Research and Motion (RIM) has been pronounced dead so often it’s only got two ways to go: die, or fight back like Apple [AAPL] and the firm’s R&D spend hints at a fight back, probably just in time for next year’s key Mobile World Congress event in February.
[ABOVE: Expect more like this in the weeks ahead as RIM attempts to woo interest in its next OS.]
RIM, R&D and the fight back
The Toronto Globe and Mail has taken a look at R&D trends across 380 international firms. The report finds RIM puts 8.5 percent of its net sales into R&D while Apple pops just 2.2 percent.
To be fair the comparison is a little moot: RIM’s R&D spend is likely to constitute a larger percentage of net simply because it’s earning a lot less, but the figures do at least confirm it hasn’t stopped spending on ideas. Its most recent quarterly report impressed the analysts, thought the company’s no way safe yet.
Apple’s position’s a bit of an anomaly: it sits at number 348 in terms of big firms spending on R&D as a percentage of income. The list is also slightly skewed by the inclusion of big pharmaceutical firms spending far more than they earn on research.
The iPhone maker’s track record says strategically applied investment can pay off.
The lesson of the iMac
The late Steve Job’s decision to bet the whole company on the most attractive consumer device his company’s philosophy could visualize -- the iMac -- was a signal step that changed that firm’s fortunes. That success set the scene for the iPod, which itself became the stage for the eventual release of the iPad and iPhone.
Apple used its advantages when it came to the iMac: design, the final iteration of its aging operating system and the inclusion of Internet support out-of-the-box. Commodity PC makers at that time left customers to get their own modems.
Apple also used its position as the fallen industry leader transformed into the underdog by the monopolistic ways of its biggest competitor, Microsoft. The company managed to woo many in the media with this. For example, I’m told one high level player in the tech media was introduced to the iMac in 1997, months before its release.
RIM has a similar story to tell. The former industry leader is losing to two forces: Apple’s consumer focus has led its iPhone to claim the enterprise; Google’s partnership model has generated competing devices at all levels of the market. RIM has been completely outmaneuvered -- the industry changed faster than the company then could.
Change fast, change now
Can RIM make like Apple and change the game?
Company CEO Thorsten Heins, continues to claim BlackBerry 10 will be a game changer in the smartphone wars.
“There are many more steps to come before we launch BlackBerry 10. Then I think the market will be very excited by what BlackBerry 10 has to show, and what it will deliver to its customers.”
He claims the next OS will have a “fantastic keyboard” and security functions built to protect the barrier between personal and business apps use for consumers in the BYOD age.
Early previews of new devices running BlackBerry 10 suggest the company is developing gadgets that may appeal to today’s design-conscious smartphone consumer.
Differentiation is one thing: RIM will promote a security message based on the nature of its network; it will include replaceable batteries; build devices which are robust, with good displays.
One step beyond
Avoiding fragmentation appears another part of the plan: just two supported screen resolutions (720-x-720 and 1,280-x-768) mean developers won’t have to build apps for a variety of different screens.
The OS will enable users to keep an eye on what apps may be running at any time -- useful with its built-in multi-tasking support. The company is also committing to regular OS updates, including “not just bug fixes, but new features” every two months. That latter matches Apple’s frequent software updates, and instantly betters Android, an ecosystem in which the upgrade process is patchy at best.
The top-of-the-range device, the so-called BlackBerry Aristo, will: “Run a 1.5GHz Qualcomm processor backed by 2GB of dedicated RAM, all packed into a tiny 8.85mm body. Fronting the show with be a stunning Super AMOLED display courtesy of Samsung, while the BlackBerry 10 OS will be doing its stuff underneath,” a report claims. There’s further insight into the operating system here.
This model won’t have a replaceable battery, but will offer front and rear camera, NFC and LTE support. In other words, it will be a peer player to Apple’s iPhone or the better Android devices.
I think this means RIM has looked to both its major competitors to ensure its story includes feature parity. It has also looked into itself to bring the best of what it has to offer (enterprise-class security, for example) in its attempt to define its own identity.
Given the increasingly vicious nature of the smartphone wars, RIM will have to execute the introduction of its BlackBerry 10 devices with surgical precision if it is going to have a chance. It also needs to avoid any more unexplained service outages.
However, as consumers look with contempt at reports claiming both the Android ecosystem and Apple are now spending more on patents than they do on invention in order to keep pace in the patent-inspired thermonuclear war between the two systems, RIM does have a chance to define itself as a credible third place (or fourth place, including Microsoft) contender.
Will that be enough? If I’m honest, I don’t think it will.
I believe RIM needs to hit the market with a product that’s not just good enough, or even slightly better: instead as Apple achieved with the iMac, it needs to define an utterly unique identity for itself.
The challenge is that the firm really only has one attempt left: BlackBerry 10. The signs are promising: but will reality match the hype?
Apple and Google will be watching to see if it does.
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