With plummeting market share around the world, this smartphone maker is hoping that a new operating system, already late, but due this year, will wow young people in India
A decade and a half ago, when mobile phones had not yet invaded our lives, the hottest toy around in the US was a pager-like device with a keyboard that anyone who considered themselves important carried around with them. In planes, restaurants and movie theatres, investment bankers and corporate executives could be seen frantically typing away, trying to get their deals done. The device was made by Research in Motion (RIM), a company in Waterloo, Canada, and it revolutionised the world of communications.
Today, it is difficult to believe the grip that BlackBerry (BB) once had over the world. Its company has been floundering, its stock has tanked, its products are considered somewhat outdated and not in sync with the most important market segment fuelling smartphones - the youth. Yet, while BB's market share continues to slide around the world, the one place that still holds a glimmer of hope for the phone maker - where it has traditionally done well and continues to have its fair share of fans - is India. The country also conveniently happens to be one of the fastest- growing markets for smartphones in the world, where its team has been selling up to 160,000 phones a month. But, even here, RIM has slipped in share and rivals, such as Samsung and HTC, have gained.
Can RIM use India as its launch pad to reinvent itself and boost global fortunes? (Click here for charts)
Indian youth, BB's linchpin
India is a country where BlackBerry still enjoys a strong brand equity. In Q1 2012, while global shipments of BlackBerry plunged 29 per cent, in India, the slide was far less severe, declining from 15 per cent in 2011 to 12.3 per cent between January and March 2012.
RIM has realised that a younger cohort represents its best chances of survival - the same cohort that is a die-hard fan of the kind of touch-screen user interface that Steve Jobs made ubiquitous around the world. According to Nielsen Informate Mobile Insights released in August 2012, the incidence of smartphones among mobile phone users is higher among Gen Y, with 11 per cent of all under-25 year-olds owning a smartphone, compared to six per cent of all over-25-year-olds in urban India. "In 2008, we had first realised that the adoption of smartphones is going to be the highest among the age group of 15-24 years," says Krishnadeep Baruah, director, marketing, RIM. "We started the journey of focusing on the consumer segment from 2009, when BB launched retail and distribution presence in India," he added.
RIM's 2011 campaign in India was entirely youth-focused. Along with its vendor partner Vodafone, it aired the revived "We're the BlackBerry Boys" commercial, which shows that not just a suited executive, but a trendy college boy also qualifies to be one of the "BlackBerry Boys".
For the first time, BlackBerry's devices were made more affordable. The campaign, which introduced entry-level devices priced between Rs 8,000 and Rs 9,000, apparently clicked well with its target audience. "In Q4 of last year, the sales of BlackBerry picked, as it had strong partnerships with vendors. The campaign attracted the youth to BB services. Earlier, they used the device mostly for the BlackBerry Messenger (BBM) services," says Jayanth Kolla, co-founder of consulting firm Convergence Catalyst. "The Q4 of 2011 was the biggest quarter for BlackBerry in terms of device sales in India. They sold around 1,00,000 devices a month," he adds. During the quarter, a single product (BlackBerry 8520) contributed to half of the sales. Moreover, for the first time, RIM launched a global product (BlackBerry Curve 9220) from the Indian market in May 2012.
Though the campaign did well and the company gained some traction in the consumer segment, things went southwards again. Not only did market share decline - although not as steeply as the company is used to seeing elsewhere - but its India revenues also dropped 25 per cent to Rs 1,460 crore in 2011-12 from Rs 1,950 crore the previous year. Among the top-10 mobile handset vendors in the country, RIM had a market share of 4.7 per cent and was in the fourth spot behind Nokia, Samsung and Micromax.
For every step forward, BlackBerry seems to be taking two steps back. According to Katyayan Gupta of Forrestor Research, "The initial success among the youth was mainly because of the BlackBerry Messenger services. But, they failed to go beyond it and offer other compelling services. Moreover, there are over-the-air services that let users have BBM-like service over any device anyway." Katyayan also says that while BBM was their spearhead into this market, there was no improvement made in hardware.
At the same time, Korean handset maker Samsung came up with compelling touch-screen products in its Galaxy series, Apple launched its iPhone 4 and Nokia tried to up the game with its Lumia series products. Though the company claimed that during 2011-12 it had launched products in India, analysts like Gupta feel that "the lack of new products definitely hit BlackBerry."
Focus on individual users
Launched in 1999 globally and in 2004 in India, BlackBerry's enterprise solutions still command a loyal following among a significant chunk of the corporate crowd both in India and globally. Yet, even the enterprise segment of its business took a hit as the concept of 'bring your own devices' - where employees were urged to bring whichever brand of phone equipped with whatever operating system - became popular.
BlackBerry, for long, has been focusing on enterprise customers only, but in today's world, the line between the business customer and the individual user is blurring, Forrestor's Gupta says. "The company can no longer focus on one segment and leave the other," he added.
Glimmer of hope?
Realising that it has much work to do and a very small window of opportunity to do it in, BlackBerry has put all its chips on a much-anticipated, but much-delayed new operating system, the BlackBerry 10. The operating system, which according to RIM CEO Thorsten Heins promises smooth user experience and is 'all about the flow', is expected to hit the market by 2013.
Though RIM hopes to catch up with its rivals with the launch, according to consulting firm Frost and Sullivan, it's a case of 'too little, too late' for RIM.
According to the consultancy's Asia-Pacific enterprise communications and contact centres research manager, Pranabesh Nath, and ICT's South Asia and Middle East senior consultant, Abhishek Chauhan, RIM has been battered by Google, Apple, Samsung, and Microsoft, and the roll out of the BB10 would be unable to give RIM any kind of boost.
At the same time, Nath and Chauhan believe that a turnaround is possible through three major moves. First, complete revamp of mobile devices, which means churning out new hardware, as well as an operating system that can trump the competition. Secondly, improve developer and partner support (which has been waning of late) to bring out new and exciting applications for BB10. Lastly, work hard to gain customer confidence and interest, which has also reduced considerably, after RIM consistently failed to maintain pace with superior products from competitors.
Apart from new devices on BB10, the adoption of BB10 as a platform by other vendors would also be a crucial factor for RIM. RIM has already announced that it wants other handset makers, such as Samsung, to develop products on the new BB platform. But, "it is still a long shot," Gupta of Forrestor research adds.