The Fall Of RIM
By | June 22nd, 2011

BlackBerry aka CrackBerry Imagine the frustration and humiliation of being a market leader in an industry that is exploding – only to lose your dominance and even your respect.

Ask Rupert Murdoch how he feels about the demise of MySpace at a time when social media has become a dominant part of the culture.

And now Research in Motion finds itself in the same boat in the mobile space.  It wasn’t that long ago that seemingly every business person – including most CEOs – relied on their BlackBerrys, swore by them, and became totally addicted to them.  The term “CrackBerry” symbolized the hypnotic pull of smartphones, and Research In Motion ruled the roost.

Until the iPhone came along.

And we now know the rest of the story.  In the first quarter of this year, Apple sold more than 18 million iPhones in a marketplace where many analysts estimate a 50%+ increase this year.  In fact, research firm IDC pegs smartphone sales growth at 55%.

In the meantime, BlackBerry sales continue to lag, sparking layoffs, streamlining, and all those other words that you don’t want to hear from a company that was once the big dog.  RIM profits fell nearly 10% in that same quarter due to disappointing sales.

It gets worse.  The investment community is finally onto RIM’s problems.  Its sixth largest investor, Jarislowsky Fraser Limited, announced it was paring back its stake by 50% or more.  As Stephen Jarislowsky told Bloomberg, ” We are on the way out.”

Who knew?

We knew – and those of you who participated in Techsurvey 7 (and their earlier editions) saw this coming, too.

In this fluid, crazy, fast-moving world of technology that is sparking a sea change in the basic ways in which people communicate with each other, it is our jobs – yours and mine – to try to know what’s coming.

As it relates to smartphones and apps, our design team at jacAPPS needs to know where it’s going before it gets there.  And as media professionals assigned with developing our brands’ tech strategies, you need to be sure you’re attuned with your consumers,and understand what platforms and brands matter to them.  Otherwise, you can make very costly mistakes at a time when every dollar counts.

In the smartphone market, it’s about passion, utility, and loyalty.  (If that sounds like radio, you’re thinking along the same lines.)  We saw hard evidence in this year’s study that Apple (and Android) have all three assets, whereas BlackBerry lacks them all.

Consider that on average, consumers replace their cell phones about every 18 months – and most of us have a pretty good idea of what’s coming next.  For Apple, customer loyalty is at the top of the heap; for BlackBerry, its current customers are headed to Apple and Android, as you can see on the chart below:

TS7 Next Smartphone

More than 80% of iPhone owners are staying with that brand next time – for RIM, it’s a grim story.

But as mentioned, your smartphone isn’t just a device that does a lot of stuff.  We’ve learned in research from “Goin’ Mobile” to our Tech Surveys that your phone is a reflection of who you are.  Smartphones make a statement about their owners, and some – like Apple – evoke passion with a capital “P.”  BlackBerry owners, as the chart below clearly shows, are much more lukewarm with their praise.

TS7 Smartphone Feelings

All that blue for iPhone translates to “love.”  And that’s a big driver in this marketplace.

But RIM’s ultimate downfall is in the world of apps.  Somehow, while BlackBerry owners were busy firing off emails and texts, the Apple team conceived the “App Store.”  And the different experience between platforms today suggests that RIM’s inability to comprehend the importance of apps is a big reason why they find themselves on the mat.

From Techsurvey 7, the number of apps that smartphone owners download differs greatly by device.  Apple owners – iPads, iPhones, and iPod Touch devices – are more likely to have more than 40 apps.  Compare that to BlackBerry customers, about half of whom have fewer than 10 apps.

TS7 Apps Downloaded

Somehow a major player like RIM missed the app phenomenon, assuming it somehow wasn’t of importance to consumers.  But you don’t have to be in the dark because basic research among your own database members – the same ones you send “eBlasts” to every week – can open the doors of your understanding, and provide guidance for your fiscal and strategic decision making.

As they used to say on The X-Files, “The truth is out there.”

You just have to ask the right questions.

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