RIM – a fall from grace

Two news articles piqued my interest last week. First was Marissa Meyer’s (the CEO of Yahoo) announcement that all employees would now be provided by free smart-phones and accompanied data plan. This would be along her priority that Yahoo would have to be a major player in the mobile world by 2015; in order to do so would require that employees use and understand user behavior to create a compelling mobile value proposition. What was telling were the vendors chosen Apple, HTC, Samsung or Nokia….. but no RIM. On top of this Yahoo would now discontinue IT support for the Blackberry platform.

The second was thescripted and belted out by RIM executives for the Blackberry JAM developers’ conference.

I have seen performances, but perhaps never something that sounded so desperate an effort to keep the few developers who haven’t deserted them – as yet. The company has now literally put all its eggs in one basket focusing on the BB10 launch promised for next quarter. If I was a shareholder I would have to ask CEO Thorsten Heins if this is the best punch that he could pack. I am also a bit mystified on their selection of their CEO in the first place – given that he came from Siemens who themselves do not have a stellar track record in this regard and hasn’t done anything radical enough to shake up a company which perhaps desperately needs just that – a different way of looking at their business.

This is just what I will try to postulate; perhaps not rocket science but drawing it up from first principles and positioning it against current competitive trends in this space.

What has been BB’s strength, the USP which drew enterprise customers in hordes during the boom years? It could be summarized as the phone with its ubiquitous keyboard as well as the BBM messaging and email platform offering secure communications prized by enterprise customers. This was the firm belief that this capability would not be replicated and stuck to their strategy over a decade. A decade is light years in the fast moving telecom space. Fast forward a decade later and touch screens are the order of the day with technologies such as swype making typing easier. At the same time 3^rd party companies have come up with compelling solutions which offer similar levels of security but are compatible across multiple platforms and/ or are available at a lower price point. Perhaps they do not maintain the BB legendary watertight server structure but for a majority of the populace this is just good enough. At the same time the shift in behavior has ensured that bring-your-own-device (BYOD) is gaining popularity and enterprises are pandering towards the preferences of their employees who prefer an Apple/ Android phone with thousands of apps to the Blackberry. To its own consternation Blackberry has been unsuccessful in wooing developers its platform – ‘no developers – no apps’. On top of this one USP was the ability compress data in order to squeeze data in older 2G – 2.5G network. With the emergence of 3G/ 4G networks media is now the primary bandwidth hog – email is no longer a red flag item. So now RIM is left with a device which few want, with an app platform which looks like a desert compared to the rest and with messenger and secure email no longer being the preferred service. I will admit that I do not have any deep insights into BB10, but perusing the news and blogs leads me to many skeptics and a few optimists. Perhaps it is drawn from past history with many promises and a track record of under-delivery.

So what could RIM do? On talking to present and past BB users one gets the feeling that although people have gotten past the desire for the handsets (now preferring the iPhone and devices from the Samsung/ HTC universe) there is still an appreciation for the neat and effective BBM and email service. Could RIM drop its pretense of being a device company and migrate along with the rest of the world into being the ‘multi-platform app’ for enterprises. Such an app (or an ecosystem of apps) would leverage the ‘security and trustworthiness’ of RIM, would appeal to the broad range of former RIM BB users who loved the service, but perhaps are now users of different handsets.

Of course, this is no Blue Ocean, but RIM does have the background, the brand and the history to deliver such a service. It would mean a harsh restructuring of the company, but RIM would be able to survive – find its mojo and hopefully emerge as a phoenix in the expanding and lucrative billion dollar mobile enterprise universe

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours

The Clone Wars

Just looking at the Lazada web-page one would definitely have to smile, or grimace –a straight face would be quite challenging. The Businessweek article took up on the Amazon clone launched by Rocket Internet in the South Asian region. For one, they seemed to have done a pretty neat job of copying the entire Amazon page and if not for the different name you could have mistaken one for the other. What was even more interesting reading were the comments made at the end of the article both for and against the upstart. For some it was a visceral cry against such a blatant copy, for others it was more of well, aren’t half the products we now see partial copies of others. You could look at Samsung versus Apple, or go back in time to see Apple versus Braun – many products have taken ‘inspiration’ from some other original creation.

From my perspective simply copying the design of a web-page and crying copy-cat doesn’t offer sufficient justice to the affair. You can start by looking at it from an over-arching perspective and ask yourself – what is Amazon’s true USP which gives it its strategic advantage; is it the website, or is it the ability to leverage its amazing computing power and logistics service which has been built up over years of heavy investment and provide solid returns on sliver like margins. Is this something that can be easily replicated or replaced? For all I know Lazada may be using AWS for its own service!

However, there is an important facet to consider which cannot or should not be ignored. By copying the color, layout and nearly everything but the name, does Lazada hope to confuse a casual and novice shopper who may have wanted to buy something from Amazon, but ended up there? Could it then be akin to a phishing outcome where you inadvertently end up in a different website but with a significant level of similarity to the original? This in the end was the crux of the Apple versus Samsung deal, at least in USA where Apple secured a $1 billion from Samsung on the premise that the level of similarities could serve to confuse customers because they were not sufficiently distinct and different. Perhaps this is something that could end up costing Rocket a lot.

Although their execution and speed of launch is to be commended, given that the Samwar’s are well endowed I wonder why was it so very difficult to get a good designer to create something original for the web-page. After all, there is nothing like one single ‘best page’ – and time and time again people have created excellent designs. It would still remain a significant hurdle to match Amazon’s prowess in creating an excellent logistics infrastructure enabling it to move huge volumes of goods and continue to drive strong revenues and profits on very thin margins. Nonetheless, it could only be a firm with deep pockets who can consider such a battle – Rocket could just be one of them. It is of course, noteworthy that they have launched in Southern Asia where Amazon is still not yet a household name. This would allow them to compete with other local firms who may not have the sheer execution capabilities that Rocket brings to the table. But in doing so they are pushing against the Chinese– and those can well turn out to be formidable competition.

This is not a one shot game, and needs a long term vision, strategy and patience. The latter quality is something that Rocket is not known for. The market is certainly out there, and gimmicks such as cloning the webpage aside, hopefully Rocket too has the patience and drive to see the whole thing through.