RIM and the Case for a Third Smartphone Winner

Blackberry bushes love the Northwest. They grow like crazy here and are generally considered a weed. In the spring blackberry bushes flower and then the fruit grows through the summer, with full bloom in August. The fruit is delicious but often very hard to get to as the plant has some nasty thorns. There’s a fast food chain here called Burgerville that specializes in fresh fruit milkshakes. Their blackberry shakes are to die for. None of this has to do with BlackBerry, the product (and now company as RIM changed its name) but I couldn’t resist the fruit/plant discussion.

I saved a whole mess of articles on BlackBerry announcements last week. I’m looking for signs of life and, frankly, a clue. I may be one of the few people on the face of the planet that believes strongly that there is room for a third mobile platform. I think iPhone and Android are basically attacking the same market segment — entertainment-centric people — and there is room for a product well positioned as an information-centric platform. At one time RIM was well positioned to capitalize on that market with its messaging-centric devices.

So the question I’ve been asking myself for the past month since the company name change, BlackBerry 10 and new devices were announced is this: can BlackBerry be that company.

There are some potential signs of life from the things CEO Thorsten Heins at the announcement. He said his devices are aimed at “people who need to get things done, people who need simplicity, and balance” and “people who consider true multitasking a must have.” Okay, maybe some signs of life. But then Heins also said, “hyper-connected social multi-taskers” and “We will soon give you more ways to connect your mobile experience to not just other people, but the whole world around you,” neither of which, frankly mean much of anything.

What does it mean to be an information-centric user? It means that the devices are designed and meant to make us more productive, caring less about entertaining us. Let me give you some examples, some of which could be accomplished today and some of which are dreams of a better future:

  • Calendar, contacts and tasks are all interconnected seamlessly across all devices
  • Devices are smart enough to change directions for you when it sees you have steered off course
  • Devices talk to parking meters and tell us which spot, closest to my meeting, is available
  • It monitors my calendar and traffic patterns and tells me that I need to leave
  • It sees a meeting request and automatically schedules it tentatively, waiting for approval
  • It knows all the information I’ve created and all the connections I have and tells me all about a person as I walk into the meeting

This is the tip of the iceberg, obviously, and the one company who is doing any of this is Google.

Jean Louis-Gassée backs this up with an article on why iPad just isn’t up-to-snuff as a professional tool. ”But when we take a closer look at the iPad ‘Pro’, we see that Apple’s tablet is far from realizing its ‘professional’ potential. … The more complex the task, the more our beloved 30-year-old personal computer is up to it. But there is now room above the enforced simplicity that made the iPad’s success for UI changes allowing a modicum of real-world ‘Pro’ workflow on iPads.”

Back to BlackBerry. There was nothing in the BB10 announcements and reviews that left me believing that RIM has this perspective. Here’s a few additional quotes:

  • Walt Mossberg review: “If you use a corporate network controlled by an IT department, and want to keep your work and personal apps separate, BB10 has a simple way to do it. You just swipe down and press a button called “Personal” or “Work” and the apps, and even the background, change. However, email and calendar entries are still intermingled.” A sign of hope. At least they get the dual use for devices.
  • Interview with CEO Thorsten Heinz, answering the question, “What does BlackBerry mean to you?” Heinz said, “Innovating in the field of mobile computing by being bold.” I have no idea what that means. What? Android isn’t bold? Apple’s sitting on their laurels?
  • Alec Saunders, VP Developer Relations from a developer event in Amsterdam: The themes BlackBerry wants to encourage for BB10 apps are “integrated, social and beautiful”, he said. ”Don’t just port the apps you’ve built over — build us applications that are specifically for BlackBerry 10.” You don’t want popular apps just new stuff? And how is “integrated, social and beautiful” different then the apps on iOS and Android?
  • Joshua Topolsky in his Z10 review talks extensively about apps. He highlights a few of the bundled ones: Messages, Camera, Maps, Browser, Remember and Story Maker. Camera and Story Maker (a video editing app) are primarily consumer-oriented. Browser is a requirement for all. Remember, Maps and Messages are all prosumer apps. Unfortunately Topolsky’s biggest problems are with the prosumer apps. He particularly finds the Messages app, Blackberry’s original claim to fame, slow and painful for anyone who gets lots of messages. Maps, he said, is horrible at directions. He does mention that Dropbox, Evernote and other third-party services can be added at the operating system level.

Maybe the reality of these devices in professional hands will prove differently. Or maybe BlackBerry felt they needed to match iOS and Android strengths before moving in its own direction, something I don’t believe but could be enticing for an also-ran uncomfortable in its own shoes. But I highly doubt either of these are the case. My gut tells me BlackBerry is in an awkward position and will never again regain its former glory.

Apple, the Business Chameleon

Interesting data out of India. According to IDC, Apple jumped from almost no revenue to 16% of smartphone revenues, second to only Samsung, all in one quarter. And according to this Techcrunch article:

Apple’s move up has been prompted at least in part by a major change in the way it sells the iPhone in India, by employing the help of small local retailers to distribute the device, and creating amortized payment plans that defray the significant upfront cost of buying an iPhone in India.

I remember a story, maybe falsely, about how General Motors beat out Ford. As you probably know Ford was the king of cars in the early 20th century. Henry Ford, the “inventor” of the assembly line, the man who famously said you can have a Ford in any color as long as it was black, was winning by lowering the price to the point that anyone could buy one. GM wanted to compete and by the 1940s had trounced Ford. How? By offering credit plans to buy their nicer, more stylish cars.

The hardest thing about predicting what will happen in the mobile world is figuring out what Apple will do. Apple built its US revenues off Apple Stores and carrier subsidies. Pundits everywhere ask how Apple will compete in countries without subsidies and without stores, and Apple changes their business model for the realities on the ground.

When I wrote about the next billion smartphone customers a week ago, I practically skipped Apple. Will the company figure out unique distribution models to bring devices to low-income people? Will Apple figure out less expensive devices? Completely different types of devices? Something the rest of us can’t fathom today? Impossible to know.

But just like General Motors in the first half of the 20th century, I wouldn’t count Apple out.

OS Control and the Next Billion Smartphones

Mobile World Congress was last week and what we have gotten in exchange for mobile computing news is a stream of new operating systems. What we’ve added is Tizen, an operating system primarily being developed by Intel and Samsung, and Firefox OS, an operating system developed by the makers of Firefox browser, Mozilla Foundation. So let’s sum up what OSes we have now:

  1. Android
  2. iOS
  3. Windows Phone
  4. BlackBerry 10
  5. Tizen
  6. Firefox OS

When I made my list six years ago there were 10 operating systems. Six is definitely better than 10, so we have some improvement. Interestingly only two of these six where on the list six years ago (Android, iOS) and only one was shipping at the time.

There are two dynamics at work here causing a contraction and proliferation of operating system versions. The first is that so few companies are actually making a profit on their devices. The list, at most, is Apple and Samsung, and only Apple controls their OS. Everyone else in the industry is on the outside looking in, including last generation’s big winners Microsoft and Intel.

The second dynamic at work here has to do with a concept called “the second billion.” The second billion refers to the next billion users of smartphones. The first billion, you and me among them, are relatively affluent and can afford things like $500 devices and $100 per month data plans. The next billion, however, are living on something like $500 a year (at best). The kinds of plans you and I subscribe to are out of their scope. Given that they are all cell phone users, the race is on to convert them to smartphones. And to convert them, the race is on to drive smartphone prices down to US$50 or less.

This is why Mozilla thinks they have an opening with Firefox OS. “We’re not trying to replace Android or iOS,” said Mozilla’s Christian Heilmann at Mobile World Congress. Of course not. He’s trying to sell to the next billion customers, not to the ones that already bought. Selling to the next billion will mean cheap devices and Internet connections. Tizen, BlackBerry 10 and Firefox OS are all built on top of web standards (HTML5), too, to make it easy to create apps. After all, slap together some cheap hardware parts, put a browser on top of it, and call it an OS is the cheapest way to go.

The question is do any of these “second tier” players have a chance against iOS and Android? Apple is a tough nut to crack. The bet being made by pundits — and the reason I believe the stock price is dropping — is because it is believed that Apple won’t be able to make a high margin, low cost phone. But Apple is a mysterious company and I wouldn’t necessarily bet against them at this stage of the game.

Android could be installed on cheap hardware and there is already a huge build-up of apps and games. On the other hand, Android is showing some signs of weakness. Samsung, as I mentioned earlier, is one of the major developers of Tizen. Samsung, in essence, controls all the profits in the Android ecosystem but has continually worked on its own operating systems over the years. The question is why? And the answer is protection. Understand that Samsung and Google don’t trust each other. Understand that as long as Samsung’s main smartphone revenue stream is from Google’s Android, Samsung is under Google’s thumb. Understand that Google buying Motorola was an affront to Samsung. And know that Samsung doesn’t want to be controlled by Microsoft.

Huh? What? Microsoft?

Yes, Microsoft. Microsoft, you see, has patents that has allowed it to extract royalty payments from Android licensees. It is believed those royalties are as high as $15 per device sold. In order to sell to the next billion customers, none of the Android-licensees can drive a profit when 1/3 of the retail price goes to Microsoft.

Everyone in the Android ecosystem — everyone — seems to be looking for a way out. Samsung is working on Tizen. LG and ZTE are licensing Firefox OS. This doesn’t mean these OSes and these companies will be successful and that they are all jumping ship from Android. It only means that they are all trying to move onto an OS that each one can more completely control, an OS that doesn’t cost them $15 in licensing fees per each $50 retail device.

The world is shifting. As I look back on this post in another six years I’m certain I will see a limited number of surviving device manufacturers each using a very limited number of operating systems. Apple will continue forward with iOS. Nokia will be tied to Windows Phone and Blackberry tied to its OS. Samsung will control Tizen and Motorola/Google will ship devices on Android. Amazon will survive, of course, with its not-quite-Android version of android. Maybe LG or ZTE or someone else will survive with Firefox OS.

In six years will all these companies and all these operating systems still be around? I wouldn’t count on it. But what I would count on is a more siloed mobile world than the one we have seen so far, one where individual operating systems and individual hardware manufacturers are even more closely aligned than they are today.

Google’s Design Aesthetic

There’s been a statement going around for a while that says Google is getting better at design faster than Apple is getting better at services. To which I reply, duh! Google bought a hardware company! I’d hope they are getting better at design.

The shape of the mobile market has changed since that day when Google acquired Motorola. Yes, Motorola is still a separate company but all the same I’m certain the experiences and expertises have leached into Google. Since then, the Nexus devices and Chromebook devices have only gotten nicer. I have a Nexus 7 tablet here and can honestly say that it is by far the nicest of the Android tablets that I’ve played with.

Meanwhile, Apple continues to struggle with services. MobileMe became iCloud and still there are endless problems in making them work correctly. Ping came and went. Now Apple’s maps has received plenty of criticism. Four years ago I watched a small Oregon company, Urban Airship, come about. Urban’s business was to make notifications really simple.

My colleagues and I never thought the service would take off not because we thought Urban Airship wasn’t doing something useful but because we thought Apple would provide the service. After all it is one thing to provide the operating system hooks and another completely to make it easy to use. Apple never did it and Urban Airship is now approaching 100 employees on two continents.

Will Apple get better at services? I’m certain Apple can be good at whatever it turns its attention to. But I know Google has gotten better at design, and a big part of the reason is because Google recognized it needed the expertise, went out and acquired it.

The iPad’s Failing

Jean-Louis Gassée has written a couple of interesting pieces lately on the viability of the iPad as a productivity tool. The first, called The Missing Workflow, outlines how creating a simple blog post is very complicated on an iPad:

For example, can I compose this Monday Note on an iPad? Answering in the affirmative would be to commit the Third Lie of Computing: You Can Do It. (The first two are Of Course It’s Compatible and Chief, We’ll be in Golden Master by Monday.)

I do research on the Web and accumulate documents, such as Dan Frommer’s blog post mentioned above. On a PC or Mac, saving a Web page to Evernote for future reference takes a right click (or a two finger tap).

On an iPad, things get complicated. The Share button in Safari gives me two clumsy choices: I can mail the page to my Evernote account, or I can Copy the URL, launch Evernote, paste the URL, compose a title for the note I just created, and perhaps add a few tags.

Once I start writing, I want to look through the research material I’ve compiled. On a Mac, I simply open an Evernote window, side-by-side with my Pages document: select, drag, drop. I take some partial screenshots, annotate graphs (such as the iPad Pro prices above), convert images to the .png format used to put the Monday Note on the Web…

On the iPad, these tasks are complicated and cumbersome.

The second article, entitled iPad and File Systems: Failure of Empathy, outlines how the hidden file system complicates, well, everything:

This is all well and good, but with success comes side effects. As the iPad gets used in ways its progenitors didn’t anticipate, another failure of empathy looms: Ignoring the needs of people who want to perform “complicated” tasks on their iPads.

When the iPad was introduced, even the most obliging reviewers saw the device as a vehicle for consumption, not creation. David Pogue in the New York Times:

“…the iPad is not a laptop. It’s not nearly as good for creating stuff. On the other hand, it’s infinitely more convenient for consuming it — books, music, video, photos, Web, e-mail and so on.”

This is still true…but that hasn’t stopped users from trying — struggling — to use their iPads for more ambitious tasks: Building rich media presentations and product brochures, preparing course material, even running a business. Conventional wisdom tells us that these are tasks that fall into the province of “true” personal computers, but these driven users can’t help themselves, they want to do it all on their iPads. They want the best of both worlds: The power of a PC but without its size, weight, (relative) unresponsiveness, and, certainly, price.

And this, frankly, is the iPad’s shortcoming. I love my iPad. I use it constantly and even for some basic content creation. But there is no way I’m editing Excel files, doing full-blown Word docs, creating a PowerPoint, even trying to create a blog post with more than text. Even taking notes on an iPad, with fat fingers and styli, is ridiculous. It’s just not conducive to those tasks.