As Research in Motion prepares for an important update to its Blackberry phone, it’s focusing on the needs of some of its most important customers: government workers.
Research in Motion currently has 1 million security-conscious government customers in North America, but Apple’s iPhones and phones running Google’s Android operating system are now common place on Capitol Hill. The same is true at the State Department, NASA, Department of Veteran Affairs and the Department of Homeland Security. Last month, even the U.S. Department of Defense said its employees could choose a non-RIM phone.
“Government business is extremely important to us,” RIM chief executive Thorsten Heins said in an interview. “We want to not just maintain that. We can really win and grow.”
RIM would like to maintain its exclusive relationship with government agencies, but must be “realistic” about the increasing competition it faces, Heins said. To maintain a foothold in the smartphone market BlackBerry must be attractive to consumers, not just businesses, he said.
“We’ve got to face that competition,” Heins said.
Research in Motion once led the PDA and smartphone market, with 16 percent of world smartphone sales as recently as 2008. But according to a report Gartner released Wednesday, RIM devices made up just 5.3 percent of worldwide sales in the third quarter, down from 11 percent during the same period last year. Android sales, meanwhile, now account for 72 percent of smartphone sales.
RIM has a chance at a comeback, but it’s a slim one, said Kevin Smithen, a technology analyst at Macquarie Securities. “The window is still ajar for RIM but not by much. They really have to nail this launch,” Smithen said.
RIM is launching its new operating system, BlackBerry 10, on Jan. 30. The first BlackBerry 10 model will have an all-touch screen, followed quickly by another phone with a full keyboard.
But the new operating system has been delayed for nearly two years, and in the meantime the market has shifted further toward Apple and Android phones.
While the company has a strong presence overseas, its standing in the U.S. market is in jeopardy, Smithen said. “The adoption of the iPhone and the Android device in the last two years — while RIM has dropped the ball — has become ubiquitous. It’s much harder to overcome that in the U.S.”
At many companies, people can now pick their own devices and get subsidized by employers. That trend has been a big blow to RIM’s core business.
With the shift, consumer-focused features such as an easy user interface or a wide selection of apps became far more important. To respond to the evolving market, RIM rebuilt Blackberry’s operating system to focus more on the consumer experience, Heins said.
The new system allows users to split their phones into two sides. One side can house games, personal e-mail and appointments, while business-related software, messaging and documents will exist on the other. Users can toggle between the two sides of the phone but not share data between them.
“We’ll hopefully solve that problem of two devices with no compromise to the user experience,” he said.
Competitors may offer more apps, but RIM’s selection of 70,000 to 100,000 applications will be more “meaningful,” Heins said.
A resurgent RIM would also benefit wireless carriers concerned that Apple and Google-based devices will continue to dominate the market, said Smithen. “Even if the carriers promote those devices ... ultimately it’s the consumer or the employee that’s going to make the decision,” he said.