Two high-profile outages and the iPhone incursion might make one wonder whether BlackBerry's days are numbered....
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Don't tell Mike Lazaridis, founder and co-CEO of Research In Motion (RIM), that his smartphone brainchild is on the way out. He remains upbeat about its wireless dominance, and he said its years of evolution make the device hard to match.
We had a chance to sit down with Lazaridis at Gartner's Wireless and Mobile Summit last week, and his company pride is obvious as he rattles off sales figures and uptime metrics off the top of his head: RIM, which released its first two-way pager in 1998, now controls 73% of the corporate smartphone market. Now, with new devices like the BlackBerry Pearl, RIM is making inroads into the consumer market as well. Their core customers are so addicted to the "CrackBerry" and its push email that an outage last month, lasting only a few hours, made one user's "blood run cold." If RIM isn't a victim of its own success, its occasional failures, such as the most recent outage on Feb. 11 are surely highlighted by it.
"It's a blessing that they care about us so much; it's a curse that we have to deal with it when something goes wrong," Lazaridis said. That curse does not strike often, he reminds us.
"The bigger story is we had eight months of 100% uptime, and then we had two unfortunate incidents, but the second one was much shorter than the first," he said. "The fact that we were able to bring 10 million users from a cold start that quickly without losing an email -- that was a big deal."
Lazaridis said the company is closing in on "four nines" of reliability (RIM is currently at 99.85% uptime, he said) but even then, BlackBerry couldn't be any better than the parts it relies upon: various wireless carriers, corporate email servers, the Internet.
Still, customers want reliability. The outage made national headlines. BlackBerry users were frustrated by the downtime, and they wanted answers. They were frustrated by RIM's lack of transparency into why the outage occurred and what was being done to prevent a recurrence.
Lazaridis said that during the most recent outage, RIM's customer communications were the best they have been: Support lines were briefed on the status and ready to update those who called in, and a few hours after the outage ended, an explanation was sent out to media outlets. But Lazaridis also said the company has to be judicious in how it informs customers about outages. A notification email to BlackBerry partners might be immediately forwarded to millions of users, re-crashing the system as soon as it came back online.
"We got a lot of criticism as to why we couldn't tell what happened within the first two hours," he admitted. "But you know what? We couldn't care less what happened; we just want to get it back up. And then we'll figure out what happened."
RIM's market dominance becomes a liability during these outages. With so many users, an outage is inevitably big news.
"Anytime any system goes down where you have tens of millions of people relying on it, you're going to have bad press," said Jack Gold, analyst at J. Gold Associates. "There's no system on earth that's 100% reliable. [RIM] has had a pretty good record."
Part of the problem is a centralised structure. All BlackBerry emails ultimately go through a single Network Operations Center (NOC) -- still located in RIM's hometown of Waterloo, Canada -- which tracks where devices are as they hop between wireless cells and even different carriers. While this helps make sure each email is "pushed" to the device quickly and efficiently, it means that when the NOC goes down, no BlackBerry devices get email. Most other mobile email systems are decentralised but rely on regularly "pinging" email servers, which burns up battery life. Given the inherent single-point-of-failure limitations in RIM's approach, Gold gave the company high marks for making sure it sees as little downtime as is feasible.
Sometimes, Lazaridis said, having such dedicated users is a mixed blessing.
"It's really intimidating to be relied on by so many customers in the way that BlackBerry is viewed as mission critical," he said. "At the same time, it's really rewarding to see that BlackBerry is so valuable to so many customers."
As dedicated as those customers currently are, each day brings them more viable choices, either from entrenched players like Nokia or disruptive newcomers like Apple.
Lazaridis said the BlackBerry's evolution has given it staying power that will be hard to replicate.
A competitive edge with staying power
"All too often, we get caught up in megahertz, megabytes, MIPS, megawatts, Gs, version numbers," Lazaridis said. "You run the risk of losing your audience. When you talk to IT managers, they're under such enormous pressure to save money, to reduce staff... They're always being looked to increase the competitiveness of their organisation."
Instead of focusing on features or benchmarks for their own sake, Lazaridis said, RIM is now homing in on tricky problems that reduce downtime and improve user efficiency, such as remote software upgrading and file restoration.
On a recent cruise, Lazaridis accidentally dropped his own BlackBerry overboard. Having an extra handset packed, he remotely activated it and was able to restore all of his data - contacts, calendar, email - before the ship even reached port.
Beyond remote activation and recovery, RIM is also offering several other advanced features, such as complete native attachment handling, through a partnership with DataVis; wireless software updates that reduce maintenance costs; and a rich ecosystem of business-minded applications.
"We literally have 750 to 800 registered ISVs that are writing to BlackBerry. We have thousands of applications," Lazaridis said. "But the difference is that we don't have a hundred different golf score keepers. We have SAP making their applications work on BlackBerry, we have CRM, we have Oracle, Cognos, Lotus."
RIM is first and foremost a company that solves business problems, he said, which may explain the frustration he expressed when asked why the iPhone generates excitement that the BlackBerry hasn't been able to match.
"Talk -- all I'm [hearing] is talk about it," he said, dismissing the iPhone's chances in the enterprise. "I think it's important that we put this thing in perspective."
He said iPhone penetration remains low, with Nokia's N95 more than doubling iPhone European sales, although the N95 costs twice as much.
"I think the iPhone has a great deal of appeal to a certain class of users," he said, adding that Apple's design-centric approach would ultimately limit its appeal by sacrificing needed enterprise functionality. "I think over-focus on one blinds you to the value of the other."
Lazaridis said RIM spent years focused on getting functionality down before working to develop sleeker offerings like the Pearl. Apple's approach, he said, produced devices that inevitably sacrificed advanced features for aesthetics.
Going it alone
RIM does share at least one aspect of Apple's strategy, however: total control. While Apple forced major concessions from AT&T on how the device would be bought and used, BlackBerry took control of the back end -- from the software on the phone to the email servers to the hardware to its single NOC.
RIM's ability to control the BlackBerry platform implementation from top to bottom is a key reason the government and law enforcement agencies have given the device security clearances. Beyond Apple, manufacturers working in a more open ecosystem might have a hard time earning those clearances.
Gold said these twin propositions of security and top-to-bottom control were RIM's core strengths, and it could hold Apple back from wider adoption, particularly in the large enterprise market.
"Enterprises are looking at multiple things when they deploy devices," Gold said. "They need security, and they need application support." RIM greatly simplifies both tasks, he said.
"[Security] is hard to do if you don't build the software," Lazaridis said. "How in the world do you present the source code to do source code evaluation when you have to get five different companies to come in with you?"
But Lazaridis said the fundamental strength of BlackBerry was its tight quality control of the user experience, which helped it evolve from a luxury device to a necessity.
"Ultimately, the customers are buying BlackBerry because it does what it says on the box," he said. "It has a return on investment so high -- which has been independently verified -- that it's embarrassing. To me, it's like having a phone on your desk, but it's even more valuable."
Even if BlackBerry's innovative pace isn't at the breakneck speed of the rest of the industry, Gold said, it could maintain its position in the market for a while.
"Momentum means a lot in the enterprise. What's my incentive to go out and change?" he said. "You have to tell me why I need to change." Until that questions is answered, BlackBerry is likely to remain the primary choice of the power user - the occasional service outage aside.