The world is now social. The world is now mobile. These two ideas are simple and have changed the way a lot of things are done. Before you had to wait to get home to your desktop or until you had a moment to pull out your laptop in a convenient place if you carried it with you. Now you just pull out your mobile computer and get the task done. I use the term mobile computer to categorize both phones and tablets that are always on and easier to use in more places than was previously possible.
The RIM Problem
RIM makes their own products, both hardware and software. Not many other mobile companies can say that these days with everyone licensing Android from Google. RIM has stood their ground and continued to fight the good fight to stay relevant. The problem is their hardware is slowly becoming irrelevant, at least in the eyes of users today. Yes they are growing in international markets but its not because they make beautiful hardware or software. It’s because of the services they provide.
The RIM Advantage
RIM is a service company. They build hardware and software to support their services.
Their main service is e-mail. They build their hardware to allow you to interact with the e-mail service very easily using the built in keyboard. Push email has always been the cornerstone of RIM. In fact, I have heard from most users that they sometimes get their email on their blackberry first before they see it on their computer mail client. That is good service and probably the best mobile only email service available.
Their second key service is where their international growth is coming from. Blackberry Messenger (BBM). Why? Because it is free. Yes you have to pay for data, but its one monthly payment for data and messaging (not counting texts) and when you consider prepaid plans, this goes a long way.
In many countries, they do not have unlimited texting plans and international text costs are relatively high, even here in the U.S. For one monthly fee, you get access to the internet on your phone for email and web and you get access to BBM. Using BBM, you just need the PIN of your friends with a Blackberry and you can chat with them anytime anywhere, even if they are in another country. You can send pictures, share links and more for free compared to adding a texting plan or making an expensive voice call.
In most developing countries, many families have lots of relatives abroad and having conversations with them using BBM is free and easy. This is a huge selling point and why RIM has seen a huge growth Internationally in my opinion.
As mentioned in a study on the BlackBerry’s data cost savings.
In many emerging markets, which have high mobile calling costs, BBM’s speed has turned the service into a substitute for phone conversations
RIMs Gross Margin from selling handsets is currently about 30% per handset and about $15 per quarter from service fee per blackberry user. Here in the U.S, the rate of Blackberry adoption is dropping at the expense of the iPhone and Android. That means revenue from handsets and service fees per user will also continue to drop, especially with the push in international markets with pay as you go plans.
Earlier I mentioned that RIM is a services company. They should focus on this and get away from the low margin handset business they have now. I am not saying they should completely abandon the handset business, just focus on increasing the revenue generated from their services to maintain or increase revenue and profits.
Other Mobile Platforms
Imagine RIM creating a BB app for iOS, WebOS and Android. Download this app, and sign up every year or month for BB services. Right now, people pay Apple $99 a year for MobileMe. A service that doesn’t even compare to the BB services including BBM.
BBM is already a large social network and growing. When people switch from a blackberry to any other smartphone, they miss their BBM (at least the people I know who made the switch). Just search for any forum on the topic of people trying to use IM and such to replace it. By leveraging this, BB could make a huge profit just from selling their service of push enterprise email and BBM social. This social group could then be leveraged to maybe include video conferencing, calling, sending money, sharing articles and much more. This could be huge, especially if RIM can’t catch up in the hardware game of making beautiful touch screen phones or leverage their recent QNX purchase.
I know many people would download and pay for this if it was available. Just look at Kik whose growth was huge growing to over a million users in 15 days after introducing their chat app for iPhone, Android and Blackberry. As more people buy these devices, RIM can take advantage by providing services to these platforms.
They could provide services to other mobile platforms in tiers such as pay only $3 per month for BBM, $5 per month for E-mail and BBM, $8 for both services including video calling, money transfer and other services they can provide.
I know I would pay for this, and I am sure most people would.
What do you say RIM?