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Requiem for the Blackberry Dream

Posted in Mobile Devices and Company Updates by Manas Ganguly on September 21, 2013

Z10-HandsOn-02-578-80

Blackberry has finally cuts its jugular and the ride has winding down. Its been in the making for over 3 years now. The revenue and device shipment numbers are pretty surprising given how weak it is – the situation at Blackberry is much worse than anticipated. A couple of questions to be answered for Blackberry at this critical moment…

BB rise and fall

Where Blackberry disconnected?

1. An ageing portfolio that never saw much in terms of innovation – There were always a handful of Blackberries – Storm, Bold, Curve, Torch – 4 devices through 4 critical years when Apple and Android stormed the markets.
2. The customer experience was very below average – The BES and BBM were great services – but Blackberry was mighty bland in designing experiences around the customer and these services.
3. In an age where Applications are key and must be scalable across platforms, BlackBerry apparently provided no incentive to port many older BB7 business apps that enterprise companies use to run on BB10 on launch. That was being stupid.
4. Blackberry misread the BYOD wave in enterprise, blinded by its past glory of securitized enterprise solution. The segment where Blackberry was unassailable till sometime back -has simply moved on to other solutions from companies like include Citrix, MobileIron, Maas360, Microsoft and Airwatch.
5. Customers today are averse to be bogged down in their choices- to a hardware with a service bundle. They value flexibility in terms of choosing their own device and “Appizing” it with enterprise and security features.
6. The Q10 and Z10 was a case of wrong targeting – Blackberry could have probably done better with mid level and entry level phones for the customer – Their carrier commitments would have given them some solid seeding in the market and made numbers happen. As the portfolio is now pruned, it is interesting to note that within 7 months of launch, the Z10 is now being re-positioned as a mid tier device for emerging markets. The concern still remians that Samsung is eating everybody’s lunch in the mid segments across markets.

What do the current set of actions at Blackberry signify?

Cutting the headcount hardly addresses any of Blackberry’s pressing needs of the day.However, I don’t think anybody could do much better with it. The current cuts helps cleans things up for any type of potential deal or acquisition that they’ve been very forthright about seeking. Beaten on Hardware and pushed out of its enterprise security space- It’s probably going to find limited value for most potential buyers.Cutting operating expenditures deep is the best they can do to try to stabilise this ship.

Is Blackberry Attractive? What parts?

Even if Blackberry were to dissolve its hardware arm and its services arm and use its services arm – it would hardly be a cake walk as one would otherwise expect. The BYOD and the Apps space has cannibalized Blackberry’s USP. It is hardly the incumbent in the enterprise market.

Blackberry’s agreements and contracts with hundreds of mobile operators could be valuable to someone who has an intent to engineer a new mobile global network of devices or services (Apple, Google, Visa, Mastercard).

So, what can Blackberry expect?

The best Blackberry can hope for is a Nokia-style takeover, though who would actually take over is tough to imagine.

The other possibility is that a leaner BlackBerry will abandon the consumer market once and for all and get rigorous about becoming a niche company focused on a particular customer — one that needs security, control, and a few particular tasks done remarkably well, possibly even as a software rather than a hardware company. If the company is deciding to evolve to a service company, Blackberry needs to act small and become innovative like a startup

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It has been a pleasure. Au Revoir Blackberry!

Posted in Mobile Devices and Company Updates by Manas Ganguly on September 21, 2013

Nokia is selling off. Blackberry is winding down. Too Many other Asian Smartphone Vendors are churning out of business- the seismic level activity in Smartphone Industry is beginning to take its toll

Blackberry’s white knights – Z10 and BB10 haven’t brought the moolah home. In the Q2 pre-released earnings call, Blackberry has said that it will take a $1 billion pre tax hit on the their bottomline. Much of this – about $950-$995 million is to do with unsold inventory of Z10 at Blackberry. Worse there is a 40% workforce cut on the cards. In Q2, Blackberry sold close a 5.7 million units to end customers. BlackBerry is now predicting total second-quarter revenue of about $1.6 billion, compared with Wall Street’s forecast for $3 billion. Interestingly enough the revenue from the BB10 devices has not been accounted for – and all the revenue is mostly from the legacy BB7 platform. I was always skeptical of Blackberry’s comeback attempt with the Z10 and BB10. Always felt that Blackberry was looking at the wrong end of the market to stay relevant.

The good news is that it has a solid $2.6bn in cash and is debt free. The other is that the BBM would be made available to Android and iOS to increase its customer reach.

BB is seeking the current strategic alternatives –
1. Split the company. Spin of BBM as a services group
2. A sell out to a possible suitor for the hardware business – BB becomes a services company

OR

1. Sell out the unit as a whole.

Going forward, BB is not only pruning its workforce but is cutting down its portfolio also, focussing on enterprise and prosumer-centric targeted devices, including 2 high-end devices and 2 entry-level devices in all-touch and QWERTY models. Blackberry is also supposed to be refocussing on end-to-end solution of hardware, software and services for enterprises and the productive, professional end user. This means that Blackberry is exiting the consumer market and getting back to its fort- the enterprise.

In any case Blackberry now ceases to be the force it was in smartphones. Blackberry had its moments in smartphone folklore and history – and yet again the example of a mobile phone company – which was out innovated in the game.

Read other posts:
2012: Make or Break for Yahoo!, Blackberry and Nokia
Blackberry share prices fall below book value
Blackberry: Past Perfect, Present Tense, Future Unsure : Part 1, Part 2, Part 3, Reprise

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Gartner: Q4, 2012 Mobile Phone and Smartphone Market shares

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on February 16, 2013

Long time back, i had written a blog on the subject of smartphones becoming the key handheld at the cost of feature phones. If the Gartner 2012 numbers are to be considered, the saturation point for feature phones has been reached and the 2012 feature phones numbers – have been on a 1.66% decline as against 2011.

Gartner 4Q 2012 2

Incidentally, i see another trend – that of smaller players/ white-labelled OEMs- and a fragmented market emerging – a far cry from the Nokia and Samsung dominance days. The rise of Android is but actually a testimony to this trend with the exception of Samsung. With no malevolence to Samsung – it does seem to me that Samsung is holding on to a untenable position in shares in mobile devices with the white labeled OEMs on the prowl.

Gartner Q4, 2012 - 1

While Apple will still hold on to the smartphone ground (because of its ability to leverage hardware, software , services and experience), Samsung doesnot hold that ace with Android. This inspite of the fact that Samsung Galaxy series was the first high end Android that has challenged and now dethroned technology leadership of the iPhone.

Gartner Q4 2012 3

The end result looks like an Android dominated market, though there could be a case of Android fatigue setting in with the audiences. However with the low end $50 smartphones on Android’s the numbers for Android will continue to add up especially in APAC and African markets. Thus Android is expected to still rule the volumes game on smartphones. It would be interesting to see how Windows and Blackberry go after Android – but the key still remains that – Android is the undisputed choice in smartphones in the fastest growing markets across the world. Windows and Blackberry will take time reversing this trend.

Q4, 2012 Smartphone Market shares- IDC

Posted in Industry updates, Mobile Data & Traffic by Manas Ganguly on February 15, 2013

The new IDC report for smartphone shipments in Q4, 2012 hands it over to Android – which seems to have reached more dizzying heights than what Symbian/Nokia ever reached in their near monopolistic regime heydays. the two systems accounted for 91.1 percent of operating systems on all smartphone shipments during the fourth quarter of 2012. For the year 2012, Android and iOS accounted for 87.6 percent of operation systems on smartphones shipped.

SmartPhone OSs II

Android smartphone vendors and Apple shipped a total of 207.6 million units worldwide during Q4 which is a 70.2 percent increase from the 122.0 million shipments of Q4 2011.

Android Saw triple-digit growth for the year. According to IDC, Samsung was the biggest contributor to Android’s success as 42.0 percent of all Android smartphone shipments during the year were by Samsung. The report notes that the intra-Android competition has not stifled companies from keeping Android as the cornerstone of their respective smartphone strategies.
At the end of 2012, Android had a 68.8 percent of market, with over 497.1 million shipments. In 2011, Android’s market share was 49.2 percent with 243.5 million shipments.

IDC- Smartphone

iOS also continued to register strong growth. But the report notes that iOS’s year-over-year growth has slowed compared to the overall market. Of course the report also mentions the growing buzz around a large-screen iPhone and a cheaper variant, which it says would help sustain growth. iOS shipments for 2012 stood at 135.9 million smartphones which represents an 18.8 percent market share. This is a 46 percent growth compared to 2011 when iOS smartphone shipments stood at 93.1 million at a market share of 18.8 percent.

BlackBerry OS: The report states that the decision to postpone the release of BB10 to 2013 left the platform vulnerable in 2012 and reliant primarily on older smartphones running on BB7. As a result, BlackBerry’s tight grip on enterprise users has loosened. BlackBerry had 32.5 million shipments for 2012, which gives it a market share of 4.5 percent. This is down 36.11 percent from 2011 where it had 51.1 million shipments and a market share of 10.3 percent.

Windows Phone/Windows Mobile: The report notes that this has made some progress in Q4 of 2012. Nokia’s Lumia phones were the key driver in Microsoft’s success, says IDC. Windows Phone/Windows Mobile had a 17.9 million shipments and represents a 2.5 percent market for mobile OS on smartphones. This is 98.9 percent increase from 2011 when it had only 9.0 million shipments which was a market share of 1.8 percent.

Is Blackberry looking at the wrong end of the market?

Posted in Mobile Devices and Company Updates by Manas Ganguly on February 3, 2013

OS- Smartphones 2009-2013

Continued from an earlier post: Why am I so deeply sceptical of BB10 as RIM’s comeback kid?

The Smartphone sector looks to be one of the most extreme oligopolies of the 21st century- even while the market is exploding at 35% YoY (700 million in 2012 versus 490.5 million in 2011) – there is little room left for any one but Android and Apple.

Apple and Android contribute to 92% of the Industry Volume and 102% of the Industry profits! All others combined for 8% of the market volumes but were edged out of the profits – leaving little space for investments into devices and the markets. The thing about market share is that it is liable to change rapidly in a rapidly growing market.However, with the base of 700 million it is possible that growth rate would have topped out. On the other hand, North Americas and Europe are visibly saturated in volumes/and growth is slowing down; and with maturity are only driving Revenues and profits as people tend to purchase more high-end smartphones, including the more expensive Android variants and the iPhone.

Blackberry with its Z10 and Q10 is targetting the high end of the smartphone market – The space that is dominated by Samsung Galaxy SIII, Apple iPhone, Nokia Lumia 920 alongwith handfull others. Instead of beating its competitors out on price, it wants to offer a genuinely quality product that the most tech-savvy consumer would be happy to purchase. This part of the market is by far the most cutthroat, and also the slowest growing.Ergo, even if Blackberry succeeds in creating space in this segment, it will be just a niche! Blackberry is trying to sell an expensive smartphone with a high margin, but it is competing against the most entrenched players imaginable. The part of the market that Blackberry is choosing to enter will not grow much, and RIM will face vicious competitors from every angle. There isn’t room in the lucrative high-end smartphone market for small fry ~ a $8billion Blackberry for instance! (Refer to the Blackberry Torch as an example – well crafted – but it didnot take BB where it was designed for)

POGUE-popup
Unveiling the new Blackberry!

On the other hand, the smartphone market is growing super because Android is powering the low end of the market. These markets are typically the South East Asian regions, Indian subcontinent, China and Africa. Even while Blackberry has a strong presence in nations like India, it is the Android army that it has to content with in such markets – and currently Blackberry’s portfolio in the low end is only based on the 4 year old Blackberry Curve which is appearing a little jaded and last generation.

Thus Blackberry really needs to be focussing on low end innovation, pricing, volumes and markets – currently there is no visibility of it doing this. Hopefully it gets its act together before its too late. A flagship device is one thing – numbers, profits, revenues is quite another.

Why am I so deeply sceptical of BB10 as RIM’s comeback kid?

Posted in Uncategorized by Manas Ganguly on January 31, 2013

BB10I would like it Blackberry makes the fabled comeback – except that there is an overwheliming feeling that Z10 and BB10 donot really put RIM and Blackberry on any comeback. A few top of the mind thoughts on BB10/Z10-

Without a shred of doubt, the BB Z10 is a great device – and RIM has exceeded itself in making the comeback device which is in equivalence of Samsung SIII & Apple iPhone5 & Nokia Lumia 920. But device parity, 70k apps & new UI OS just ain’t cutting it- BB needed something remarkable to break thru Android & Apple clutter. In so far as i see it, BB Z10 ain’t magical to break the clutter. Or so it seems? Its a great comeback effort for BB – for now Z10 may keep them from going out of contention – & that is what BB wanted Z10 to do for it.

The Blackberry 10 touts apps such as Timeshift, Flow & Peak, Predictive Keyboard and the Hub. Yes, they are all good- but for the users of apps- this list is perhaps jaded. Its a couple of years old. How the device does it is the key – but hey! i dont see the novelty in here. On numbers compre this with 650K (or whereabouts) Apps on Apple or Android. The key here was the app moving beyond the device – to perhaps some other device – a tablet integration, a TV integration, a Car Dashboard integration. Blackberry is only at step 1 and Apple/Android are halfway about a couple of stories ahead. I cant still talk to the Blackberry for instance!The bare-bones maps app and a deficit of camera features are two examples where BB has a lot of distance to cover.

The slick video of BB10 OS make a great selling point and theres no denying that – but it looks to be a little late in the day – Screen Share, Remember, WebEx, Share et all!

The BlackBerry10 is ready just like a car before the race, now they need to avoid stalling and crashing along the way- Carolina Milanesi

In my opinion, BB10,Z10 and Q10 give that little space, that little breather and that little Oxygen that Blackberry needed to survive. With a few good operator tie ups- Blackberry has fixed the short term – only to rebuild for the longer wars ahead.

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Do Facebook and Blackberry make a good marriage?

Posted in Industry updates by Manas Ganguly on June 4, 2012

RIM has hired JP Morgan and RBC Capital to help search for a partner to license its software. However, Bankers don’t normally help in mere partnership capacities. They become involved when a company has put itself up for sale. And there is no doubt this is exactly what RIM has done. Its announced job cuts last week was a move to make itself more attractive to potential suitors. (Read earlier posts about Blackberry’s fall here –  Part 1, Part II, Part III and Reprise)

Whenever RIM/Blackberry is said to be a target of an acquisition, there is the obligatory mention of  Microsoft, which makes perfect sense; it would relish the opportunity to beat Apple and Google at their own games while strengthening its existing partnership with Nokia. For that matter, there are plenty of reasons why Nokia might enter the mix and make a play of its own for RIM.

However, the focus really is another company which is trying to make its own smartphone- Facebook. Even while trying to assess whether of nor exactly the value of social media is $96 billion, Facebook has announced its interest in smartphones (not a smart idea really!). We have seen examples of another tech lord miserably failing in terms of hardware – Google and yet its Moto acquisition. If that be the direction Facebook is rooting itself to – Facebook needs RIM as much as RIM needs Facebook.

Facebook has to justify a lot of $s on its ability to monetize 900 million users and its ad revenue model.  In RIM, not only will Facebook get a better enterprise presence; it will acquire assets such as RIM’s BB10 software, a growing music service as well as RIM’s Mobile Fusion, a product that supports the collaboration of enterprise mobile devices, even that of competing models such as iPhones and Android devices. These services, as you realize will help Facebook diversify and hedge its risks and further its mobile ambitions.

In Essence, Facebook immediately becomes a hardware and services company while silencing critics who assert that the company does not monetize well and enough and hence the valuation is merely a fad, a bubble.

For RIM, the game is over — end of story! But marry it to Facebook and a whole new dimension could uncover.

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Developer Interest in Android wanes as Hybrid Apps take over

Posted in Applications and User Interfaces by Manas Ganguly on March 20, 2012

HTML5 is taking over as the key enabler of Internet on mobile phones. The Internet of all things and cloud based convergence will be a key theme in this decade and it will be powered by a tight integration powered by APIs. The future will be about Platforms on which devices and services will be enabled will be powered by applications both native and web based. This post examines the platform, applications and developer intent.

A recent survey by Appcelerator finds that Apple iOS leads the developer interest charts with 89% intent. iPad comes a close second at 88%. On the Applications side, the loser is a very unlikely candidate: Android (79% on the Android phones,64% on the Tablets and 51% on the ICS platform). Appcelerator in its quarterly survey figures out that Android is gradually slipping down mobile programmers’ priority list, with HTML5 powered Web apps stepping in to as an answer to development difficulties. HTML5 ended up showing 67% positive intent from developers.

The wanning interest in Android platform is being attributed to the Fragmentation of the Android platform. The survey concludes that a lot of developers are unhappy with the fragmentation of the platform as well as the fragmentation of the monetization platform. Fragmentation impedes monetization on the Android platform. Customization for screen size, feature sizes, even skins that device manufacturers have put on top of that eats into resources allocation on the platform.

79% of developers think that HTML5 was going to be a component of people’s apps in 2012. Only 6% developers plan to make all-out Web app that runs in a browser; a much larger 72% plan a hybrid approach that wraps native interface elements around an app that relies on a browser engine behind the scenes. A hybrid has some native code on device, but content will be delivered via HTML.

For developers on open platforms it’s a tough line to walk. They want to have an open OS, but openness means they’re going to have fragmentation.

Web applications–those built with technologies such as HTML, CSS, and JavaScript that run using a browser engine–answer at least some of Google’s fragmentation challenges.Web apps rose slightly to 67 percent, passing Android tablets in the last quarter. Thus HTML poses the answer to fragmentation.

The good news for Android is that even while it has suffered recent declines it fares much better than Blackberry (16% Developer interest) and Windows (37% developer interest).

The good news for Google is that developer interest is on a rise for Web-App hybrid environment like the one running on its Chrome OS and Chromebooks.

2012: Make or Break for Yahoo!, Blackberry and Nokia

Posted in Mobile Devices and Company Updates by Manas Ganguly on January 13, 2012

2012 promises to be a very tough year for Yahoo!, Blackberry and Nokia who having ruled their respective domains for a decade, suddenly risk redundancy due to lack of innovation. In the technology domain, historically, once an incumbent looses a pole position to challengers riding a new wave of technology, the incumbent no matter how large and dominant finds it difficult to come ahead and regain the leadership position. This has been the story with Yahoo!, Blackberry and Nokia.

• Blackberry and Nokia have eroded 81% and 50% of their m-cap in the last year and are 90% off from their historical highs. Same goes with Yahoo! which is 85% off from its historical highs in the heydays of dot com bubble.

• All three have leadership changes in recent/one year and have made a few hard choices and a few other risky ones to get back into reckoning. Can Stephen Elop turn around Nokia, Can Scott Thompson revive Yahoo and Who replaces Lazardis/Basilie at RIM (and more importantly how fast)


Value erosion* is the m-cap loss in last 1 year

• The Market position of Yahoo!, Nokia and Microsoft is vastly altered from 2 years back. Yahoo! is gradually loosing its No.2 spot to Microsoft and the search relevance in the overall picture. Nokia lost its Smartphone leadership to Samsung and Apple in 2011 and as per reports, Samsung forecasts walking off with the Mobile Phone manufacturer crown in 2012. Blackberry has lost out to Android and Apple in good measure and its Playbook has been drubbed. There isn’t much that is expected from future releases of BB OSs and Devices.

• Blackberry appears to me as the worst in the lot and is a prime acquisition target. Same goes with Yahoo!. The Nokia Lumia series of Windows phone has seen some limited success and also been able to secure partnerships with T-Mobile and AT&T. However there is talk of Microsoft acquiring Nokia Smartphones which leads one to think how would Nokia compete without Smartphones?

2012 will need to be the turnaround year for these three and if not then there is a possibility that there could be partial or full acquisition and buy outs very soon.

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The evolution of the Tablet PC Market: From Consumer to Enterprise

Posted in Enterprise Computing, Industry updates by Manas Ganguly on January 7, 2012

Tablet industry will need mass enterprise adoption for powering growth in 2012. Device makers/eco-system masters will have to customize to enterprise use cases. (Cue Android/Blackberry/Microsoft)

The Tablet PC was designed first by Microsoft and targeted at the enterprise segment mainly.

However, it was Apple and iPad with its unparalled experience which turned the Tablet PC into a consumer segment product mainly (That’s been the niche of Apple). Apple established the Tablet as a media consumption device as against smartphone(communication device) and laptops(computing devices). Apple made iPad the centre piece of its eco-system and still continues to add various other dimensions breaking one frontier after the other.The success of Apple spawned many others notably Android, Blackberry and even HP’s WebOS.

However, it was Amazon with its scale and expertise in media distribution that has now taken the pole position in low end tablet category.The Amazon USP is the media based services.Amazon Kindle Fire is exerting pressure on all tablet makers to reduce prices. Furthermore, with the introduction of iPad3,one could see iPad2 price down to at $300 levels. Android is an example of a strong competitor which has failed to create any impact in the consumer segment. The “Apeing Apple” strategy has not worked for Android (see image below). This is perhaps clear with the “missing in action” response that Ice-cream Sandwich has garnered post luanch.(A .6% presence inspite of Samsung, HTC, Sony and LG device makers pushing it). With the consumer segment taken by Apple and Amazon, there is little left for others. There are options of deep penetrative pricing as practiced by HP and Blackberry, but that doesnot translate in profits and viable business cases.

In 2012, tablet makers will have to go the “enterprise route” to find a foothold in a market which is fast polarizing towards Apple and Amazon.Again this will include a eco-system approach which will include application makers, cloud, telecom operators, MVNOs, value added service providers and other linkages with industries, Operators, functions and solutions which might always not strictly be from within the industry.

Device makers will need to decide which enterprise purposes can be supported by their tablets. The key drivers of successes in enterprises will be Optimization for specific use cases. I am listing out a 7 point use case optimization-
1. The stylus will emerge as an important input method which would enable consumers to annotate, make handwritten notes,
2. Similarly, voice enabled input could be a critical feature for creating compelling user experience
3. Tablet makers will need to drive development of apps and services optimized and uniquely well-suited for enterprise uses
4. Tablet makers will need to enable cross-platform interorperability between phones(smartphones), PCs, back-end legacy systems. Prima Facie, Microsoft has an edge in this.
5. Tablet makers will need to heed to security and piracy as key concern areas when addressing enterprise requirements
6. Device makers will need to Promote peripherals and ancillary services such as keyboard, cloud based services, pairing between office peripherals such as photo-copiers, scanners, servers etc in form of partnerships, shared GTM programs etc.
7. Device makers will have to evolve a new device lifecyle revenue model which balances the CAPEX, OPEX and service costs for optimum margins and sustained profitabilities.

2012 will see a lot of tablet device makers explore the enterprise segment as a viable and sustainable business case. The sooner the better.

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