RIM: One Year Later

Thorsten Heins, RIM CEO

What's up with RIM lately? A year ago, the company was pronounced dead. The revenue was collapsing, the company was losing market share, and the press was having a field day with delivering disaster stories about the BlackBerry maker. When Thorsten Heins was named the new CEO in January 2012, I was cynically thinking that here was another of those German technology company CEOs who will show us how to run a business the "proper way". Just remember Michael Spindler at Apple, Eckhart Pfeiffer at Compaq, and Leo Apotheker at HP!

However, Mr. Heins has so far proven me wrong. While it is way too soon to speak about a turnaround, he has clearly managed to calm the company down. The revenue has stabilized, the string of bad news about various mishaps and calamities has seized and the press is yet again buzzing with excitement about the next model of BlackBerry. As a result, the stock has bounced back from the summer lows.

Living in Waterloo, Ontario, where RIM is the largest employer in the region, I can also see that the doomsday scenarios haven't come true. There has been no massive exodus. The housing market is relatively strong and houses are selling fast. No thousands of “For Sale” or “Going Out of Business” signs. When recruiting, I see more resumes with RIM experience than a year or two ago but there are no RIM bread lines at the local Starbucks. After the layoffs last year, most of the workforce has been quickly absorbed by the more than 850 high technology companies in Waterloo; my employer OpenText among them.

The RIM stock has bounced back from its low levels 

Sure, RIM is far from being out of the wood works. The company continues losing market share and several of the big RIM customers have publicly jumped the ship. The BlackBerry PlayBooks has been officially declared a flop and working on a BlackBerry phone comes today with the same image as driving a Ford Crown Victoria. The pressure is on. All eyes are now on the soon to be released BlackBerry 10 which will be the most significant innovation since RIM switched from a 2-way pager to the BlackBerry smartphone. All the chips are on one number: the BlackBerry 10. It has to be a success - RIM won't get a third chance.

So far, the BlackBerry 10 looks solid. There is plenty of buzz about it and the "leaked BlackBerry 10 picture" campaign is working like a charm. The technology blogs are loving it and reporting about it daily. Most of those reports are very positive. While I am not much into following celebrities on social media, I noticed that RIM has engaged them as well - just the other day, the marathon champion Paula Radcliffe tweeted about her BlackBerry 10 crush. If the BlackBerry 10 fails, it won't be RIM Marketing's fault.

BlackBerry 10 (Photo: closari on Flickr)

RIM is now finally doing the right thing to address their key weakness - the shortage of applications. Last weekend, RIM was running another “portathon” and actually offering cash to developers for porting their apps to the BlackBerry OS. While $100 per application might not be much, I suspect it is more than what some of those apps earn in their lifetime. This is something that even Microsoft has yet to learn. In fact, the battle for the 3rd place mobile OS - after Google Android and Apple iOS - will be fought between RIM and Microsoft and the outcome is wide open today.

The bottom line is that RIM managed to get itself a little bit of a reprieve. This is no time to declare victory, but if the new product hits the mark, there is a sufficiently large and loyal customer base that will embrace it. Let’s hope the BlackBerry 10 delivers!

The State of the Mobile Market

The latest marketshare data for the mobile devices market has been released recently and I thought that it might be a good time to take a look at the mobile market today and tomorrow. First, lets take a look at the data that comes from comScore, combined with the latest Nielsen report and with data from iSuppli and a few other sources. The most widely reported information is the smartphone market share which looks as follows (comScore):

Basically, there are three vendors left today - Google, Apple, and RIM - with RIM losing market share while Google and Apple are growing. A forth vendor, Microsoft is fighting what seems to be a loosing battle to connect with the leading group. According to many analysts including Gartner and IDC, we will see some massive changes in the near future. The research firm iSuppli recently published a report that suggests that the Windows Phone will not only knock off the fast-fading RIM from its 3rd spot but it will even steal the 2nd spot away from Apple:

So why are all the analyst so bullish on Windows Phone when Microsoft has been losing marketshare so far? Well, the next data point may suggest an explanation:

As we can see, the smartphone penetration is still relatively low but growing very quickly. The overall market growth for mobile devices is at 10.8% according to iSuppli and both Nielsen and iSuppli expect that 60% of devices sold in 2015 will be smartphones. That means that there is plenty of marketshare to grab amid the double digit device growth, the rapid growth of smartphone penetration and the decline of other vendors.

Not a bad market to be in, is it? No wonder the vendors are so desperate to grab a piece of this pie. Today, Google and Apple have a clear lock on the top two positions while RIM keeps sliding and Microsoft is nowhere - at least so far. There are rumors about a Facebook phone and HP still has to make up or re-make up their mind about what to do with webOS. Here are some thoughts about the respective players:

Google
Google has grabbed a ton of market share thanks to all the Asian manufacturers such as Samsung, LG, HTC, Sony, etc. They all needed an operating system and since Google Android is free, the choice was easy. So far so good except that there are three big problems looming ahead. First, as a result of the open source model, the Google market has become massively fragmented and application developers struggle to support all the device types. Second, Google acquired Motorola which will make it difficult to keep the competition honest between its own devices and the other vendors. Third, Google is hardly making any money on Android - in fact they are paying hefty patent fees to Microsoft for each device - which makes it a hard business to sustain for a publicly traded company.

Apple
Apple may have lost the top market share spot to Google but honestly, Apple is running circles around everybody. Leveraging their unique value proposition of a tightly integrated system consisting of hardware, software and content, Apple is just piling up profits and making everyone else look bad. Make no mistake, the market share loss in units has nothing to do with market share in revenue and profits where Apple is standing head and shoulders above the rest of the industry combined. The decline in units market share is not a result of an inferior product or any systemic problem. It is more the result of the fact that many users are upgrading their feature phones and opting for the cheapest smartphone available without caring much about the operating system. Those users are clearly not Apple’s target customers. Apple is after the more affluent user who will not only shell out a premium price for a premium brand but who will also keep contributing to Apple’s profits through ongoing purchases on iTunes.

Microsoft
Unlike Google who’s Android is basically a less polished version of Apple’s iOS, Microsoft has built a very distinct and compelling mobile operating system. But adoption is so far eluding Microsoft for several reasons. The vendors selling Microsoft Phone devices are the same lot as those who sell Android. Android is free and Windows Phone is not and so guess who they push more? The second issue is that Microsoft has bet the farm on their Nokia partnership which was a smart move except that Nokia didn’t ship any Windows phones until the end of last year. The third and by far most important issue is the lack of developer support. Apple and Google have attracted many developers quickly leveraging superior tools, compelling business models and - in the case of Google - the open source effect. Microsoft has shown little love to developers so far. Unless Microsoft addresses these issues, they will always continue battling at best for the third place.

RIM
Well, it has been widely reported that RIM is in trouble and just replacing the CEOs is not going to fix that. RIM’s greatest problem is the lack of innovation. The good old BlackBerry may work fine and be more secure than iPhone but it is no longer hip enough even for the executives at stodgy brick-and-mortar companies. Today, RIM needs a purpose, a focus, and a compelling way to differentiate. Leaking pictures of phones that could ship in two years and be almost as cool as the iPhone is today is not going to do it. Even if those new RIM phones were available today, it would hardly make much difference. Besides needing some innovative and competitive products, RIM also has to address the developer support just like Microsoft.

HP
To be complete, I should also mention HP as the only other remaining MOS vendor. Or did they announced that they have killed webOS? Yeah, whatever. I will write another post when I meet a user with a webOS based smartphone.

HP Kills Palm

In April 2010 - not even 18 months ago - I wrote my comments about the then announced acquisition of Palm by Hewlett-Packard. Back then, I was speculating about five possible scenarios and I guess I was wrong. The scenario number 6 has occurred and HP pulled the plug on the Palm devices and probably also on the webOS mobile operating system today.

This move doesn't come as a big surprise. Yes, it is unusual for a company with the kind of resources that HP has to give a project that little time to prove itself - particularly a relatively recent $1.2 bln acquisition. But since the launch of it's new webOS based devices just a couple of months ago (in February 2011), it became apparent that they were flopping in the market place. Just earlier this week, it was reported that Best Buy sold less than 10% of the 200,000 Touchpads they ordered. Clearly, the mobile devices market is becoming a market space where you either make it big or go home. HP is leaving now.

That begs the question: how will this move reshape the mobile market. Apple is today clearly the player to beat. Until this week, I thought that Google was the a number 2 (or even number 1) but their acquisition of Motorola announced earlier this week has potentially put Android on a new trajectory and I see plenty of challenges ahead. But today, Google is certainly one of the top 2 vendors in the mobile market place.

The position number 3 is heavily contested. Microsoft wants it really bad and they have made a lot of good moves so far. Their deal with Nokia was received somewhat skeptically at first, but it makes much more sense since the Google/Motorola deal. Microsoft now stands a good chance to take over the spot number 3 and perhaps even number 2 in the foreseeable future, particularly should Google mess up with Motorola.

The position number 3 is currently occupied by RIM and RIM appears to be under a lot of pressure now. RIM has missed its numbers in the June earnings announcement and has been losing market share at an alarming pace recently. Yet, RIM and its BlackBerry franchise do have an impressive installed base and an access to the enterprise market that other vendors envy. That makes RIM a likely target and there is plenty of possible suitors about.

So where does that leave HP? Well, they may decide not to participate in the mobility games any longer just like their big rivals IBM and Oracle. HP's new strategy appears to be following IBM's example by divesting the PC business (which was also announced today) and focusing on "higher margin growth categories". Both were acquisitions, by the way - remember Compaq (2002) and EDS (2008)?

If HP decides to participate, it has three options:

1. Embrace Android which would make them a Google partner. That's less likely now as Google's Android strategy is at crossroads and since HP also announced the acquisition of Autonomy today which puts it on a collision course with Google in the enterprise search space.

2. Go with Windows Phone which would continue HPs long standing partnership with Microsoft. This is quite a feasible scenario but HP appears to be wanting to get out of the hardware business today. By the way, how ironic is it that while HP is getting out, Google - the ultimate Internet company - is getting into the hardware business by acquiring Motorola?

3. Acquire RIM which would fit HP's focus on the enterprise market. As I said above, RIM is likely to be in play soon and HP could indeed be one of the suitors. HP would probably not shy away from the high price tag of $15-20 bln or more - they have spent big money like that in the past. And the RIM acquisition by HP appears less problematic than by Microsoft, Google, or some of the fence-setters such as IBM, Oracle or Cisco.

In the end, I dare to predict that HP will stay out of the mobile devices market. If they want to be more like IBM, they are better served by focusing on services and remaining hardware agnostic. Too bad about Palm, though, as that was a good piece of technology. I still remember when US Robotics shipped the first Palm Pilot back in 1996 - the first successful personal digital assistant (PDA) which is how we called smartphones before they had the 'phone' feature. Well, an era has come to an end. After the demise of Nokia's Symbian, there is yet again one less contender in the mobile race. It is a four-horse race now with Apple, Google, Microsoft and RIM and there are only three (or less) spots left!

Why the Google's Purchase of Motorola Could Be Great News for Microsoft

Google surprised many this morning by announcing its intent to acquire Motorola Mobility, the mobile device manufacturer that has recently created by the Motorola split. At $12.5 bln, Google is spending some serious change - not that they can’t afford it - which only underscores the importance of mobility today and going forward. The stakes are high and so it is not a surprise that the key contenders are jockeying for positions.

So what are the consequences of this move? Google has been touting its Android operating system as open and open sourced and it was very successful in attracting many different hardware manufacturers including Samsung, HTC, LG, Dell, and, of course, Motorola. By buying Motorola, Google will need to convince the other vendors to stay with the Android OS which may be tricky now that Google is a direct competitor. Sure, Google sold its own smartphone in the past - the Nexus - but that was just a tactical maneuver to get Samsung and co. motivated and the phone was discontinued soon after they started shipping. Now with Motorola, Google is firmly in the competing corner.

None of the vendors licensing Android have been using Android exclusively and they all have other options. To stay with Android, Google will have to convince them that there is a solid Chinese wall between Motorola and Android to avoid any channel conflict. Google doesn’t have any credentials in that. Google will have plenty of struggle to combine its highly profitable advertising business with the low margin, highly competitive hardware business from Motorola and Motorola isn’t a small bite to swallow. Controlling both the software and hardware could give Google a leg up over the immensely profitable Apple franchise which in a way validates Apple’s closed and vertically integrated strategy.

The Motorola acquisition may motivate other Android phone makers to look for alternatives and the most obvious one is Microsoft. Many of these vendors are already shipping a Windows Phone based product and the Google acquisition of Motorola is likely going to send a strong breeze into Microsoft’s sails. It could possibly also give RIM a little bit of a reprieve, even though RIM is not ready to license out its own mobile operating systems (yes, they have two - the BlackBerry OS and the QNX). Similarly, Apple will not likely license its iOS to other vendors but should enjoy a boost in marketshare while the Motorola deal is being sorted out.

Some pundits call for Microsoft to acquire RIM and/or Nokia in response to Google’s move. I suggested the Microsoft-RIM marriage a long time ago but since the Nokia deal, that acquisition is less likely. In fact, Microsoft is standing strong right now as a dependable operating system vendor from whom all the device manufacturers can safely license the mobile OS. All of a sudden, that sounds much more attractive than licensing from the hard-to-predict Google. I think that the status quo is working really well for Microsoft. And even Nokia, having bet the house on Windows Phone must be breathing a sigh of relief.

Google actually claimed that the primary rationale behind the Motorola acquisition is the pile of patents that come with the deal. Well...whatever. I think that the patent wars that are currently raging between Google, Apple, Microsoft and others are not helping customers and that they are very detrimental to the industry in general. The patent laws may have to evolve but that could be a topic for another blog post. Besides, why is everyone claiming that their pile of thousands of patents is better than the other guy’s pile? Since when are patents sold by the pound?

To sum it up, the Motorola acquisition is a very risky and pricey move for Google who’s finding itself on an unfamiliar ground with hardware and who’ll have a lot to prove to keep Android open. I also believe that this deal has opened the door for Microsoft who’s suddenly looking like a safe bet when it gets to licensing a decent mobile operating system. It will be fun to watch how this is going to play out.

Quo Vadis, RIM?

Everybody is talking about RIM today and I simply have to comment. I have written several articles about RIM in the past. Over a year ago, I have suggested the 10 Reasons Why Microsoft Should Acquire RIM. A few months back, I have also wondered why does RIM keep chasing the consumers instead of focusing on their traditional strengths in the enterprise. RIM is the largest employer here in Waterloo, ON and so I do care.

RIM is in trouble and there is no way to hide it. Having discovered the killer mobile app - email - a decade ago, RIM has completely missed the notion that we could use the BlackBerry for more things than just email. Apple entered the market back in 2007 and completely transformed it with some 400,000 apps available for the iPhone. The result is a dramatic loss in market share which is now inevitably followed by revenue shortfall.

Here is RIM's problem: declining marketshare.

The question on everyone's mind is what will happen next with RIM. I see three possible scenarios:

1. Turn-around
In this ideal scenario, RIM will find a way to compete with compelling devices but that won't be enough. RIM will need to attract developers and get quickly to some 100,000 apps. That won't be easy since the developers have to divide their precious resources between supporting iOS, Android, RIM and now Microsoft and HP are also vying for their attention - and with much deeper pockets. And even the application support may not be enough. RIM will need to add some exclusive or at least unique and compelling content and services. The mobile battle ground is no longer about devices but entire eco-systems. Apple has got music and movies, Google has search and ads, and even Microsoft has the Xbox games. What will be RIM’s angle? My suggestion would be enterprise content and enterprise apps but that hasn’t been RIM’s focus lately.

2. Acquisition
The voices suggesting that RIM will be acquired were loud yesterday. The Wall Street Journal even declared Microsoft the most likely suitor. While I suggested that a year ago, I don’t see that scenario as likely in the next 12 months. Microsoft is right now in a committed relationship with Nokia and that relationship would have to fail before Microsoft could pursue RIM with a straight face. And honestly, I don’t see that happening anytime soon. Microsoft built an awesome and differentiated mobile operating system and appears to be quite determined to make it a success. However, they still have to get those 100,000 apps - here they face the same challenge as RIM.

There are, of course, other possible suitors who could be interested in RIM. Cisco could use it to boost its unified communications agenda - and to add some additional load on those routers.  Oracle has surprisingly not articulated any mobile strategy so far and buying RIM would be a shot in the arm, particularly given Oracle’s laser focus on the enterprise. IBM has also been waiting on the sidelines and could use a mobile platform. And even Google could acquire RIM, swap the OS and use it as a foray into the enterprise market. And let’s not forget other big players in the IT market: Dell, Intel, Lenovo, etc. I just hope it’s not going to be Computer Associates or some cable company.

3. Demise
The 3rd, least attractive scenario is a slow - or maybe not that slow - demise. Vicious cycle of falling market shares, declining revenues, and lay-offs could lead to RIM following in the footsteps of Palm. Sure, even Palm got eventually acquired by HP but at the time, Palm was already pretty much irrelevant. And if RIM doesn’t make some radical changes, this scenario could really happen.

I sincerely hope it won’t come to a demise of RIM and that RIM turns things around. RIM is a great company and the world will be a better place with an independent player keeping the big vendors honest. Acquisition by the right company would not be a bad outcome either. I still believe that Microsoft would have been the best fit but as I explained above, this scenario is less likely now than it was when I have suggested it in April 2010.

It sure will be interesting to watch this market play out.

BlackBerry Playbook - The Good, The Bad, and The Ugly

I finally got to test the released version of the RIM BlackBerry PlayBook and here are my impressions of the PlayBook - the good, the bad and the ugly.

The Good

The PlayBook is a 7 inch tablet device with a new operating system by RIM. I am a fan of the 7 in format as I already determined when I  tested the Samsung Galaxy. The 7 inch format is big enough to get a decent browser experience and to be able to type and yet it makes the device immensely more portable. The device has two cameras and an HDMI slot, although I didn’t find any SD card slot to my disappointment.

The PlayBook has a very sharp looking display. The resolution is 1024x600 which is more dpi than the iPad with 1024x768 given its smaller screen size. I like the user interface of the new PlayBook OS (QNX) which makes the app interaction very easy - it is much more obvious about which apps are currently running compared to the iPad. Talking about the UI, I have to mention the Flash support which is something iPad doesn’t do. That said, I am not so sure lately I really want Flash to survive, given the abundance of invasive Flash adds. I do realize though that the advertisers will find another technology to annoy me with their ads if they don’t have Flash.

The PlayBook user interface is awesome

Finally, I like the standard set of applications that come with the PlayBook. Besides the usual suspects such as browser, music player, picture viewer etc., the PlayBook also comes with a set of office applications called Word To Go, Sheet To Go, and Slideshow To Go. I’ve tried to open up a couple of Office documents and I was positively surprised to see a pretty decent fidelity of a PowerPoint deck - something the Keynote app on the iPad still struggles with. That said, don’t expect to be able to use a complex Excel spreadsheet with pivot tables.

The Bad

There were a few things I didn’t like about the PlayBook. First, the device is surprisingly heavy. With 425 g, the device is too heavy to hold comfortably in one hand for a long time - i.e. when reading a book. The iPad weighs 607 g which is much more but given its size, the weight is not that surprising. The Samsung Galaxy weighs 385 g which is less but even that was too much for reading when I tested it. The Kindle only weight 241 g which is why it is such a successful reading device.

I was impressed by the fidelity of PowerPoint decks opened on the PlayBook's native Slides To Go app.

Many people have reported about the hard to use power switch. It is really, really hard to engage - the designers clearly haven’t tried the button themselves. That said, you don’t need the power button much - a simple sweep on the screen wakes up the PlayBook from hibernation. I did like the volume buttons that some of the reviews criticized. My iPhone and iPad have them too and I use them all the time.

While the PlayBook hardware appears very slick, the software was clearly a bit rushed. The PlayBook has no native calendar or email client. To use email, the PlayBook has to be tethered to a BlackBerry (smartphone) via a bluetooth connection which I wasn’t able to test since I traded my BlackBerry in for an iPhone not long ago. This limitation will likely go away in some future update but right now, the tablet’s usefulness is limited without email which is my number one application on the iPad.

The Ugly

In the end, it is all about the software - most notably the apps. And that’s where the PlayBook has its work cut out. The BlackBerry has been only slowly trying to catch up with Apple and Google in apps availability but the PlayBook OS (NQX) is distinct from BlackBerry and there are only a handful of apps available. While the PlayBook has in theory most of the apps one would need for work - let’s ignore that email issue for a minute - the fun apps are in very short supply. From the list of my most useful iPad apps, I was able to find a browser, a basic RSS reader, a note-taking tool, Twitter client, and I’ll throw in a Facebook client which iPad doesn’t have. From the list of my coolest iPad apps, I didn’t find a single one.

The Trump Card

The key to the PlayBook’s success will be RIM’s ability to attract developers. Right now, I am a bit skeptical. However, there have been some reports about the PlayBook’s ability to support Android apps in the near future. Should that come true - and should the apps run in a realistic mode with full capabilities - RIM might pull a great coup and address the lack-of-apps issue overnight. But until that happens, the PlayBook’s outlook is questionable.

My son is testing the 'play' part of PlayBook. He enjoyed the Flash support.

The Summary

The PlayBook is a beautiful, well designed device.  Assuming the apps will become no issue, it will be a solid option for many users, particularly those using it primarily for business. Besides the native office apps, PlayBook also leverages RIM’s security infrastructure and offers a much more secure option than Google or Apple. But the apps are a major issue today and with pricing on par with iPad ($599 for a 32 GB version), the PlayBook is hard to justify in comparison to the iPad.

Struggles of a Professional iPhone User

A few weeks ago, I have made the switch from BlackBerry to iPhone. I’ve owned an iPad for almost a year now and there appeared to be no hope that most of the cool apps that iPad offers would ever appear on the BlackBerry OS. I was also getting increasingly disenchanted with the poor browser experience, with the lack of an iTunes-like tool to manage my content library (not that I am enamored with iTunes - a pretty poor program if you ask me) and with a variety of performance issues and freezes that plagued my BlackBerry lately. And so when the renewal time came up, I have made the switch into the promised land of Apple. 

iPhone Calendar

I should mention that I am at this point an all-in Apple user, having embraced at home everything from iMac, iPad, iPod, iTunes, AirPort, Time Capsule, AppleTV to now also the iPhone. I expected the iPhone to be inferior for making actual phone calls but who cares - the last thing I want to do with a smartphone is make phone calls. But actually, the iPhone makes phone calls just fine. I have, though, discovered numerous challenges that I honestly miss from my BlackBerry: 

1. Calendar
The calendar is pathetic which I knew from using it already on the iPhone. It does not not support the Exchange categories and so my iPhone calendar is monochromatic in contrast to the colorful experience in Outlook. That’s rather odd considering that this is an Apple calendar - as if the cool hip Mac guy swapped cloths with the chubby dull PC guy. I’m also having issues with the calendar not caching properly which means it always tries to rebuild itself by downloading all data from the server. Pretty annoying actually - even though this issue could have to do with our IT architecture rather than with my iPhone. 

2. Appointments
The most glaringly missed feature, one that suggests that Steve Jobs is secretly carrying a Blackberry under his black turtle-neck, is the inability to simply click on a phone number in a calendar appointment to dial it. Conference calls are apparently not something iPhone users are expected to do. This is such an appalling omission that I must suspect that Apple developers never actually used the iPhone 4 for anything but to track the performance of the Apple stock. 

3. Appointments (again)
The calendar does not allow some of the basic functions - I cannot forward an appointment, I cannot suggest an alternate time, the calendar message gets truncated and I don’t see a setting to prevent that. BlackBerry did these things and I need to use them daily. And while I’m complaining about the appointments, here are three requests I have for Microsoft: I want to be able to decline an appointment (saying clearly ‘no’) while keeping it in case my other engagement gets canceled which keeps happening all the time. I also want to see an ability to prioritize my appointments. And finally, I also want to have notes associated with calendar appointment before, during and after the appointment.  

4. Email Search
Where is the search button in email? Seriously? Is there some kind of magical four-finger flick motion I need to learn to evoke this basic function? C’mon, Apple! 

5. Contacts
My iPhone doesn’t allow me to look up people numbers in our corporate Exchange directory. Why not? Does Apple expect me to download the entire directory to the iPhone and maintain it by hand? Steve Jobs must apparently not be calling many people at Apple. Also,  phone numbers stored in incomplete format such as (519) 123-4567 cannot be dialed when roaming. Your number has to be in the complete format with a country code e.g. +1 (519) 123-4567. That limitation is regrettable and odd given that the OS knows when I am roaming and what my default country is and could thus easily complete the number automatically. 

6. No super-apps
I always thought that the super-app concept from BlackBerry was a little bogus - it touts cross-integration between apps that makes so much sense that I couldn’t imagine it would not be there. Well, I can imagine it now since the apps on my iPhone are completely isolated from each other. The concept is pretty straight forward - for example, every time I see a person in an app, I should be able to access that person’s profile straight from within the app - I should be able to call, email, IM, or whatever other means of communication I have. Similarly, I should be able to share (via email, Twitter, Facebook, etc.) any content asset from within any application. These things are inherent to the BlackBerry OS and yet they don’t exist on the iPhone.

7. Multi-tasking
Apple’s claim that multi-tasking is supported since iPhone 4 - true, as long as one of the tasks is listening to music. Something as basic as checking the calendar while on the phone is not possible. This one threw me off as I always thought that all those teenage consumers - the primary target audience for Apple - are heavily into multi-tasking doing chats in 10 sessions at a time while talking on the phone, tweeting, facebooking, and doing homework all at the same time. They might but not on the iPhone. 

These are some of the examples of functionality I miss from my iPhone. They are basic level features used daily by every professional in business. My experience is re-affirming to me what I have already suspected - Apple does not care for nor understand the business user. They will keep piling up awesome features for playing music, movies, talking to friends, taking pictures and all the other things consumers do and love but the business users are not Apple’s priority. 

I still think that the iPhone is a superior device and I am going to stay with it for now. I am locked into my 2 year plan anyway - courtesy of my customer-loving wireless service provider. But the lack of support for business users is a huge opportunity for RIM which has a massive head start in this space. This is where they grew up and this is where they should dominate. Their marketing messages should be focused on the business user rather than chasing consumers (which I wrote about in December 2010). Business users like me should be told to keep their BlackBerry but nobody is telling them that.

The Mobile Battleground

The mobile wars are raging at full swing right now. The key players include Apple, Google, RIM, and Microsoft. The battle lines have been drawn based on the mobile operating systems but there are in fact, at least three fronts:

1. Devices
What’s a little puzzling is how the smartphone manufacturers expect to compete. Today, HTC, Samsung, LG and Sony-Ericsson all ship smartphones with the Android operating system which means that they all have the same functionality and applications. For now, the phone features are still distinct as they have different sizes, cameras, or expansion slots but within a year, they will all likely be identical. The Windows Phone 7 phones will face the same challenge as I have already described in my take on the Microsoft-Nokia partnership. Clearly, only Apple and so far RIM have a differentiated strategy as they own the hardware and operating systems and don’t license it to other vendors. HP could be in the same boat but they have yet to ship a device.

2. Apps
It’s all about the apps, baby. Actually, it is about application developers since they are the ones who have to be compelled to build their apps for the respective mobile operating system. Maintaining the apps for the multitude of OSs is very costly and so most developers want to focus on 1-3 systems. The spots 1 and 2 are today firmly in the hands of Apple and Google and therefore position 3 is highly contested by RIM, Microsoft and HP. RIM has some lead based on their market presence but Microsoft has more experience in courting developers and so the game is on. HP has no market share, no developer ecosystem and no applications to speak of - a tough hill to climb.

3. Services
Besides applications, most mobile operating system vendors have a deeper agenda - they want to provide online services that consumers use on their mobile devices. Mobile devices are the key to some of the consumer spending online whether it’s by selling content or advertising. And the consumer power and profits associated with these services are just as compelling as the mobile market itself. Apple has clearly figured it out first and that’s why the company is today making piles of money on mobile devices and on selling music and movies. Google is leveraging its power in search to drive consumer advertising and even RIM figured out that the free BlackBerry Messenger is a very powerful service that drives consumer demand for its devices.

The table below compares the consumer stack of key contenders. It shows not only who provides which service but also contrasts it with the leader in each respective category:

Comparison of the consumer stack among the mobility players.

 The color represents the heatmap - the darker the color, the stronger a given vendor is at that particular service of the consumer stack. As we can see, Apple and Google have a pretty solid position with most services covered and many of them strong. Microsoft has made big strides towards having most bases covered but many of them are lacking on traction. What’s also interesting is that, in so many areas, the leading service is provided by a vendor without a mobility agenda. This hints at possible partnerships - the way RIM has embraced Facebook and Twitter by developing their own BlackBerry apps. I expect that more such partnerships and even acquisitions are likely.

The consumer stack is an important factor in the mobility war. The mobile vendors want to take advantage of their strengths but they will need to be careful not to overtax the users. Google, for example, wants to leverage its search-based advertising but too much of that will be a turnoff for mobile users. Microsoft wants Windows Phone 7 users to live in Windows Live but since this service has relatively low adoption, they must not lock the users to their own consumer stack. The vendor who gets it right will reap the benefits on both ends - making money off the devices as much as off the services. Just like Apple does with iPhone, iTouch and iPad and the music and movies content.

If I Was The King of Finland

I have been to most countries in Europe but I have never been to Finland. I really don’t know much about the country except for a couple of hockey players and Formula 1 drivers who speak in a flat toned voice with absolutely no emotion whatsoever. But this much I do know about Finland - I know that Nokia is from Finland. In fact, it is one of the national icons of Finland. I suspect that the CEO of Nokia is more influential in Finland than the president Tarja Halonen, even though she been a topic on the Conan O’Brian Show a few years ago.

Stephen Elop and Steve Ballmer

On Feb 11, 2011, Nokia announced the plan to adopt the Windows Phone 7 mobile operating system (MOS) on its smartphones in favor of the Symbian MOS they were using so far. This move is not a major surprise as Nokia, once the dominant leader in mobile phones, has been rapidly losing market share over the years. Also, the new Nokia CEO Stephen Elop came recently from Microsoft and since no story of Steve Ballmer throwing a chair at him appeared this time, he must have left on relatively good terms.

The move towards Windows Phone 7 is significant. It gives Microsoft a strong ally in the mobile wars which have been raging since 2007 when Apple launched the iPhone. It is definitely a great move for Microsoft which has finally started to take mobility seriously with the launch of Windows Phone 7. Microsoft’s previous attempts in mobility were lackluster at best and Microsoft needs to gain market share quickly to come at least in sight of Apple’s and Google’s taillights. Nokia will absolutely help Microsoft. But is this move the best for Nokia?

This is a tough question and if I was Stephen Elop, I would have been looking at the following options:

1. Give Symbian another push
The problem is the lack of apps on Symbian. From the app vendors point of view, Symbian is at best the number 5 mobile platform on the market, trailing behind Apple iOS, Google Android, RIM BlackBerry and Microsoft Windows Phone 7. Just getting to position 4 means beating Microsoft which is a big mountain to climb.

2. Sell out
Of course Nokia could have sold out - get acquired by another company that could afford the $35-40 bln market capitalization. Selling out is rarely the intent of a new CEO unless he or she got hired for that specific purpose. I guess we know the answer now. The possible suitors could have been Google and Microsoft as both companies attempted to sell their own devices in the past and failed. I’d argue that the merger with Microsoft is still a possibility down the road.

3. Go with Android
Nokia could have teamed up with Google and embraced the Android operating system. That would have gotten them to position 2 in mobile platform rankings which would give them instantly thousands of apps. The Android MOS is open sourced and so there is no royalty to pay to Google. The disadvantage would have been the difficulty to differentiate with Samsung, HTC and other Asian manufacturers who have already started offering Android-based phones and tablets months ago. I’ve shared my impressions about the Android-based Samsung Galaxy tablet recently.

4. Go with Microsoft Windows Phone 7
Teaming up with Microsoft was a predictable choice given Stephen Elop’s Microsoft background. This move gets Nokia to position 4 in the mobile platform rankings with a fighting chance to eclipse BlackBerry should RIM stumble with PlayBook. But that’s about it. The number 4 mobile platform is not going to get as many apps built as the top 1-2 and what they need are apps, apps, and apps. With Microsoft, Nokia found a powerful marketing ally but Windows Phone 7 isn’t open sourced and Nokia will have to pay royalties to Microsoft. Also, differentiation is not a slam dunk since Samsung, HTC and other manufacturers already ship Microsoft-based phones.

I’ve also considered a scenario of Nokia merging with RIM and embracing the BlackBerry OS but since the companies have virtually equal market capitalization, I have dismissed this scenario as a viable option.

Stephen Elop, Nokia's CEO

Obviously, Stephen Elop has opted to go with Microsoft and take advantage of a powerful and motivated ally with the risk that even this combination might not succeed to win over application vendors. And even if that battle succeeds, Nokia will have difficulty to differentiate. Within 12 months, all the devices will have every bell and whistle and with the same OS and the same apps available, the battle will be probably fought on price. And that’s not an enviable position to be in.

The reality is that Nokia had to make a move and the new situation is decisively better than the situation before. Possibly, Nokia might end up licensing Android in addition to Windows Phone 7 just like Samsung and HTC do. Or they might sell out after all - most likely to Microsoft. In either case, both companies have their work cut out. 

Images: Courtesy of Nokia