RIM's secret plan to get BlackBerry out of the smartphone jam

Jack Gold is the founder and principal analyst at IT analyst firm J.Gold Associates.

RIM has been feeling the heat in the smartphone business, along with everyone else who is not iPhone or Android powered. Indeed, Android has even been pressuring Apple’s success in the marketplace with new and attractive smartphones from HTC, Motorola, Samsung and others. And BlackBerry has fallen behind in compelling features and functions, and particularly its user experience.

So does that mean BlackBerry will follow the same path as Windows Mobile and Symbian, becoming a has-been in the market as many have predicted? Maybe not.

RIM has been taking major steps to upgrade and revamp the BlackBerry platform and is in the midst of a major transformation from which I expect a new and competitive OS, compelling devices and enhanced user experience to emerge. The first phase of this transformation will arrive with the imminent release of the BlackBerry OS 6 and complementary devices, with a second phase coming in about 12-18 months. While RIM has not been as vocal or marketing-driven as its competitors, it has been working behind the scenes to acquire new technologies and to strengthen technologies it already owns. Recent acquisitions have been low profile, but taken together they forge a view of where RIM’s technology is headed. For instance, some of RIM’s keys acquisitions over the past couple of years include:

•  Torch Mobile – this is probably the preeminent acquisition RIM has made for its BlackBerry platform improvement program, and the one with the most immediately visible payback. Torch gives RIM a Webkit-based rendering engine. When integrated into a new BlackBerry browser, it will significantly increase performance compared to BlackBerry’s not very well regarded current browser. It’s a key component of the new user experience as well. But perhaps more importantly, it gives BlackBerry an industry standard HTML5 capability and will enable Flash and potentially Silverlight support. The challenge for RIM is to make the WebKit rendering engine secure enough to not undo BlackBerry’s compelling security advantage.

•  Viigo – gives RIM new programming tools and a platform to deploy real-time content. Viigo is a consolidator and syndicator of web based information and real-time content delivery and can be configured to access and push data from enterprise systems (e.g., data sheets, sales updates, service bulletins). Viigo could give BlackBerry App World a boost by syndicating new apps, and it could potentially enable a music or video service.

•  Alt-N Technologies –  provides RIM with an easy to deploy and manage email server targeted at companies that don’t need all the robust features (and costs) of an Exchange implementation. I expect Alt-N to be bundled with BES Express for a complete stand-alone mobile email solution which would appeal to many SMB customers and provide enterprises with an alternative to the Exchange/ActiveSync environment.

•  Dash Navigation Inc —  provides technology that can be directly applied to the BlackBerry Maps app to enable full navigation and further extend its capabilities in Location Based Services (LBS), competing with Google Maps and Nokia’s Navteq LBS solutions.

•  QNX – provides RIM with a substantial portfolio of Real Time Operating System (RTOS) experience and Intellectual Property (IP), including important voice and audio/acoustics algorithms, Flash tool kits, and Intel Atom expertise. This allows RIM to fundamentally re-architect the BlackBerry OS from the ground up. Its deep custom design expertise and a close alliance with auto makers and embedded machine vendors gives RIM an expansive opportunity to address new markets, including a path to a “BerryPad”.

While the company’s recent acquisitions provide it with key technologies, RIM still has a daunting challenge to meet Android and iPhone head-on. Further, it can not afford any major missteps or long delays in getting to market. To meet the challenge, I believe RIM will need to quickly add competitive capabilities to its ecosystem in the following areas.

A Monetization Engine — (like Apple iAd or Google AdMob). RIM is part way there with Viigo.

Gaming – BlackBerry needs to be a more appealing gaming platform. WebKit and HTML5 provides BlackBerry with a streaming/online gaming capability it currently doesn’t have.

Social Networking – BlackBerry Messenger is gaining traction as a secure and reliable private messaging service, particularly in developing countries. RIM could leverage this capability to increase the social networking functions already enabled on its devices with clients for Facebook, Twitter, etc.

E-Wallet — Eventually RIM will need a “money exchange”, e-wallet or billing solution (like Nokia’s Ovi Payments), especially as it expands into the developing world. It would be better for RIM to partner rather than acquire this.

Enterprise Apps – I expect continued partnership announcements for the enterprise space from IBM, SAP, Salesforce.com, etc. RIM will not abandon this core constituency anytime soon, nor should it.

Mobile Management – It is apparent that few companies will standardize on a single smartphone platform in the future. RIM should explore extending at least partial BES capability to non-BlackBerry devices.

I believe RIM faces a number of challenges in transitioning its platform into a more “modernized” ecosystem. While it is already a major player in the consumer space, with more units now sold to consumers and pro-sumers than enterprises, it has not kept up with many of its major competitors. RIM must address a number of challenges. First, what its brand means going forward. While it built its reputation on messaging, it must now become associated with much more functionality and be seen as the leader in innovating the new user experiences in modern mobility. RIM must decide to move further up the value chain with additional products and capabilities. It has started on this path with its MVS but needs to do more. Further, as we move to more caps on data plans, network efficiency becomes important. Like MPG ratings for cars, RIM which is known for its network utilization efficiency, should pursue a comparison of typical user actions like email, opening a web page, etc. with other platforms. This has major implications on end-user total cost of ownership if BlackBerry can show an advantage. Finally, with its new acquisitions, RIM now has the ability to expand beyond smartphones and into tablets and other Internet-capable devices.

Its clear that RIM is transforming the BlackBerry. What’s not yet clear is if customers, both enterprises (its traditional constituency) and consumers will embrace it. We should know in the next 12-18 months.  But I believe that the steps RIM has taken will dramatically improve its market position against Android, iPhone, HP’s WebOS, etc. Paraphrasing Mark Twain, I believe the demise of BlackBerry has been highly exaggerated.

This post is an edited excerpt from J.Gold Associates’ research report, “BlackBerry’s Jam and RIM’s Transformation”. Jack Gold is the founder and principal analyst at J.Gold Associates, based in Northborough, Mass. He covers the many aspects of business and consumer computing and emerging technologies.