RIM backing away from hardware

22 January 2013 by Steve Blum
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For sale?

RIM is talking about getting out of the hardware business and making a living licensing its soon-to-be-released Blackberry 10 operating system. They talked about getting into the OS licensing business at the Mobilecon show in October, although they seemed pretty intent on staying in the hardware business too at that point.

They’ll have a hard time transitioning to a licensing model. RIM’s selling proposition is beginning-to-end enterprise/institutional IT network support. Consumers don’t buy Blackberries, and that’s where the major manufacturers are focused.

I could see RIM doing a deal with a manufacturer to buy out its hardware business and support the Blackberry OS as a niche. But they’d be playing the end game. It’s not a growth strategy. If anything, manufacturers are looking at more open source OSes. Samsung adopting Tizen is an example.

The automobile sector is one potential growth area for RIM, and they’re looking at it. It’s essentially a machine-to-machine play, and if that’s really where they’re headed, they have a better shot at making a go at licensing. A closed system can be an advantage in that space, where telecommunications capability is just one more feature engineered into an overall product design.

Smart phones are a different story. There’s an increasing amount of effort focused on the BYOD (bring your own device) market from manufacturers, carriers and, most importantly, application and service developers. As long as there are IT departments that buy mobile services and hardware, and dictate corporate policy – government agencies, for example – RIM will sell devices and back end support. But their market share will continue to decline. They just don’t have a compelling growth story to tell to handset manufacturers.