It makes sense. RIM's strength has always been in the corporate market, but we're seeing a new dynamic develop in the smartphone market. Up until now, everyone has pretty well assumed that the only viable strategy was market dominance. For example, either you had to be Apple (AAPL) forging ahead with the iPhone, or Google (GOOG), giving away Android to make money on displaying ads. But RIM's moves show that there may be a different approach: assume that, unlike the PC market, there will be multiple winners, and that success will mean not selling something that appeals to everyone, but products aimed at particular market niches.
The cellphone market has actually seen this in the past. Nextel, before the acquisition by Sprint (S), originally built a business on combing cellular communications with mobile radio. For a lot of small businesses, especially those in the building trades, Nextel became the carrier of choice.
As cell reception became more widely available, users could move from Nextel. But it showed that not all users were alike and that a company could prosper if it could find and satisfy the needs of a niche that was big enough and willing to pay for satisfaction.
Most everyone has focused on winner-take-all strategies, but the market is so turbulent that these are dangerous bets to make. For example, Apple gained enormous traction with the iOS-powered iPhone and many assumed for a while that it would be the single vendor to beat. Now? Piper Jaffray, often an Apple cheerleader, estimates that Google Android will win the predominant market share, controlling almost a quarter by 2012 and more than half within five years.
Piper Jaffray assumes that RIM and Nokia (NOK) will also jump aboard the Android bandwagon to gain the majority share. I think that could be off. For Nokia to give in on its operating system of choice, one outside its control, would be highly out of character for the company.
Maybe that's how things will play out, and I don't think that RIM management is so misinformed or blind to think that the company can overtake the trends. But it doesn't have to. Companies that want to dominate a market have a flaw: they must try to satisfy everyone enough to keep them as customers. That means a vendor can't launch itself headlong into making any one segment delighted.
Although the BlackBerry Torch hit the ground sputtering, RIM has shown that it has a more sophisticated strategy in place. If it can't get the consumer market, it will go for its hardcore corporate base. For example, there was the QNX acquisition earlier this earlier this year, which gave RIM an operating system that runs on automobiles, telecommunications equipment, building management systems, and industrial controls. That means RIM could build smartphones that communicate with, and act as remote controls or data collection stations for, a wide variety of equipment of interest to corporations.
With a product that becomes a must-have for many large companies, especially given RIM's experience in security and protecting corporate data assets, the company could make a better use of its design and engineering resources and continue a steady and profitable business. Will it match what the iPhone or Android can do? No. But not every corporation has to be the biggest on the block, so long as they can carve out enough success to pay off for investors.
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