Beginning of the End: Blackberry Continues to Lose Ground

(Published in The Express Tribune, June 6, 2011)

Following a poor quarter and a bleak future outlook, Nokia this past week has seen major analyst downgrades — sending the stock spiralling down some 20% in the past week alone. BlackBerry manufacturer Research in Motion (RIM) has also seen a precipitous decline of 10% in the past week and falling some 40% in the past 3 months.

According to the data released by ComScore this Friday, RIM has fallen to third place in the mobile market share. The data, which was for the month of April, 2011 puts Google’s Android platform at 36.4%, Apple at 26%, RIM at 25.7% and Microsoft at 6.7%. Since January, 2011, this reflects a growth of 5.3% for Google, 1.3% for Apple and a decline of 4.7% for RIM and 1.3% for Microsoft.

Up until October 2010, RIM 35% market share while Google had just 23.5%. This goes to show how quickly the tables can turn in the mobile sector and just how disruptive the smartphone market is.

BlackBerry is still considered by most professionals as the de-facto business phone. It doesn’t have the distractions of other smart phones, has a physical keyboard the venerable BlackBerry Messenger service, known as BBM.

The BBM service was a remarkable business innovation and the reason for much of RIM’s success. It had the viral marketing characteristic of most social services. Namely, if one wanted to chat with their friends on the mobile phone without paying for every outgoing message and have an ongoing group conversation, BBM was the way to go. It’s inherently viral because it lures everyone to join the group conversation.

But what’s most innovative about the BBM service is the model RIM adopted. RIM powers the technology to facilitate the BBM service and allows mobile users to stay in touch regardless of geographic location — a great boon for travellers. This sort of deployment had no precedent in the mobile carrier space. The carriers benefited by selling BBM plans, which can get a bit steep in pricing.

This model is coming undone as conventional social networks and instant messaging companies are entering the smart phone market. These companies are bringing their own customers with them but more importantly they are cross-platform. Meaning, group conversations can happen between Adroid, iPhone, BlackBerry and various other mobile users. BlackBerry enjoyed a great run and still continues to lock its users into its current platform. At the same time, it is allaying the customer demand for touch-screen phones by rolling out its own touchscreen sets. But over time, it is inevitable that users will start migrating away to more open and cross-platform messaging platforms.