllThingsD, The Verge, that any pronouncements from these technology news sites are instantly repeated in the UK and Europe and accepted as gospel around the world.

Yes, Blackberry’s position in the US market is under threat. Enterprise customers are spooked (yet, it remains unclear exactly how serious and widespread these reports are).

In other markets, including SA, the situation couldn’t be more different. Today, RIM earns 63% of its revenue outside of the US, Canada and the UK (vs 56% a year ago). In South Africa, BlackBerry’s success has been well documented.

Arthur Goldstuck
Arthur Goldstuck

Arthur Goldstuck, MD of World Wide Worx, estimates there are 4.5m BlackBerry devices in SA. Vodacom revealed recently that it has 2.4m BlackBerry smartphones on its network. The estimated figure on MTN is below 2m (likely 1.8m), with the remainder on Cell C and 8.ta. Goldstuck’s figure may be slightly conservative. Also, this number continues to grow.

Compare that to the fewer than 1m Android smartphones in South Africa (only 500 000 on Vodacom), and around 400 000 iPhones.

New MD for South Africa and Southern Africa, Alexandra Zagury believes there is definitely an opportunity to continue growing in SA. She moves to Johannesburg after a stint heading RIM’s operation in Turkey.

RIM’s enterprise business in the country is still growing – around 80% of the JSE’s top 300 companies run BlackBerry Enterprise Server (BES). Growth in the SME space continues. And there’s the “untapped opportunity” in 11 adjacent markets which Zagury is responsible for (she’s particularly excited about the potential in Angola).

But if things are so bad in the US, surely they can head south and quickly? The Mobility 2012 findings shared by Goldstuck on Wednesday are helpful. Nokia – “written-off”, “limping”, “dead” Nokia – still leads the pack in SA with 50% market share. This figure is indicative of just how strong Nokia was in SA, and how long shifts take in markets (especially emerging ones). These changes don’t happen overnight. Beyond emerging markets, smartphone adoption in the US has only just hit the halfway mark (according to Nielsen) – despite all the hype.

The switch from feature phones to smartphones will continue in all markets, including SA. RIM’s Zagury says her number one focus is “making our South African customers happy”. As part of this, BlackBerry is planning to launch loyalty and retention campaigns in the months ahead. She also wants to make sure “BlackBerry people have the best BlackBerry experience” by ensuring as many as possible upgrade to the latest available OS 7.1. Here it’s working with the four network operators.

RIM is also working with operators to launch low-cost BlackBerry Internet Service (BIS) plans. The all-you-can-eat top packages remain, but tiered services mean subscription prices of as low as R15 per month. 8.ta, Cell C and MTN have all launched cheaper packages, and Vodacom is expected to unveil its bundles soon. The lower cost plans will no doubt see BlackBerry continue its push into the lower end of the middle-market, where price sensitivity is high.

The Mobility 2012 data is useful here too. On average, consumers using BlackBerry spend R306 on mobile services per month, compared to the overall market average of R200. This higher average revenue per user (ARPU) number has been separately backed up by senior executives at the two largest networks in the country. One can easily see why operators are so enamoured with BlackBerry.

Expect to see loyalty programmes rolled out globally as RIM defends its 78m-strong (and growing!) global subscriber base. It has to. It needs to ensure (in time) as many of these customers migrate to BB10 as possible. This is what Samsung has achieved to some extent, and what Nokia has mostly failed at with the Lumia launches to date (its had surprising and somewhat unexpected success in the US thus far).

RIM has managed to attract attention from developers too, thanks largely to the work by evangelic Alec Saunders (RIM’s Vice President of Developer Relations and Ecosystem Development). Its BlackBerry 10 Jam World Tour – in two-dozen cities worldwide – has sold out in most locations. It hits Cape Town Tuesday and this leg too is sold out. There is real excitement among developers globally about BB10, which provides an alternative to dominant iOS. Now RIM needs to deliver BlackBerry 10, and deliver it well.

The margin for error at RIM is small. Tiny, even. But don’t write off BlackBerry just yet.

Source: Moneyweb

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BlackBerry is not dead