RIM's Q2 Shake-Up: Reawakening Dragon Or Death Rattle?
RIM's painful love song to developers had left us prepared for the worst, so a rise in users and a glimmer of financial hope in Q2 2013 numbers came as no minor surprise. Admittedly, shrinking your losses to $235m versus $518m is most generously described as "slightly less terrible" than the quarter before, but the market seized on a little Canadian good news and RIM's stock price jumped as much as 25-percent in US trading. RIM's challenge, though, remains clear if you take anything more than a glancing view at the latest figures.
"If they can have another quarter of not burning cash and can get the device out in a few months, then investors are thinking, 'Perhaps they have a chance to come back,'" Veritas Investment Research analyst Neeraj Monga suggested to BusinessWeek. That's perhaps a naively top-level view, however. Although user numbers might be up and losses reduced, that new user-base isn't in high-spending markets; instead, as CEO Thorsten Heins observed, Asia, the Middle East, and Africa are the areas waking up to BlackBerry and BBM.
"It's amazing when you go into those countries and you see how BBM is just kicking it" Heins told investors, though it's seemingly the affordability of the messaging service that has convinced new customers more than anything. As was observed in competitive markets like the UK in recent quarters, cheap BlackBerry handsets paired with low-cost (often prepaid) service plans cater to a frugal audience wanting ubiquitous communication.
That desire might be the shared with the enterprise user-base BlackBerry has long catered to, but the budgets involved are very different. Low-cost Curves may be keeping RIM ticking over, but it will need takers for its mid-to-high-end BlackBerry 10 range if it's to turn things around for the longer term come 2013. A sizable chunk of RIM's income stems not only from device sales but BlackBerry Exchange Server (BES), still at the heart of many business customer systems – for the moment, at least – but of practically zero interest to the budget consumer audience.
RIM's strategy to shore up BES demand has, so far, been extending its remote-management capabilities to include support for Android and iOS devices. BlackBerry Mobile Fusion delivers some of the technology system admins have grown familiar with on BlackBerry devices – like 256-bit encryption, remote profile control, and more – to those with devices from other vendors.
It's appeal, however, is only there if your business actually wants to keep BlackBerry smartphones in its collection: if you don't really care about using a BlackBerry 7 or, as of next year, a BlackBerry 10 handset, then BlackBerry Mobile Fusion has significantly less appeal. And, again, none of this is of any interest to the developing market audience which has growing to offset waning enterprise sales.
BlackBerry 10 is shaping up to be an interesting OS, with RIM obviously learning from its rivals and elements like Peek offering a finessed way of collating mobile alerts and information without providing unduly distracting. As we saw with webOS, however, a beautiful platform is nowhere near sufficient for market success: timing is equally important even if, as Heins admits, you're only aiming for third place. That might sound defeatist out of the gate, but despite a better-than-expected quarter, RIM is still a long way from achieving even that come 2013.