The Present and The Future (continued)

It's the theme of the weekend. What looks great today may suck tomorrow.

Case in point, Blackberry and their parent company RIM. I was at dinner a few weeks ago with old friends. Both of them carry Blackberrys and they love them. I predicted that they would be using a new device shortly and that RIM would be in deep financial trouble within a few years. They were surpriseed to hear such a negative point of view.

But as this excellent analysis of RIM's business suggests, the present and the future look very different for RIM. The charts in this post come from the post I just linked to. You should read it.

If you look at RIM's financials, everything looks rosy:

RIM revenue and profit
Not only are revenues and profits at an all time high, but so are subscribers:

RIM subscriber growth
But subscriber growth has peaked:

RIM subscriber growth rate
And may be headed into decline:

Future OS plans of smartphone users

It is often the case that on the surface companies can appear to be in great shape. If you just focus on the financial results, you can miss the underlying symptoms of future problems. I've made that mistake many times, hopefully enough times that I will make it less in the future.

What you need to do is peer into the future and try to figure out what is going to happen next. In RIM's case, I sense that a "platform collapse", as the author of the blog post calls it, is a real possibility in the next year or two.

RIM's stock is trading at a PE of just under 12, almost identical to Microsoft's. It seems like the market is well aware that the growth era is over and is counting on a long period of flat growth but strong profits for years to come. A platform collapse is not baked into the market's multiple.

The big platforms out there, Apple, Android, RIM, Facebook, Twitter, etc are powerful but fragile. They need to keep innovating and providing users AND developers real value. As myspace has shown, when platforms stagnate they can easily fall apart and the decline can be fast and devastating.

I think the assumption that tech platforms can stop growing but remain great businesses is flawed in most cases. Maybe RIM can pull it off. Their strong enterprise franchise may make it possible to execute the long fade, but it is also possible that it won't. If you are an investor or manager in a large tech platform, dont' get caught up in the present. Think hard about the future and where the platform is going. That's where the value is.

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#VC & Technology#Web/Tech

Comments (Archived):

  1. tylernol

    platform collapse! People who are still using RIM are using it because it still has this weird elitist aura from back when only “important people” have blackberries. I think that aura is fading a bit more every time a new iphone or flagship android phone is released.

  2. William Mougayar

    I saw that report’s link on Tumblr and already devoured it and passed it around. Michael’s analysis was very detailed and hard to argue with. This paragraph caught my attention, regarding R&D expenditures:”Although Apple has about three times the revenue, RIM’s R&D spending is about two-thirds of Apple’s. With just a third more money, Apple produces the Macintosh, iPod, iPhone, iPad, Apple TV, iTunes, App Store, custom microprocessors, and a suite of mobile services. RIM is producing a bunch of minute variations on a family of phones, an e-mail server, a new OS, and a suite of mobile services that also has to be individually interfaced to each operator. RIM puts much of its effort into infrastructure that has little or no impact on features that users can see and value.”The difference is that RIM sells to IT/corporates (their users), and Apple/Android appeal directly to the end-users. (Although Apple is reported now to be selling iPhone bundles to corporates.)I would like to see the answers to this simple user survey: 1. Why did you switch from BlackBerry to Apple or Android? 2. Why are you still with BlackBerry?3. If given an option, would you switch out of BlackBerry?Does RIM know these answers, and are they really doing something about it? If so, when? Clock is ticking.

    1. fredwilson

      one of the reasons USV doesn’t invest in companies that sell toenterprises is we believe it inhibits real innovation

      1. Adrian Bye

        this thesis would make for a very interesting expanded blog post on its own and maybe you could get some good feedback on it too

        1. fredwilson

          we would like to focus on companies that sell to enterprises and wetry from time to timeopen source cloud based software like mongodb is the closest we’vebeen able to get to


            and a good move that was too

        2. Jeff Pesek

          yes, would love some expansion on this Fred…

      2. ryancoleman

        A wise decision – I recently left a startup (that I co-founded) and moved to a job in a large enterprise (36,000+). Knowing what I know now, after just a few months in, I never would have started the last company (or would have at least approached it from a radically different perspective)Sales cycles take forever and even if they love your product, if it’s something that needs to be implemented internally, it could be years before it makes it into the plan for a year.’Innovation’ in the enterprise is a far different beast than in the start-up/small business realm.

        1. William Mougayar

          If something is hot and needed, the well managed enterprises will adopt fast. These long cycles you’re talking about are true for traditional products & services.If we’re talking Web 2.0’ish and new stuff, the incentives are greater. When big companies suddenly realize they are behind, they’ll buy one of these shiny things.The trick is to sell it to them as Aspirin, not Vitamin.


            I like that analogy a lot!

      3. William Mougayar

        “Selling to enterprises” and “selling to enterprise users” are two different things.The consumerization of previously-known-as enterprise products is happening as enterprise users bypass central choke nodes/gatekeepers that inhibit innovation and are choosing new products directly.That in essence is what RIM is probably believing- i.e. that IT will never let iPhones inside because of security & bla bla bla….But I’m seeing more and more large enterprise users with iPhones and Androids although they are seen as mavericks started like that, by attracting the mavericks in the organizations. I think that market segment is still waiting to explode. Look at Groupon, who took a very old idea, but implemented superbly with software technology and a compelling user experience that would make enterprise procurement systems pale. I wouldn’t be surprised if they applied that model to enterprises.Many enterprise end-users want to adopt innovation as much as the average consumer, if they were allowed to. That’s the opportunity I see, and one we are pursuing.

        1. fredwilson

          very true

        2. PhilipSugar

          I know two sales guys who went to Salesforce……..they are serious enterprise guys…..I think this post sums it up well…

          1. William Mougayar

            Excellent post link. Thanks for sharing!

          2. Dave W Baldwin

            Thanks for sharing….that is a must read.This is one of the reasons I have reiterated the position of getting it together from the standpoint of the consumer, and be multi OS….I think there will be less sniping between Apple and Android users in forums like this as we move thru 2011.

        3. Nick Grossman

          This is right — that’s why I think the Edmodo approach is so clever. Find a way to reach the enterprise users (in that case, students and teachers) without having to go in through the front door (i.e., the gatekeepers or bureaucracy).

          1. fredwilson

            that’s the model we can wrap our heads around

      4. raheeln

        because digital services are fundamentally mostly consumer-driven, the value-chain starts from the market side. For that reason, strong customer experiences and inexpensive cost structures can ‘mash’ together in a loosely joined architecture, promising to create a rich hybrid of collaborative, new-to-the world platforms. two words for RIM and the subject of platform leadership: ecosystemic platforms.

      5. PhilipSugar

        It does….and therefore does not make sense to your investment thesis….which is great.It does not mean you can’t be a great technology company that can’t kick some ass in the space….I know you don’t mean that at all, I think some people incorrectly infer it.I’ve always said I eventually want to try to kick ass in a industry that is not filled with as many smart people as technology… use technology as a weapon to bludgeon stupid competitors.

      6. Dave W Baldwin

        In memory of John Lennon- “Come Together”. We’re in a new decade ;D

    2. Matt A. Myers

      I personally think RIM has a good chance at maintaining and increasing their revenues, and reducing their loss – they will need to make investments in marketing though. Sadly I don’t see them having enough products to support a chain of Apple-like RIM stores, and I bet they could look uber-sleek.All these graphs show me is that competition exists and they’re having to offer things at a more competitive rate as competition increases.And yes, their old platform may not be a driving force anymore but it’s still a good solid foundation and they can work with that.They took one step in the right direction – assuming they know how to harness the resource fully – of acquiring Swedish design firm TAT ( seem like a fun company with personality, and that’s what RIM needs to do with their product to extend into the fun social sphere, and with a strong business past they could boast those features as a strong foundation.Re: Not keeping their BBM platform open, I’m not sure how this will affect them. I imagine they see it as a way to lose customers, but they may at the same time then lose customers to other phones who allow Kik for users who want to use Kik. What will cause them to lose more customers?P.S. If anyone at RIM wants me to review what you’re all doing, I’ll do it for a small investment in my startup. 😉

      1. William Mougayar

        Marketing might be one of the solutions arsenal, but what many believe and what that post eluded to, is that the issue with RIM is systemic, from the top down and from side to side. That is difficult to change. I, personally was shocked by how much time Balsillie spent last year on hockey related issues, as if he was already retired and all was good at RIM-land.Funny that RIM is noticed by its absence on this blog. Someone at RIM should be all over this conversation and making their arguments. Or someone that is a strong RIM supporter, say something.

        1. Matt A. Myers

          Perhaps it was for appearances of “all is okay.”And I agree about RIM’s silence being detrimental – unless they’re trying to be all secretive because they have some well-thought out magical plan that isn’t roughly what I stated above. They need to play catchup, and they need to keep investors excited or leave them on a positive note — and more so they need influencers talking positively about them, as that trickles down to consumers and reviews for consumers. And if it’s secrecy and they’re maybe doing it for hype – they’re failing quite hard because they’re not teasing us…

          1. ShanaC

            Playbook? Then again, I don’t feel teased by it. Problem for RIM that as a traditionally enterprise market – they didn’t need that tease to get by. Now I see everyone and there mother on the buses with smartphones wanting a good packaged deal.

  3. reece

    Innovate or die.It’s human nature to want the latest and greatest (even if it’s only ‘perceived greatness’). I love my iPhone, but the Nexus-S does look reaaaally nice…Sustaining innovation, maintaing greatness (and subscribers) is really hard. Look at any of the tech steamrollers – Microsoft, Apple, Google, Facebook – it’ll be tough for them to keep their positions forever – whether from each other or from some small startup who can be laser-focused and innovate “harder, better, faster, stronger.””The land of great is a lonely place. Why? Because it is too easy to give in to fatigue and to make excuses. Being great is hard… really hard.” – a favorite quote from a coach I admire.

    1. fredwilson

      belichick showed that to rex ryan monday night

    2. Guest

      Innovate or die. up~

  4. James O'Connor

    Gizmodo had a similarly stark graph showing Blackberry’s sales as a percentage of overall smart phone sales (on Verizon). Their drop in market share is astounding, especially when plotted against the introduction of new droid devices.

  5. Dan Ramsden

    Because what looks great today may suck tomorrow is likely why the large tech companies have been “hoarding cash” and focusing instead on little M&A deals that don’t make a dent in their balances. Can’t argue with the rationale. And this makes the seed bubble often discussed here that much more difficult to justify.

  6. Tom Labus

    QNX could keep them well in the Enterprise business. It wouldn’t be a bwidth hog and will be more secure. Big corp issues.

  7. Jeff Pesek

    Wait, now I’m confused:”one of the reasons USV doesn’t invest in companies that sell toenterprises is we believe it inhibits real innovation”10 minutes later…”we would like to focus on companies that sell to enterprises and wetry from time to time”

    1. fredwilson

      blog comments are allowed to be confusing :)what you are hearing is a desire but not a strategy for doing so

  8. Ttryan2

    Lotus Notes. A wildly successfull breakthrough in its time, sold heavily into the enterprise, now almost non existant. Great civilizations can an do fade.

  9. ryan singer

    I intended to post this on a past post:…In relation to your post on past and future, I was reviewing some of comments in the past and thought it was a good chance to re-review Apple in relation to RIM. It seems this last year Apple did some good things such as making FaceTime open. Android now incorporates and improves upon this and on some carriers is available on their network. So Apple stays alive another year. RIM finally broke down and implemeted an “app store” only proving how far behind the curve they are; no innovation and basically predicting their death unless they reinvent as Windows Mobile 7 did for Microsoft.

  10. Francis Hwang

    I’m a core BB user, and this graf spoke to me:”RIM need a product vision identifying a few new differentiators for BlackBerry that will resonate well with the busy knowledge workers who are at the core of its installed base. There should be no more than three of these features (because customers can’t remember more than three), and they should not be copies of things that Apple is already implementing. RIM should focus on building them deeply into the product, so they are very well integrated with the rest of the device. My nominees are meeting planning, conferencing, and live document sharing.”Those three features—meeting planning, conferencing, and live document sharing—would be pretty great if done well, and maybe RIM is the company to do those well in mobile.One of the tricky things, though, is that those feature areas are ones that inherently depend on network effects of users, which means that users wouldn’t get much value out of a BlackBerry-only solution. You can’t restrict meeting planning to only meetings with other BlackBerry users, and you can’t schedule a conference call where you force everybody to use a BlackBerry on the call. So RIM would have to form deeper technical partnerships with existing players—for example, GoToMeeting with conference calls, Google Docs with document sharing, etc—which would be a big shift for them strategically. Could they pull it off? Perhaps. I might not bet on that though.

    1. fredwilson

      RIM’s unwillingness to make BBM cross platform and their efforts tokill Kik, which has the best third party cross platform BBM likeservice tell you all you need to know

      1. William Mougayar

        The Kik saga is unfortunate indeed, but why do you think that Kik had the best 3rd party x-platform product, when there is WhatsApp, Tango & PingChat that are x-platform and have a lot more than Kik’s chat only capabilities. And not to discount Skype mobile apps which are pretty good too.

        1. fredwilson

          i’ve used most of them now (thanks for the tip on whatsapp)Kik is way faster than all of them

      2. Graham Siener

        Francis and I were talking about this the other day and IMHO RIM’s best move is to stop making hardware and start selling Blackberry as a Service (BaaS). Imagine if they could create an iOS app that satisfied IT departments and users alike.Moreover, imagine if they embraced Android and created a deeper BaaS integration there. All of a sudden, RIM doesn’t have to make weird hybrid phones like the Torch to attract a nebulous user base. Instead you’re everywhere business users are, and your $10/month service overhead is all of sudden a much higher margin with broader reach.I’m not sure if they’re brave enough to get there…

        1. fredwilson

          BaaS on Android is a great ideathat would be bold and forward thinking

        2. James Harnedy

          RIM did build BaaS services for Nokia and MS but it didn’t catch on. One of the problems with this approach is the security stack must be tied to the metal, otherwise rooting and other malicious behaviour is possible – so the key reason to deploy BB in the enterprise is immediately weakened.I also believe mobile requires a vertical stack approach, hardware and software designed as one. Something RIM have done reasonably well when it comes to messaging and security. Unfortunately the pace of innovation beyond these core areas hasn’t been what it should be in recent years. I can say, after working with RIM as a partner for over 8 years – they are busting ass these days to catchup but it will be a while before they are properly competitive on the handsets.

          1. Graham Siener

            Didn’t realize they tried this already but that only strengthens the argument that they should try again (e.g., MS tried webtv and that didn’t catch on because it was a decade too early vs. boxee). I agree that security must be tied to the metal, but I don’t buy that the hardware and software need to be designed as one. You could port any sort of security stack onto Android — git clone git:// just don’t see why they need to build hardware when they’re falling behind, despite “busting ass.”

          2. Fernando Gutierrez

            I agree. I tried for a few days one of those Nokias with Blackberry service and it wasn’t BB nor Nokia… maybe if they try again they can do it better.However, I’m not sure what a BB app could give me that the other OSs don’t already have. I’m now on BB and planning to move to Android, but the only thing I’ll miss is related with price plans (a world tariff plan to get good roaming prices), not with the phone/OSs.Maybe security, but I’m not so sure about the real importance of security today. Yes, IT people will say that it’s key, but with USB drives, internet, laptops…. I don’t think real security/privacy is possible any more (BTW Fred, I’m sure a post on Wikileaks would generate a really intese debate).

          3. kenberger

            They definitely tried this before in a big way. Lookup “BlackBerry Connect”. At the 3GSM conf in 2003 (I think) I saw all kinds of non-RIM phones running this. *Sounded* brilliant, even way back then.Can’t remember seeing any of these phones out there since then in a meaningful way.


          A great idea! I do doubt that they are brave enough for that change. Maybe after they see the writing on the wall. Only time will tell.

        4. Donna Brewington White

          BaaS — priceless!

      3. Francis Hwang

        Huh, it’s only from Googling now that I found out about RIM’s lawsuit against Kik. It’s unfortunate–one more move out of RIM that just reads like a defensive crouch. I’d like them to do better, but realistically I expect they’ve got a ways to go before they really hit bottom.

  11. Jon T

    Fred – talk about spouting the obvious. This childish assessment is more pathetic that in 2010, not 2008, that he should be telling his Blackberry friends they might change… for real??And no Fred, nothing about Apple’s iOS is fragile.

    1. fredwilson

      can you elaborate?i understand you think my post is lamebut i can’t tell exactly what you think is lame

    2. Matt A. Myers

      People are here to learn. Not everyone might find things in the post obvious.*2 cents for you*

  12. LucD47

    Fully agree, Fred.In my view, a Value Investing approach to analyzing the market seems rather appropriate here.An exploding market (as we’re seeing with smart phones) can be one of the worst things to happen to a market leader . . . one of the key factors of maintaining profitability is captive customers. However, you can only have captive customers if they’ve already used your product. When there’s a huge influx of new users with no switching costs (investment in UI familiarity/brand affinity/accessories/etc), the market leader can quickly lose any scale advantages it had (sure, it’s still growing, but scale advantage stems from size relative to competitors – and competitors are growing faster). This seems to have clearly happened to RIM . . . to the point that they’re even losing scale within their strongest niche – enterprise – where switching costs are often highest.I’d expect RIM to soon be a rather marginal competitor.

  13. Emmanuel Bellity

    Asked on Opismart to iPhone users: If the iPhone disappeared, what would you get ? 50% still say blackberry..Results here: but only 12 votes cause still in private beta – curious to see when there will be more users !

  14. PhilipSugar

    This is a really interesting discussion about whether Blackberry is an enterprise company or a consumer company. Microsoft faces the same dilemma. Steve Jobs purposely says he doesn’t care about the enterprise.I thought the IBM 360 class of machines was dead in 1990. Twenty years later I am the one that is dead wrong.I think the only issue I have is when you poo-poo enterprise technology companies (last paragraph). Kind of like dissing “lifestyle” businesses. They are just a different class of beast. You have to embrace what your are. Yup I think some lame chain of tschockies sucks compared to LeBecFin. But guess which one is still in business and makes more money.They are not what you like, but managed correctly they can be SUPER profitable. I just got out of a meeting with a company that had over 100k employees where we partnered with a company that had over 30k in their one division. Believe me this is not a buying process in a cell phone store.I would just say this….you have to embrace what you are or you are lame. No different than a 60ish something CEO divorcing their wife and married a twenty something bimbo. (unfortunately I’ve seen that result up close and personal three times) That is an issue with many tech companies….instead of just cranking money for their shareholders they go spend it on something they will never be.Now the interesting thing will be if everything goes mobile and to the cloud, eventually I would see big companies just giving an employee a computer/phone allowance and letting them take care of it the same as their car that they might use to drive to meetings (that is what we do)That is what interests me……you really linked to a kick ass post as well.

    1. William Mougayar

      This analogy “eventually I would see big companies just giving an employee a computer/phone allowance and letting them take care of it the same as their car” is priceless.Plug and play tech. Just like driving a car. Cool.That’s how we handle a new employee: If you’ve got a Mac, do this. For Windows, do that. If BB go there, and if iPhone it’s this.

    2. fredwilson

      do you think enterprises will be able to dictate what mobile devices their employees carry in their pockets and purses?

      1. PhilipSugar

        It’s a question of: “should not” or “could not”A long time ago I worked for a big Japanese corporation….the COO told me I could not eat my Umeboshi… until I was finished my lunch.Since I was twice anybody else’s size and we frequently had discussions over nuances of words (My Japanese was completely ignorant compared to their English) I popped it into my mouth at the beginning of lunch and explained unless he physically was prepared to do something about it, it was shouldn’t not couldn’t. Needless to say everybody was appalled but he thought that was the funniest thing he had ever heard.So long answer is Fred if your BigCo says you carry Backberry or get fired….you damn well carry Blackberry if you are a normal BigCo person….you don’t work for BigCo because you are a Maverick.Is it what I think it should be??? No….but it is what it is. I can’t understand why if you’re BigCo you don’t hire 20 of the best developers ever for $250k a year each and 2 years later have a total custom system to run your company for $10M which is a fraction of what you would pay SAP and it would kick ass…..but what do I know.

      2. Michael Mace

        My two cents: I think most companies in the US find it hard to dictate an employee’s choice of smartphone unless they’re willing to also pay for the phone and the monthly service charge. And that’s an expense most of them don’t want to take on. Even when I was back at Palm in the early part of the decade, most IT managers I dealt with were resigned to accommodating multiple mobile platforms. They were just too busy with other issues to force a battle over something that the average employee saw as a personal right.

        1. PhilipSugar

          Yes….this is why I think it goes to an allowance, like a car allowance.Its cheaper to put the cost of management down to the employee.I think you’ll get there with Laptops as well. We already have. You don’t want people storing any data on Laptops in case they get lost….at the point you aren’t storing company data on the device, the line between personal and company is blurred.

        2. ShanaC

          They could sell blackberry as service for this reason along – you must have N software even if it is yours

  15. ebun

    What looks good today should suck tomorrow in a market economy because as long as there is a chance to make a buck or build something cool, innovators will continue to look for ways to make incumbents redundant. Seems RIM just fell prey to the classic innovators dilemma but I reckon it isn’t quite over for them yet, only time will tell

  16. Adrian Scott

    very inciteful post, thank you.

  17. Dan Bentley

    Long time reader; first time commenter.This is a misperception that better data visualization would have fixed. If the revenue graph were log scale on the y-axis, it would bake in investor’s expectations (of semi-constant %age year-on-year growth), and show how they’ve started missing the curve.

    1. fredwilson


    2. ShanaC


  18. RichardF

    Ebay’s management could do with reading this post

    1. Donna Brewington White

      So true, Richard.I have my reasons for thinking this after a little experiment with online sales using eBay as an initial platform, but I wonder what makes YOU think/say this?

      1. RichardF

        Ebay have not innovated on their platform nor really established closer links with the small companies that use Ebay.Ebay could do Groupon, offer other online to offline tools to local small business, do more to leverage social and their community…..the list goes on Donna.

        1. Donna Brewington White

          This lines up with some of my thinking.I don’t think eBay realized that it was a platform for community — or at least it failed to maximize this opportunity IMHO. As someone who did a stint on eBay as an experimental prelude to launching some sort of online retail business, I quickly realized that one of its greatest strengths was the network of (seller) communities that sprung up around it. Just like with Twitter, for instance, it was some of those surrounding offshoot communities that educated me and drew me further in. However, I believe that eBay made the mistake of thinking it was, first and foremost, a retailer and made some decisions that catered to buyers to the detriment of sellers. I understand that without buyers, there are no sellers, but eBay may have missed an opportunity to create a happy selling community as one of its key distinctives — they could have had their own Etsy, for instance.Anyway, I think eBay blew a huge opportunity to be more of a social and community platform that in the long-run would have made it a more powerful selling machine.

          1. RichardF

            maybe they should try and buy Etsy Donna 😉

          2. Donna Brewington White

            Ha! Not unless Fred sits on eBay’s board!

          3. Blsavini

            I don’t know if I would go so far as saying that Etsy was a community of happy sellers. It is increasingly being compared to Ebay, and more and more sellers have given up waiting for tangible improvements, and moved on to other sites. The lost sellers had presentable sales and have decided that they can no longer wait for credible leadership and tangible, workable seller tools.The emphasis within Etsy appears to be social marketing. This needs to be balanced with traditional and industry standard catagories, a better alignment with Google matching terminology,( the uploading of listings to Google shopping is seriously impacted) working and effective customer service, some level of search parity for all sellers, and as always improved communications from the administrative levels. Artfire has moved up nicely in traffic rank by exploiting the ever increasing disatisfaction with Etsy.I have a shop within Etsy.

          4. fredwilson

            they are certainly disgruntled sellers. that exists in every marketplacebut etsy is hardly ebay. if anything, it is the anti ebay

          5. Kathleen

            That comment seems very dismissive, and leads me to believe that much of what the “disgruntled sellers” are trying to communicate to Etsy leadership is not being truly heard.

          6. fredwilson

            Its not dismissive. Its just honest.There have always been disgruntled etsy sellers and always will beIt is hard to please everyone all the timeBut that doesn’t mean we don’t listen to all the criticism and feedback andbuild it into our product roadmaps

    2. ShanaC

      Ebay’s core has just been rewritten. I think they have a vague idea that there is a problem, but I also think they are frustratingly slow about the solution.

  19. Greg Solovyev

    Just yesterday my friend returned her Blackberry Storm 2 back to the Verizon store and got a new Droid 2. She loved the first Storm, but the second one turned out to be a disappointment – slow, glitchy, heavy, and not better in any way then Storm 1. Droid 2 on the other hand turned out to be a pure delight, totally worth the restocking fee. And she is not an early adopter, she is rather conservative about phones, it took me some time to convince her to try Droid after she had her Storm for 2 years, not to mention that two years ago, a Blackberry was her first smartphone.

  20. goldwerger

    The camera market is a strong parallel. Last decade we experienced the displacement of film with digital, and now we are going to see the disappearance of dedicated digital cameras (except for niche markets).The word “convergence” has been frequently over used, but I think the new platforms of Apple and Android provide the first practical catalyst for convergence-based disruption in consumer electronics – cameras, camcorders, books, even some laptop uses – are now rapidly converging.RIM has stayed true to its core competency as a productivity aid, but erred on staying the course to dogmatically to embrace the required radical change of redefining itself as a mobile end-node to media generation/consumption.I think that the dedicated digital camera market may be obsolete as fast as in 12 months. And I think RIM’s outlook may only extend a few months beyond that.

    1. fredwilson

      i haven’t used a digital camera for three yearsor i should say i carry my digital camera in my pocket 🙂


        Yeah, that is true. My phone is often the closest camera around. Only when I need really high quality shots do I choose something different. Like when I go on vacation, I often bring my nice camera with me. I also use a nice camera for business purposes, but thats because of the company’s focus.

      2. goldwerger

        This fully dawned on me when I bought Flip in 2007 and haven’t used it since 2008…;)

      3. plang

        The only issue with substituting digital cameras for phones is battery life. My android battery can barely last a full day. Until manufacturers start innovating in the battery space or creating self-charging (i.e. solar) phones, there will still be a market for digital cameras.

        1. Fernando Gutierrez

          That’s true for most features on smartphones. If you pretend to use them for all the things they can do you won’t have enough battery! Urgent innovation there is needed!


      Although convergence is a often passed around buzzword, I actually tend to think that technologies tend to diverge more than they converge. Convergence is a pretty un-natural thing. The best approach to a new business is to diverge and narrow your focus to something that is entirely new. Be the market leader in that new category.

      1. goldwerger

        FotoFuze, i think your observation often holds true when new technologies are introduced, often by highly focused startups (my own personal habitat).However, when adoption accelerates, efficiencies and synergies in use (and sometimes other synergies in branding, cost, distribution, etc.) often drive the opposite – iPad is one of the best examples of all of these, but it took over a decade of mobile computing, several failed conceptual attempts, and maturity of digital media consumption, before the synergies of user experience, brand, cost, and distribution came about.

  21. Ian

    First time commenter, long time reader.The other chart(s) that might be interesting is market share over time and relative growth rate versus competition, both declining for RIM as I understand. the market is growing faster than RIM’s market share.One of my favorite sayings is “If profits are your only metric of success then you are only looking in the rear view mirror.”

    1. ShanaC


  22. Scott Barnett

    My current phone is a Blackberry Tour and my next phone will be a Droid. Blackberry has some catching up to do – I don’t think they are toast, but I do think by focusing revenue on selling to the enterprise they have not been forced to innovate as quickly as Apple and Droid – consumers don’t need large consensus to make a switch like this, but enterprises do (how many companies still run on Windows NT/XP?). I think the question is what % of Blackberry’s business is truly consumer oriented? If it’s not large, they may be in an ideal spot – continue to win/maintain the enterprise business, and if they can get more agile for consumers, maybe they can maintain or even grow their consumer base a bit. I wouldn’t write them off quite yet.

  23. Joshua Davis

    Very true, sir. If a failure to improve happens, then a failure of sales happens. But the way I see it, RIM’s chances are just as good as everyone else’

  24. Alex

    RIM has a long history of innovation so while I agree with the Platform issue they still have a chance to reinvent their own industry. Mobile devices are quickly expanding to much more than just smart phones so there are many other battles to win. As Android proved to Apple having a dominant platform is temporary. The FCC is opening new spectrum for all to compete which will provide for many new opportunities.

  25. Rpaulsingh

    Very well put. Technology is a perishable asset and so matter how big if companies don’t continue to innovate their technology will be usurped by competition. However,unlike consumer business, enterprise customers move lot slower and they look for more things like security, control, privacy besides the sex appeal. So even if end consumer wants to rush to buy android or iPhones, RIM has some more time before enterprises kick them out.

  26. SteveD-

    The rosy financials are a pretty classic innovator’s dilemma scenario (I’m reading it now). Record profits are a common occurrence just before a fall from prominence. Great post and really interesting how the charts seem to parallel the points being made in the book.

  27. Roy Nallapeta

    Fred with continued evolution of the platform do you think just mimicking the competition i.e. doing software o/s distribution (like android) or selling more devices (iphone) is enough? The business today or until today felt blackberry’s to be indispensable, wouldn’t it be more an appropriate move for RIM to enable business apps and concentrate on delivery of those with a better UX? This I guess adds values to its already perceived killer offering until now and later branch out into mobile devices platform enablement. If there is any company capable of launching meaningful enterprise 2.0 apps or get a buy in I think RIM is the one, sadly they don’t see it that way… Defining the terms of competition matters, this is my thought towards RIM’s current state.

  28. hypermark

    The most damning thing I see about RIM is that in an industry where software-based differentiation and cultivation of third-party developers is key, even the basics they get wrong.Case in point, every time they push an OS update, the device “forgets” a number of settings, such as which mailboxes are visible, and every new app update forces a reconfirmation of the app’s settings, a serious buzz-kill to updating. And don’t even get me started on the App World execution.Touting QNX, an RTOS, as a game-changer is Exhibit A that the company continues to confuse attributes with outcomes.

  29. Shai

    They local client base of RIM are now looking at alternative platforms, specifically iOS and Android. Fortune 500 companies have been their key clients and several are leaving RIM, including BofA, Citibank and Standard Chartered Bank. When you have public financial services firms, which typically are very conservative from an IT perspective, leaving your platform, that is big trouble. RIM has 12 months to make a significant change to their OS, otherwise their slow death march will become a fast pace death march.

  30. Donna Brewington White

    Harking back to the previous post, it seems that the question is first sociological and then technological. Although there are times when tech seems like the “chicken” and at other times seems like the “egg” in terms of responding to and creating perceived user need — or at least desire.

  31. Robert Hacker

    One characteristic of the past may be relevant to the analysis. RIM has always been a bit slow with new products. They followed Palm and devastated them. There combination personal assistant and phone took over the market but they did not introduce the first product. Many people who have seen the BB tablet say it is an exceptional product for the business/enterprise user. If these claims prove true RIM may yet again find a strong growth curve. While Apple is enjoying early success in phones and tablets, the enterprise market has not really voted yet.

    1. Dave W Baldwin

      Keep up the work Robert….part of my surprising people was I knew what was coming sooner than later when discussing the design I’ve mentioned here that will deliver major impact on Education (along with Healthcare and so on)…told them that the price of a legitimate vehicle for the design (not depending so much on the big PC) was coming quick. Was able to start sending info on the laptop per child to prove my point.

  32. Dave W Baldwin

    Remember the waves everyone. We had the Carriers putting up towers to deliver signal followed by a mass rush to design the best vehicle to the consumer via OS, looks and so on. We are now in the wave that benefits the service function that delivers to the customer’s need. The number of opportunities for providers of solutions is endless.In the past year we have seen the ‘closed’ vs. ‘open’ mantras play out…remember it was less than a year ago that people looked at you sideways if you said your product would be on both Apple and Android.Enterprises do offer incentives to newcomers purchasing the BB. There are those that are sheep, others that stick with their own phone and/or outright move up to the Smartphone of another brand in order to keep work at work, home at home.IMO it is better to produce the product that is usable to all categories and more than one OS. Then you have a platform that has a Core and immediate Offspring. This enables multiple M&A options….plus additional Offspring.As we move forward, the wish to ‘M’ will grow stronger vs. ‘A’. When you wonder about RIM, the big companies are already doing this in order to stay alive as attention focuses on Apple and Android. The same will happen from the developer side. It is better to develop toward growing the customer vs. killing the opponent, for the developer who can join another and produce something that a much bigger customer base across multiple OS’s will do more in the end…and not be so lonely that they have to marry the bimbo.Ms. Warrior of Cisco is right on stressing collaboration… in this coming decade we will look back at the hot year of development (rise of Android/iPad/WebTV) 2010 represents and laugh saying it was lethargic.

  33. cpopenoe

    What you say resonates personally with me. I have had a succession of Blackberrys since they were first released. I haven’t always been happy with the devices – far from it, but never thought really seriously about getting anything else. Mainly its the keyboard, and the excellent email; the browser doesn’t seem to have improved in years. I have spent the last 7 months doing iPad development and own iPod Touchs too, but the iPhone is not a device I have every seriously considered for everyday use. My Verizon contract calls for a new device in early March and unless there’s an amazing new announcement from RIM I can’t imagine that the device I get to replace my Blackberry Tour will be a Blackberry. Right now I’m thinking it will be a Droid Pro, but that can change too.I was on a several week shoot this fall with another forever Blackberry user who had a BB Torch, and had little love for it. That was supposed to be one of RIM’s innovations. Hardly so. He’ll be in the market for a non-BB device soon too. All this is anecdotal for sure, but we all have similar examples and the report on Tumblr seems spot on to me.

  34. csertoglu

    The growth of the conected economy has allowed platforms to grow faster than ever before: facebook, 4sq, twitter, groupon (yes, it’s a local sme promotions platform, not a coupons business). since this rate of growth is new, dealing with missteps while trying to navigate this new world, is also uncharted territory. that’s why before RIM knows it, it can be headed into treacherous waters. this kind of speed needs a new type of agility.

  35. Alex Murphy

    RIM reminds me of AOL which is another great example of a platform collapsing. Too invested in what has been to focus on where they need to go. They missed the boat with the app store and creating a device that can run and install dozens of apps.There is hope with their next gen of phones and their tablet, but I think the light coming from that hope is pretty small.

  36. Graham

    Fred,I agree that RIM is beginning an inevitable period of decline due to product management hubris. Security is the #1 concern of the large enterprise and whichever company solves this problem best will eventually win in that space. It will not be Apple in the corporate world although they and Google/Android are battling for the consumer space. I cannot predict who will win the enterprise yet, but RIM is doomed there; I agree with your analysis wholeheartedly.

    1. fredwilson

      i met with a company that has built a security layer on top of androidseems like a good idea

  37. palbi

    I briefly worked for a bank circa 2004 and I remember they still used some DOS stuff at the time. Even when the situation is not so extreme, it is safe to say that most banking software just suck. Still they are never upgraded because it is a huge cost for the organizationNow, with cellphones it’s somewhat different because ppl don’t need their company to teach them how to use an android device. So the cost of a switch wouldn’t be as high. But still I don’t see any competitor ready to challenge RIM on the enterprise arena in the near future.

  38. paramendra

    RIM will go the Blockbuster way.

  39. Robinhchan

    Bets are that an Asian OEM buys them, like Lenovo bought Thinkpad, for the brandand then puts Android on top

  40. Guest

    i like BlackBerry,hoho~

  41. Sirach Mendes

    Hey Fred,I agree that Android and Apple will kill the RIM market share in the US and Europe if they dont innovate.But something I have noticed in India – the youth seem to be buying RIM based phones and RIM is doing very well in that market (emerging counrites) – first hand experience Having a BB is a kinda cool thing the cool kids have – this dynamic is at play in that market – Due to late adoptionWhat is to be noticed here is that these are not Working proffessionals or suits – normal highschool and Univesity students buying a BB phone just to use the IM feature to keep in touch !Some of the obervations I have made and I feel RIM will lose out Big Market like US if they dont innovate but may just do what microsoft does now (dominance in Emerging markets )

  42. Guest

    Selling directly to users within an enterprise is an interesting strategy; I also happen to be presently challenged to execute on it. I’m working on a startup right now that develops back-office products (project control and status reporting, deliverable management, etc.) for government contractors. So far, it has been well received by small organizations, however, large enterprises have been reluctant to buy into something unless it was built by another enterprise. Since the product directly benefits the line, I’ve been trying to focus marketing on program/project managers for a specific contract, project or division and keeping the price within that managers purchase limit (also bypassing corporate IT). Very interested to see how this works in 2011.I’m curious if others have been having success with this model? Would love to hear more thoughts on a viable enterprise model.[Oh, long time lurker here. Guess it’s time to start posting! So, hello! :-)]

  43. fredwilson

    yet another long time lurker converted!!!welcome

  44. William Mougayar

    The consumerization of enterprise apps is happening, and more than some others would lead you to believe.Many enterprise users live in a fish bowl, thinking their world revolves around “their enterprise apps”, and only have a thinly unfiltered view of the rest of the world.I used to work for a large enterprise from 2006 to early 2008, and missed the very start of social media as a result of it.

  45. ShanaC

    Hello!Hmm it depends what team and what users within a company. Also, which companies. Apparently salesforce did this, however their core product basically works around network effect and being full of mavericks who want to share.In other words, I don’t think a team of project managers at a manufacturing concern would help in a lot of cases…

  46. Guest

    Yes — truly does depend on the team and users, and I hope that we’ll beable to get traction in our market through a method similar to salesforce,but we do operate in a specific vertical so we could only hope to seeadoption levels like they achieve! (My dream!) :-)Thankfully not working with manufacturing concerns; my customers are mostlycontractors providing services to the government (program management,budget/financial management, engineering/RDT&E, clerical/admin, etc.) Foreach of these projects, the contractor personnel must meet certainweekly/monthly/milestone reporting requirements for contract compliance andPM’s are responsible for curating and distributing to customers (who can,many times, be particular on format and detail). Our product attempts tofacilitate the contract compliance requirements and customer interaction fordeliverables — and hopefully we’ll be able to build that network effectonce contract personnel and PM’s realize the value in this type of serviceand begin chatting with other teams.I see it as an experiment and am looking forward to see how it works out. *hopeful*