RIM is the company behind the ever popular phone known as Blackberry which has now become an industry leader when it comes to serious corporate email systems. The company has built up repute for a reliable and secure system which provides complete end to end solutions for mobile messaging services. The success of Blackberry is so phenomenal that its not a surprise that other competitors are quickly coming up with services which are somehow similar to what RIM had been offering for years.
History Evolution
The company which was founded in 1984 by a 23 year old university student had reached a market capitalization of 69.4 billion by 2008. Due to a reputation based on security, organizations and companies which needed a secure environment for wireless message transmission were early adopters of Blackberry and thus were the companys largest customers.
From start the strategy of the company had been to target the corporate clients and thus with this focus in mind the company has been offering numerous packages and services specifically tailored to the corporate lifestyles. Moreover with the first come advantage when it comes to push email, the company had more than 100,000 enterprise customers. The real revenue drivers for the company had been the complete Blackberry wireless solution which included wireless devices, services and services. Looking deeper into the revenues one can could see that more than 70 of the revenue came from the handset sales followed by service (18), software (6) and other revenues (3). This basically shows that the handsets are they key to success for the company and thus innovation is the only way forward.
Ever since its first launch in 1999, numerous models of Blackberry handsets have come to the market with each one different and better than the previous ones. The early ones were only messaging devices with no voice capabilities but later on both of these services merged to what we see nowadays.
The companys strategy has also witnessed variations over the years. Initially Blackberry was only targeted to the serious corporate road warrior who needed emails on the go. Apart from this the company only targeted the large corporations and governmental departments who needed security and reliability.
This philosophy has changed over the years as more and more individual users are using these devices and have become a status symbol of some sort. Many celebrities and famous people are now seen carrying one of these devices in their hands which is a testament to this.
The overall handset designs have also changed over the years. Starting from the dull looking serious minded handsets of the early 2000s, one can now see the sleek and shiny new Bolds and Curves which offer more than just email and voice calls. This is true as more and more Blackberry devices are being bought by the younger generation which not only uses the popular email features but increasingly use them for the social networking applications.
Therefore this sort of a trend shift has put up new challenges for the company. Blackberry which meant only serious business back in the early 2000 now is a fashion symbol and thus in order to cope up with this sort of a transition, RIM needs to carefully plan and predict its future moves as the market for smart phones is becoming cluttered day by day.
Environment Industry
The overall smart phone industry has seen a lot of changes in recent times. Even though RIM was the first to come up with two way messaging system, currently a lot of devices are in stores which offer lot more than just email and voice and thus all of them are competing for the same market. Leading the way in the smart phone category is the Nokias Symbian platform which it specifically tailored to meet the corporate requirements. The first smart phone by Nokia was launched in 1996 named Nokia Communicator 9000. A number of devices have since then been launched. Among other things the most direct competition that Nokia is giving to Blackberry is through its E- Series line of mobile sets.
The second competitor is the Apple iPhone. iPhone has been a revolutionary and has totally transformed the smart phone arena ever since its launch in 2007. The iPhone recently incorporated corporate email system through the Microsoft Exchange system and thus now poses a serious threat to the Blackberry. Moreover with its large number of application through its Appstore, the iPhone has changed the industry standard.
The third competitor for the Blackberry is the Windows Mobile. Although some claim it to be a dying platform but nonetheless it still holds a considerable user base which specifically targets the corporate class. Therefore this poses a direct threat to the Blackberry. The last significant competitor for the Blackberry is the Google Android based devices. Although launched in 2008, the android is quickly gaining market share due to its open source characteristics and more importantly with a strong backing of Google. Therefore it is safe to assume that Android is here to stay and thus Blackberry needs to pay a close check.
The most popular operating system in the smart phone market is the Symbian OS. Symbian has the largest share in most markets worldwide, but lags behind other companies in the relatively small but highly visible North American market. This OS is owned jointly by Nokia, Ericsson, Sony Ericsson, Panasonic, Siemens AG and Samsung. As of 2009 it holds 50.3 of the market share.
The Blackberry OS holds the second position in the smart phone operating system market share with 20.9 market share as of 2009. This is followed by the iPhone OS with 12.7 after that comes the Windows Mobile OS with 9 market share. Google Android has managed to grab 2.8 of the whole smart phone market share as of 2009. This OS, although very new and in its early stages promises to give developers access to different aspects of the phones operation. This basically lends many to predict that Android may very well be the most popular OS featuring in the smart phone market.
Living in such a tough environment, RIM has to keep playing its cards right in order to remain an active force and increase its market share. In order to do this it needs to capitalize on its strengths. This means that RIM should need to focus more aggressively on its corporate email package as it still is its main revenue driver in services segment. Moreover with no OS having a dominant position in the market, the coming few years are still a hot battle ground for the smart phone market. In such a scenario RIM needs to constantly invest in the
RD segment.
Innovation and leadership are the key ingredients for a successful company. Blackberry needs both of these qualities if it wants to remain a dominant force in the coming years. For this the company needs to constantly invest in the RD segment. Although RD has been a constant factor of the company but this needs to be increase if Blackberry needs to succeed in the upcoming smart phone market.
Porter Five Forces Model
The porters five forces model for the smart phone industry will give a strategic assessment of the competitive position of the industry. Using these five forces, one can get a clearer picture of the level of competitiveness that exists in the current smart phone market.
The five forces are as follows
Existing competitive rivalry between suppliers
Currently the smart phone market is experiencing intensive competition with different suppliers marketing aggressively to promote their products. Leading the way in this race is RIM with more than 42 market share. Apple comes second with 25 share with the third one being Microsoft having 19 share as of Dec, 2009. Google Android has a 5 share but this figure is set to grow huge in the coming years. The rivalry is especially more intensive with the big 2 players i.e., Blackberry and iPhone. Once Blackberry was the cornerstone of corporate emails but as soon as Apple was launched back in 2007, it quickly managed to take up the Blackberrys market.
Threat of new market entrants
The current smart phone market is already saturated with a few big players i.e., Blackberry, iPhone, Windows Mobile and Google Android (Nexus One). Moreover there is an intense competition going on between these players. Thus in such circumstances the threat of new entrants is low. This is also due to the fact that there is a high barrier to entry and thus its not easy for a new entrant to come into the market.
Bargaining power of buyers
Buyers have an immense power in the smart phone segment. The reason being that the buyers can choose from a variety of different handsets and models and thus can choose among them. Moreover the buyers have a relatively low switching cost as one buyer can switch from a blackberry to an iPhone very easily. Therefore the buyers are the king when it comes to their bargaining power.
Bargaining Power of Suppliers
Suppliers have a comparatively low bargaining power. The reason being that with an intensive competition going among the big players such as Blackberry and iPhone, the suppliers are thus left with little bargaining power and the final authority rests with the consumer on whether to buy a certain product.
Threat of Substitute Products
The threat of substitute products does exist for the smart phone market. Substitutes for the smart phone are the Tablet PCs i.e. Apple iPad, Hp Slate, the PDA i.e. Palm and the Netbooks. Of these there, the Tablet PCs and the Netbooks are likely to give a sort of a tough time for the smart phone segment in the upcoming years. The reason being that as the technology is changing so rapidly the time may not be far away when we will see smart phone and tablet PCs combined together.
Key Success Factor for RIM
14 Million Blackberry Subscriber account base (2008).
6 Billion plus annual revenue of RIM.
More than 42 share of Blackberry in the smart phone market (As of Dec, 09).
Industry leader in secure corporate email systems.
A large RD department with dedicated teams working on to develop innovative devices.
RIMs cryptographic and security systems are known in the corporate world for their stability and security.
Low employee turnover rate means dedicated and motivated teams that enable the company to attain optimum productivity level.
Large variety of Blackberry devices for every class segment of the society.
Industry Value Chain
One of the advantages to RIM that set it apart from the other Smartphone manufacturers prior to the launch of the iPhone was that it proudly made both the operating system along with the hardware of the handset in its in house facilities. This basically enabled RIM to vastly customize a design of a device according to its need. Then came Apple with the same model and things were never the same again. Apple also came up with its own OS along with its own hardware manufacturing system.
Looking from an industry point of view the overall Smartphone industry is following the same sort of approach. Most of the manufacturing of the hardware is done in house. After the manufacturing the operating system is also developed in-house e.g., RIM developed its own OS for its line of handsets and Apple developed its own OS for the iPhone. Once the handset has been manufactured plus the software installed the smart phone is sold via wireless carriers. This is sort of an industry norm and most of the smart phone manufacturers dont sell their handsets directly to the customer with the exception to Google with its Nexus One handset which it only sells via its website
Supplemental Strategies (Mergers, Acquisitions, Vertical Integration)
The company has been instrumental in adopting several supplemental strategies in order to ensure that it remains a leading force in the Smartphone arena. The first and foremost principle that RIM had adopted ever since its launch of the Blackberry device is the vertical integration. The company incorporates in-house manufacturing of the hardware plus its own brand of OS for its line of smart phones. This gives the company a vast deal of flexibility that enables it to create totally innovative devices which would be more suited to its target market. This is probably one of the reasons that Blackberry is still the market leader in its class as such domination in every aspect is difficult to challenge.
Another strategy that RIM had adopted is acquiring small startups and firms that would enable it to give more service to its clients. One example of this is its acquiring of Slangsoft, a high tech startup in Israel that was in the process of developing the code that allowed the ability to display and input Chinese characters. This would enable RIM to access the Asian and other foreign markets.
International Expansion
Until 2008, RIM had been keeping its RD operations at its main facility in Waterloo, Canada. Although some with some work being also done in the United States and UK but the company needs a more global approach if it wants to have a broader appeal. In such times of high competition, the company needs to plan out an aggressive approach in order to ensure a universal appeal. For that matter it plan to base its operations in Europe, Middle East and Africa. The same applies for the RD facilities and for that matter the company plans to adopt the same sort of rigorous skill set requirements for the induction of foreign graduates.
Going global is not easy for any company and it comes with its set of problems. Language barriers, cultural differences are just some of the issues that the company faces. For technological firms another threat is the leak of the source code to rivals. Working in countries with little or no intellectual property laws, this has become a sort of a dilemma for any company which plans to expand globally.
Therefore for RIM going global was a very serious dilemma as the blackberry source code had to be protected. Moreover the companys setup is very much centralized as most of its engineering RD teams are still based in Waterloo and going global means interacting with different teams around the world in different time zones. On the bright side, the sheer number of new users that the company to tap into once it ventures into foreign markets is also very much enticing. Therefore the company will have to eventually expand its presence globally but this process should be undertaken in a proper manner.
Future Prospects
With the smart phone wars now entering a new era with the arrival of the latest entry by Google in the shape of the Android, RIM needs to play its cards right if it wants to be the world biggest manufacturer of Smartphone and its related services. In order to do that the company should start to increase its global presence plus increasing its RD budget.
Among other things the company should venture more into the consumer market as this is the way forward for the smart phone industry. By bringing up more consumer savvy models, RIM could seal its place in the top. Touch screen technology which iPhone perfected back in 2007 is needed to be adopted in a better way as the future is in this. Apart from this the company should improve its OS and should tailor it towards the younger generation as is the case with the iPhone and Android. The online Appstore should be improved on the basis of the Apple Appstore as online apps hold a lot of potential. Lastly the company should increase its Blackberry Connect service to other devices such as Netbooks and tablet PCs as these could be a source of additional revenue for the company.
History Evolution
The company which was founded in 1984 by a 23 year old university student had reached a market capitalization of 69.4 billion by 2008. Due to a reputation based on security, organizations and companies which needed a secure environment for wireless message transmission were early adopters of Blackberry and thus were the companys largest customers.
From start the strategy of the company had been to target the corporate clients and thus with this focus in mind the company has been offering numerous packages and services specifically tailored to the corporate lifestyles. Moreover with the first come advantage when it comes to push email, the company had more than 100,000 enterprise customers. The real revenue drivers for the company had been the complete Blackberry wireless solution which included wireless devices, services and services. Looking deeper into the revenues one can could see that more than 70 of the revenue came from the handset sales followed by service (18), software (6) and other revenues (3). This basically shows that the handsets are they key to success for the company and thus innovation is the only way forward.
Ever since its first launch in 1999, numerous models of Blackberry handsets have come to the market with each one different and better than the previous ones. The early ones were only messaging devices with no voice capabilities but later on both of these services merged to what we see nowadays.
The companys strategy has also witnessed variations over the years. Initially Blackberry was only targeted to the serious corporate road warrior who needed emails on the go. Apart from this the company only targeted the large corporations and governmental departments who needed security and reliability.
This philosophy has changed over the years as more and more individual users are using these devices and have become a status symbol of some sort. Many celebrities and famous people are now seen carrying one of these devices in their hands which is a testament to this.
The overall handset designs have also changed over the years. Starting from the dull looking serious minded handsets of the early 2000s, one can now see the sleek and shiny new Bolds and Curves which offer more than just email and voice calls. This is true as more and more Blackberry devices are being bought by the younger generation which not only uses the popular email features but increasingly use them for the social networking applications.
Therefore this sort of a trend shift has put up new challenges for the company. Blackberry which meant only serious business back in the early 2000 now is a fashion symbol and thus in order to cope up with this sort of a transition, RIM needs to carefully plan and predict its future moves as the market for smart phones is becoming cluttered day by day.
Environment Industry
The overall smart phone industry has seen a lot of changes in recent times. Even though RIM was the first to come up with two way messaging system, currently a lot of devices are in stores which offer lot more than just email and voice and thus all of them are competing for the same market. Leading the way in the smart phone category is the Nokias Symbian platform which it specifically tailored to meet the corporate requirements. The first smart phone by Nokia was launched in 1996 named Nokia Communicator 9000. A number of devices have since then been launched. Among other things the most direct competition that Nokia is giving to Blackberry is through its E- Series line of mobile sets.
The second competitor is the Apple iPhone. iPhone has been a revolutionary and has totally transformed the smart phone arena ever since its launch in 2007. The iPhone recently incorporated corporate email system through the Microsoft Exchange system and thus now poses a serious threat to the Blackberry. Moreover with its large number of application through its Appstore, the iPhone has changed the industry standard.
The third competitor for the Blackberry is the Windows Mobile. Although some claim it to be a dying platform but nonetheless it still holds a considerable user base which specifically targets the corporate class. Therefore this poses a direct threat to the Blackberry. The last significant competitor for the Blackberry is the Google Android based devices. Although launched in 2008, the android is quickly gaining market share due to its open source characteristics and more importantly with a strong backing of Google. Therefore it is safe to assume that Android is here to stay and thus Blackberry needs to pay a close check.
The most popular operating system in the smart phone market is the Symbian OS. Symbian has the largest share in most markets worldwide, but lags behind other companies in the relatively small but highly visible North American market. This OS is owned jointly by Nokia, Ericsson, Sony Ericsson, Panasonic, Siemens AG and Samsung. As of 2009 it holds 50.3 of the market share.
The Blackberry OS holds the second position in the smart phone operating system market share with 20.9 market share as of 2009. This is followed by the iPhone OS with 12.7 after that comes the Windows Mobile OS with 9 market share. Google Android has managed to grab 2.8 of the whole smart phone market share as of 2009. This OS, although very new and in its early stages promises to give developers access to different aspects of the phones operation. This basically lends many to predict that Android may very well be the most popular OS featuring in the smart phone market.
Living in such a tough environment, RIM has to keep playing its cards right in order to remain an active force and increase its market share. In order to do this it needs to capitalize on its strengths. This means that RIM should need to focus more aggressively on its corporate email package as it still is its main revenue driver in services segment. Moreover with no OS having a dominant position in the market, the coming few years are still a hot battle ground for the smart phone market. In such a scenario RIM needs to constantly invest in the
RD segment.
Innovation and leadership are the key ingredients for a successful company. Blackberry needs both of these qualities if it wants to remain a dominant force in the coming years. For this the company needs to constantly invest in the RD segment. Although RD has been a constant factor of the company but this needs to be increase if Blackberry needs to succeed in the upcoming smart phone market.
Porter Five Forces Model
The porters five forces model for the smart phone industry will give a strategic assessment of the competitive position of the industry. Using these five forces, one can get a clearer picture of the level of competitiveness that exists in the current smart phone market.
The five forces are as follows
Existing competitive rivalry between suppliers
Currently the smart phone market is experiencing intensive competition with different suppliers marketing aggressively to promote their products. Leading the way in this race is RIM with more than 42 market share. Apple comes second with 25 share with the third one being Microsoft having 19 share as of Dec, 2009. Google Android has a 5 share but this figure is set to grow huge in the coming years. The rivalry is especially more intensive with the big 2 players i.e., Blackberry and iPhone. Once Blackberry was the cornerstone of corporate emails but as soon as Apple was launched back in 2007, it quickly managed to take up the Blackberrys market.
Threat of new market entrants
The current smart phone market is already saturated with a few big players i.e., Blackberry, iPhone, Windows Mobile and Google Android (Nexus One). Moreover there is an intense competition going on between these players. Thus in such circumstances the threat of new entrants is low. This is also due to the fact that there is a high barrier to entry and thus its not easy for a new entrant to come into the market.
Bargaining power of buyers
Buyers have an immense power in the smart phone segment. The reason being that the buyers can choose from a variety of different handsets and models and thus can choose among them. Moreover the buyers have a relatively low switching cost as one buyer can switch from a blackberry to an iPhone very easily. Therefore the buyers are the king when it comes to their bargaining power.
Bargaining Power of Suppliers
Suppliers have a comparatively low bargaining power. The reason being that with an intensive competition going among the big players such as Blackberry and iPhone, the suppliers are thus left with little bargaining power and the final authority rests with the consumer on whether to buy a certain product.
Threat of Substitute Products
The threat of substitute products does exist for the smart phone market. Substitutes for the smart phone are the Tablet PCs i.e. Apple iPad, Hp Slate, the PDA i.e. Palm and the Netbooks. Of these there, the Tablet PCs and the Netbooks are likely to give a sort of a tough time for the smart phone segment in the upcoming years. The reason being that as the technology is changing so rapidly the time may not be far away when we will see smart phone and tablet PCs combined together.
Key Success Factor for RIM
14 Million Blackberry Subscriber account base (2008).
6 Billion plus annual revenue of RIM.
More than 42 share of Blackberry in the smart phone market (As of Dec, 09).
Industry leader in secure corporate email systems.
A large RD department with dedicated teams working on to develop innovative devices.
RIMs cryptographic and security systems are known in the corporate world for their stability and security.
Low employee turnover rate means dedicated and motivated teams that enable the company to attain optimum productivity level.
Large variety of Blackberry devices for every class segment of the society.
Industry Value Chain
One of the advantages to RIM that set it apart from the other Smartphone manufacturers prior to the launch of the iPhone was that it proudly made both the operating system along with the hardware of the handset in its in house facilities. This basically enabled RIM to vastly customize a design of a device according to its need. Then came Apple with the same model and things were never the same again. Apple also came up with its own OS along with its own hardware manufacturing system.
Looking from an industry point of view the overall Smartphone industry is following the same sort of approach. Most of the manufacturing of the hardware is done in house. After the manufacturing the operating system is also developed in-house e.g., RIM developed its own OS for its line of handsets and Apple developed its own OS for the iPhone. Once the handset has been manufactured plus the software installed the smart phone is sold via wireless carriers. This is sort of an industry norm and most of the smart phone manufacturers dont sell their handsets directly to the customer with the exception to Google with its Nexus One handset which it only sells via its website
Supplemental Strategies (Mergers, Acquisitions, Vertical Integration)
The company has been instrumental in adopting several supplemental strategies in order to ensure that it remains a leading force in the Smartphone arena. The first and foremost principle that RIM had adopted ever since its launch of the Blackberry device is the vertical integration. The company incorporates in-house manufacturing of the hardware plus its own brand of OS for its line of smart phones. This gives the company a vast deal of flexibility that enables it to create totally innovative devices which would be more suited to its target market. This is probably one of the reasons that Blackberry is still the market leader in its class as such domination in every aspect is difficult to challenge.
Another strategy that RIM had adopted is acquiring small startups and firms that would enable it to give more service to its clients. One example of this is its acquiring of Slangsoft, a high tech startup in Israel that was in the process of developing the code that allowed the ability to display and input Chinese characters. This would enable RIM to access the Asian and other foreign markets.
International Expansion
Until 2008, RIM had been keeping its RD operations at its main facility in Waterloo, Canada. Although some with some work being also done in the United States and UK but the company needs a more global approach if it wants to have a broader appeal. In such times of high competition, the company needs to plan out an aggressive approach in order to ensure a universal appeal. For that matter it plan to base its operations in Europe, Middle East and Africa. The same applies for the RD facilities and for that matter the company plans to adopt the same sort of rigorous skill set requirements for the induction of foreign graduates.
Going global is not easy for any company and it comes with its set of problems. Language barriers, cultural differences are just some of the issues that the company faces. For technological firms another threat is the leak of the source code to rivals. Working in countries with little or no intellectual property laws, this has become a sort of a dilemma for any company which plans to expand globally.
Therefore for RIM going global was a very serious dilemma as the blackberry source code had to be protected. Moreover the companys setup is very much centralized as most of its engineering RD teams are still based in Waterloo and going global means interacting with different teams around the world in different time zones. On the bright side, the sheer number of new users that the company to tap into once it ventures into foreign markets is also very much enticing. Therefore the company will have to eventually expand its presence globally but this process should be undertaken in a proper manner.
Future Prospects
With the smart phone wars now entering a new era with the arrival of the latest entry by Google in the shape of the Android, RIM needs to play its cards right if it wants to be the world biggest manufacturer of Smartphone and its related services. In order to do that the company should start to increase its global presence plus increasing its RD budget.
Among other things the company should venture more into the consumer market as this is the way forward for the smart phone industry. By bringing up more consumer savvy models, RIM could seal its place in the top. Touch screen technology which iPhone perfected back in 2007 is needed to be adopted in a better way as the future is in this. Apart from this the company should improve its OS and should tailor it towards the younger generation as is the case with the iPhone and Android. The online Appstore should be improved on the basis of the Apple Appstore as online apps hold a lot of potential. Lastly the company should increase its Blackberry Connect service to other devices such as Netbooks and tablet PCs as these could be a source of additional revenue for the company.
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