Do You Trust RIM?

RIM is in a heap of trouble, but you wouldn't know it from the attendance at BlackBerry World in Orlando earlier this month, where literally thousands of people packed a giant conference room to hear CEO Thorsten Heins' keynote address, meet with RIM account teams, and attend developer events. These weren't just holdouts from RIM's government or enterprise base, either; RIM allowed BlackBerry World alumnae to skip some lines, and the "SpeedPass" lines were 20x shorter than the regular ones. RIM has been growing rapidly some global markets, and many of the attendees appeared to hail from these locales, where the BlackBerry brand – and BBM in particular – are hallmarks of upwardly mobile youth.[Image credit: Simon Q]

The problem is that these new BlackBerry fans are buying cheap Curves that RIM makes little money on, and RIM is rapidly losing market share at the high end in developed markets like North America to Apple and Google. It is certainly possible that RIM will be able to defend its market share growth in locations like Indonesia, but cheap Android phones are decimating Nokia's Symbian business in those same geographies, so it is clear that consumers at all income levels are looking to invest in app-driven mobile ecosystems (and when they do have enough money for an iPhone, they buy them. In droves).

Even if RIM's unit sales rebound on the strength of BBM in emerging markets, the company needs to get higher margin devices to market that consumers want to buy. To sell a higher margin device, RIM will have to compete directly against Apple, Google, and Microsoft.

What RIM Showed Off

Kicking off his keynote address, Heins tried to dispel the notion that RIM is exiting the consumer market. The vast majority of smartphone sales – even those used for enterprise mobility – are to consumers at retail, so RIM has to compete for consumers if it wants to stay in business. However, RIM finally realized that it won't win if it tries to be everything to everyone, so it is narrowing its focus to "BlackBerry People," consumers who focus on personal productivity. This is sound strategy. Then, because RIM simply cannot help but shoot itself in the foot at every opportunity, it undercut that message by bringing a bunch of game developers on stage and highlighting a camera feature of its upcoming OS.

RIM demonstrated three aspects of BlackBerry 10:

• RIM briefly showed a glimpse of the new user interface, which resembles a cross between Windows Phone 7 (tiles on the home page allow quick peeks into the app) and what webOS 4.0 might have looked like (with smooth transitions been multi-tasking apps). It certainly appears RIM is developing a modern touchscreen user interface, but that is table stakes, and this was truly just a peek; there was no hands-on with the UI at the show. Even if the UI is amazing, it is unlikely to drive sales on its own. If people bought phones based on great user interfaces, we would all be using webOS and Windows Phones.

• RIM also showed off a virtual QWERTY keyboard with gestures which it claims is the best virtual keyboard available. If this is truly better than what Apple, Microsoft, Google, and several Android developers have created, this could at least keep BlackBerry users from leaving the fold. It certainly fits with RIM's focus on productivity-oriented users. However, RIM has promised revolutionary virtual keyboards in the past that didn't pan out, and Apple, Microsoft, and Google all have new versions of their OSs coming in the second half of the year. Apple and Microsoft are well ahead of where RIM is today on virtual keyboards, and all of RIM's competitors could improve their keyboards further before BlackBerry 10 even ships.

• Finally, RIM demo'd a ridiculously cool camera feature, which combines elements of best shot (rapidly taking multiple versions of a photo), face recognition, and photo editing. If two people are in a photo, you can rotate an on-screen loop around their faces and create a photo that combines the best version of each of them. This is a great feature, and if consumers bought smartphones based on a single camera feature, RIM would be golden. (They don't, but that doesn't take anything away from how impressive this feature is.) [Ed: It's worth noting RIM is using third-party Scalado tech for this camera feature]

The bottom line is simple: there is no way that RIM can catch up to Apple or Google in apps, entertainment, or cloud services. The competition simply has too big a lead. There is also no way that RIM can launch a version 1.0 of an OS that is as polished as rivals who have had years to hone the experience and add features. Therefore, RIM needs to create a platform that is so good in a few critical areas that a subset of consumers are willing to buy a BlackBerry 10 phone despite its obvious flaws in other areas.

RIM did not clear that bar with what it showed off in Orlando. When I pressed Thorsten Heins on this after the keynote, he insisted that there is much more to BlackBerry 10, and that he simply isn't willing to tip his hand so far before launch. In other words, "trust us." I would love to see RIM succeed both for personal reasons (I have friends at the company) and for professional ones (healthy industry competition is good for analyst firms — it means there is more to analyze and more clients to analyze for). Sadly, RIM has had a horrific track record executing over the past four years, and it is asking for a further leap of faith. Do you trust that RIM has amazing hidden features on tap, and that it will now be able to execute at a dramatically higher level?