The big question for HP is: does it try to swim in the mainstream of the mobile market and embrace the Android operating system, for both phones and tablets, or does it try to differentiate itself with an alternative like Linux or Firefox?
To succeed, HP has to come up with a unique selling proposition. The brand still has some lustre, but as the Palm debacle showed, that’s not enough to sell phones or an independent operating system. Its brand image is strong on technology and embarrassingly weak on design. So its best hope of catching the market’s attention is to come out with a product with new features and better performance.
Blackberry’s imminent demise could provide an opening. The HP brand is much loved by IT managers. By creating a product that meets bring-your-own-device standards and delivers a user experience that appeals to employees, it might fill a niche in the corporate world. Combining a novel operating system HP controls with its historical technological excellence might be enough.
I doubt HP wants to be a niche player, but right now that would be a step up.
Blackberry and Windows are the bedrock of the mobile world.
A year from now, this past week will be looked upon as the point when we shifted from one mobile operating system epoch to another. Two dinosaurs – Blackberry and Windows – appear irrecoverably stuck in a tar pit of tumbling market share and industry confidence, while two warm-blooded open source upstarts – Ubuntu Linux and Firefox – are walking tall.
Blackberry’s latest results show widening financial and subscriber losses. After CEO Thorsten Heins proclaimed “we are confident in the ongoing success of our transformation in the coming years,” the share price plummeted. The only question remaining for Wall Street analysts is exactly which hallucinogen he favors and where can they get some.
Mozilla and Canonical, on the other hand, talked this week about deals with major mobile carriers as, respectively, Firefox Mobile and Ubuntu Touch, move from development to implementation. The breakout for Firefox phones looks likely to happen in the spanish speaking world as Telefonica prepares to launch devices in its markets. Ubuntu isn’t nearly as far along, but several big European and all three major Korean carriers have joined an advisory group to prepare for its introduction in coming months.
Firefox, a light client that relies almost completely on server-side support, and Ubuntu Linux, which aims to be the single, unifying operating system for phones, tablets, computers, televisions and other consumer devices, are targeting the thick and thin ends of the spectrum. Android and iOS sit comfortably in the middle, leaving no room for twentieth century thunder lizards.
We need Hunter S. Thompson. Now. He broke the ibogaine story in the 1972 presidential race and would quickly find any ambient pharmaceuticals floating through the Blackberry corporate ecosystem. Unfortunately, he’s chilling with Steve Jobs in the Great Crash Pad in the Sky. Lacking his authoritative diagnosis, all we’re left with is irresponsible speculation.
Instead, let’s consider Blackberry’s life expectancy once the U.S. Department of Defense certifies Samsung’s Galaxy smartphones, Apple iPhones and, yes, wheezing tablets as secure enough for military use. Blackberry is already rapidly disappearing from the consumer market and bring-your-own-device pressure is forcing corporations to allow Android and iOS users into their walled gardens. An aura of top secret grade security is its only competitive advantage left.
Once Apple and Samsung have breached the Pentagon’s firewall, Blackberry’s last market stronghold – professionally paranoid government IT departments – will fade away like fractal visions of gila monster-headed campaign rallies in the Haight.
Sorry. Didn’t mean to go there again.
With DoD’s blessing in hand, the two mobile device market leaders can aggressively sell to other cautious buyers, like banks, military contractors and law enforcement.
And to security conscious deliverymen. Care to bet how long it’ll be before you see Thorsten’s connection standing on a Waterloo street corner checking Colombian commodity prices on an iPad?
Blackberry surprised the financial community by reporting a profit of 22 cents a share for its fiscal quarter that ended earlier this month. Expectations were for a loss of about that size, not a gain.
It certainly is good news for Blackberry. It looks more like the result of tighter management than anything else, but there’s nothing wrong with that. So long as market success follows.
The big problem is in the subscriber numbers, which fell by about 3 million. A healthy company doesn’t show a net loss of customers in a market that’s growing at better than 40% per year. It’s particularly worrisome when losses come from the consumer market, which is increasingly driving the enterprise side of the business.
Blackberry’s hope is the new Z10 smart phone that launched in the U.S. last week. A million units have shipped so far. But from 2011 to 2012, Blackberry’s global market share was cut in half, dropping below 5%. It needs to add 30 to 40 million net new subscribers just to maintain market share – the Z10 needs to do more than just offset customer losses. Even at nominal churn levels Blackberry needs 50 million or more new subscribers total this year. A tall order for a company with 76 million subscribers worldwide.
The likelier course is that Blackberry’s market share will continue to drop, putting it in the same league with Windows and various flavors of Linux. That doesn’t necessarily mean Blackberry is doomed, but at best it relegates the company to a cash cow role – maximizing profits from a relatively stable customer base. Blackberry can’t just manage its way out of the slide. It needs to work magic with the Z10.
Actually, I’m waiting for the new Star Wars movie.
Traffic in major U.S. cities is snarled as lines of hopeful buyers camp out in front of AT&T stores and spill into the street, awaiting tomorrow’s launch of the Blackberry Z10. Okay, I haven’t actually seen it, but based on CEO Thorsten Heins’ declaration of victory over Apple, it must be happening. What else could explain his exuberance? He doesn’t seem like the sort to dabble in hallucinogens.
He was building on last week’s lugubrious Apple speculation, following the launch of Samsung’s Galaxy S-IV. He should have checked the Apple Death Knell Counter. It’s an old story.
Apple has never dominated a market sector for long, and doesn’t need to. Its smart phone and tablet market share will settle into a range where Apple can maximize the profits made possible by its ability to charge a premium for its design and integration. Apple has never tried to win over the long term on volume.
Whether it’s computers, tablets or phones, Apple’s biggest strength is also its biggest weakness: it makes both the operating system and the hardware, and you can’t get one without the other. Particularly since scraping bottom in 1997, Apple has figured out how to capitalize on that strength and minimize the weakness.
Blackberry has the same problem but hasn’t figured it out. Heins thinks Apple is over the hill? I wouldn’t be surprised if CEO Tim Cook had a picture of a Blackberry on his office wall with the caption “there but for the grace of Jobs go I”.
Take Heins’ comments, replace Apple with Blackberry and you get a picture that he would find uncomfortably close to reality.
What RIM, excuse me, Blackberry showed this morning was solid technology that’s ahead in some regards and more or less keeping up with the pack in others. The new Blackberry 10 operating system is consistent with what they demonstrated and described last October at MobileCon.
They have a full touchscreen phone and they’re keeping a keyboard model in play. That’s probably a good idea given that their best short term hope is to re-energize their legacy institutional customers. Not the kind of buyers who stray far from their comfort zones. The improvements they’ve made to keyboard and touchscreen interfaces will be a big help.
The new user interface doesn’t break any radically new ground. It follows a tile based design that’s reminiscent of Windows 8. It’s a nice enough approach. I like the look and feel of using the Windows 8 interface, and I’m sure Blackberry has done well in that regard too.
However, Windows 8 is faltering. A nice interface is not enough to entice the truly creative developers who prefer, by a large margin, to work on iOS and Android platforms. Blackberry might have solid in-house software and standard apps and content from the usual suspects, but that appeals to aging IT managers who want to limit the scope of their network management problems.
The apps they showed this morning are pretty ordinary. Nothing would particularly appeal to the average consumer, let alone the young people who set the pace for everybody else. “Me too” doesn’t get you very far and, boiled down, that’s Blackberry’s message this morning.
Blackberry also has a problem with distribution. It isn’t a force in the mainstream consumer-facing distribution channels. It gets some help from carriers and sells to insititutional buyers, but it is completely swamped by the marketing efforts of Apple, Samsung and the other big manufacturers.
Silicon Valley money is starting to focus on the consumer market as the point of entry to the corporate and government agency space. The other big announcement this morning came from a start-up called Tomfoolery. It’s a big deal to me anyway. I might be biased because I know Sol Lipman, one of the principals, but he has a solid record of 1. fast failures and 2. multimillion dollar successes. When you have both you have huge credibility in Silicon Valley.
Tomfoolery’s play is to focus directly on building enterprise grade mobile apps that are targeted aggressively at consumers. They’ll sell one by one to employees and then turn them loose on corporate IT departments. Disruptive, darn it.
I think Blackberry did what it needed to do this morning to keep the doors open for a few more months. But that’s all the time they’ve bought themselves. If they don’t start reporting significant sales growth immediately – February and, maybe, March – they’re cooked.