BlackBerry maker Research In Motion just cut their earnings guidance for Q1 2011, blaming slower sales. Even as the future of RIM looks bleak from a US perspective, you wouldn’t think so looking at the South African market. BlackBerries are simply everywhere. I’ve always wondered why BlackBerry has such a large portion of the SA smartphone market, and I can think of
two four reasons:
- Most BlackBerry contracts come with unlimited free data, which (to my knowledge) no other smartphone handset does at a reasonable cost.
- When it comes to business users, it’s still the only phone trusted by corporate IT departments.
- A capable smartphone at a reasonable price (although an influx of cheaper Android and Nokia phones might make this a moot point). (Thanks Steyn for pointing this one out in the comments)
- The popularity and cost-effectiveness of BBM (although WhatsApp largely takes this away as a selling point). (Thanks Stafford for pointing this one out)
Now, here’s where it gets interesting. The latest earnings guidance cut clearly spells big trouble for RIM, and in a great blog post on Forbes, Eric Jackson lists 10 questions he would ask CEO Jim Balsillie based on that news, including the following:
Your bullish analysts used to say “yes, the US business is dying but International is going to keep growing.” You seemed to be saying last night that demand is drying up in Latin America too. Does that mean the US was a sign of what is to come for your future International growth?
Now combine that with a recent IDC report that predicts Africa would become the first truly post-PC continent:
IDC estimates that in South Africa, 800,000 PCs were shipped in 2010 and the number is expected to decline by about four percent annually to reach 650,000 by 2015. Meanwhile, 1.3 million handsets were shipped in 2010 and that rate is expected to increase at a compound annual growth rate (CAGR) of nine percent to reach 2 million annually by 2015.
You have to ask yourself: how long can BlackBerry keep its apparent dominance in the smartphone market in South Africa? As mobile demand increases it appears that they will simply be unable to produce hardware that can keep up with consumers’ ever increasing smartphone requirements.
The “How Angry Birds would look on a BlackBerry” joke is funny, but there is certainly some truth behind the joke. As the line between work and life continues to blur, you don’t want a business phone that can also make calls. You want a personalised handset that can also be used for work. This is something RIM simply hasn’t figured out how to do, so they continue to double down on the “corporate security” angle. As Slate recently pointed out in a review of the PlayBook:
The incoherence, I think, is a sign of something deeper: Research in Motion doesn’t know what kind of company it wants to be. It made its fortune selling gadgets to chief information officers””IT guys who wanted to give their employees access to office e-mail on the go, but only in a way that accorded with corporate security policies. When they talk about RIM’s strengths, the company’s leaders like to point to their “CIO friendliness.”
The trouble is, being friendly with CIOs doesn’t matter as much as it used to. Nowadays people don’t ask the tech guy which mobile gadgets pass muster. Instead, tech guys look to employees to decide which gadgets to support. RIM’s strategy””to infiltrate companies as a first step to becoming a mass-market hit””has been eclipsed by the Apple approach, which is to infiltrate schools and homes, and then hope that regular people nag their IT guys to let them use iPads at work, too.
Meanwhile, Nokia appears to have given up on the US, but they’re coming for Africa in full force:
Nokia is already working with developers in several African countries and Peng feels that Nokia’s next big growth opportunity is to go beyond bringing affordable voice and SMS to delivering affordable web and applications.
“Rural populations live their lives largely outside of the reach of high quality services; through solutions like Nokia Data Gathering, we are already supporting field workers to collect, send and receive information quickly and securely via a mobile phone helping circumvent infrastructural challenges and speed up data collections needs in sectors such as health, agriculture, environmental conservation, population census and emergency services,” added Peng, in a press release sent after her speech.
It might not happen in the next few months, but I think there is a dangerous trend on the horizon for RIM. Between mobile handset growth in SA, trouble in the US market, and huge competition on the way, there’s a perfect storm brewing in BlackBerry land.