The Android platform has continued to see significant growth. An article I read recently quoted Nielsen research as saying that Android market share has more than doubled from 23% to 50% since October of 2010. In the meantime RIM's share has gone down from 27% to 15% and Apple has essentially tread water with a modest drop from 28% to 25%. While this is great news if you're Google it also needs to be put in perspective. In the first quarter of 2011 alone world wide mobile phone demand grew 20% with most of that growth coming in the smartphone sector. So Apple saw some growth while RIM's reduction in units shipped was most likely modest. It's also important to keep in mind that the Verizon iPhone didn't become available until after that data was gathered.
The second competitor RIM has to worry about is of course Apple. Blackberry phones used to be cool. You'd see pictures of celebrities carrying them all the time. RIM was really ahead of their time in terms of putting together a compelling platform that combined ease of use with enough functionality to get people excited. If the market had remained static they would still be in great shape. If there is one thing you can count on though it's that people and companies run to where the money is. Given how lucrative mobile phones were to RIM it was inevitable that new competitors would enter the fray.
One of the difficulties RIM is having is centered on the fact that two very strong, and very different competitors emerged. The iOS platform is offered by a single vendor, Apple. In regards to phones Apple is generally offering only a small number of variants on their base platform. Right now you have the 4G and the 3GS. This limited number of choices makes it relatively simple for RIM to create products that either compete with Apple’s iPhones or to carve out niches that Apple is not serving well. Apple also has reasonably long product life cycles with a year or more between releases. For these reasons I don’t view Apple as the largest threat to RIM.
The Android platform on the other hand is used by many different vendors on hundreds of different phones. There is no way RIM can come up with a coherent strategy to compete with Android. If there is a market hole to be filled than the odds are good that some vendor has an Android based phone available that fills it. Of course all those choices do lead to fragmentation as I've discussed before but that hasn’t been a significant issue to consumers so far and I don’t believe it will be.
So RIM is essentially being beaten with precision by Apple and by way of a thousand cuts by Android. This is not an enviable position to be in.
RIM’s strength still lies in the area of data security. If you’re a large company or an individual that cares about the confidentiality of information flow than RIM is your only choice. The fact that some foreign governments are pressuring RIM to break that security within their borders is very telling.
So, on the plus side the market for smartphones is still growing rapidly which is helping shield RIM a bit from the significant inroads that the Apple iOS and Google Android platforms are continuing to make. The fact that their unit sales are not increasing at nearly the same pace as their competitors is very troubling but not fatal in the short to midterm. The question is, can they bring out a compelling set of product offerings quickly enough to start reversing their market share erosion?
From my perspective a compelling match up would be a RIM smart phone that leveraged Android and the security infrastructure and operational excellence the company has developed over the past decade plus. At this point RIM’s OS is costing them a lot of money to develop and support and is rapidly becoming a disadvantage. They are going to have to lose a lot more market share before they even consider a shift in strategy this significant though.
Image by Getty Images via @daylife
Image by Getty Images via @daylife
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