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Thursday, January 31, 2013
BlackBerry's Chances in Longshot Bid for Smartphone Comeback


While the odds against success may be long, Blackberry, the company formerly known as Research In Motion (RIM), has improved its chances of pulling off a last-minute upset with the introduction of the BlackBerry 10 operating system and the new smartphone models.

RIM saw its share of global smartphone shipments falling to an estimated 5.2 percent in 2012, down from 18.7 percent in 2009. In comparison, market leaders Samsung and Apple together accounted for approximately 50 percent of unit shipments in 2012. During the same period, BlackBerry's ranking in the smartphone market fell to sixth place in 2012, down from second in 2009 according to IHS.

"Despite the overwhelming advantages held by the opposition, BlackBerry's introductions this week will keep the company in the smartphone game - for now," said Ian Fogg, senior principal analyst for IHS. "The new operating system and phones increase the chances that BlackBerry can regain some of its lost market share during the make-or-break year of 2013. However, in order to claim the title as the smartphone market's third ecosystem after Google and Apple - a distinction now being pursued by a range of competitors - BlackBerry needs to bring its 'A game' in all areas. These areas range from differentiating its products, to offering compelling and reliable smartphone devices, to securing broad operator support, to creating a complete software ecosystem."

Just to start playing in the smartphone market, all contenders must differentiate their hardware and software compared to the incumbent leaders - since it's not possible in today?s market to compete with Apple, Samsung and Google simply by copying their products.

On this front, BlackBerry appears to have scored some early points, with its new OS widely adopting a communications-centric user interface, branded BlackBerry Flow and Peek. The interface features deep integration of social communications. With BlackBerry 10, apps like LinkedIn, Twitter, Facebook and others are part of a single flowing experience, rather than the separate apps of iPhone or Android.

"BlackBerry 10 will appeal to the significant number of consumers that are yet to adopt smartphones because they are unmotivated by current entertainment and Internet apps, but are instead communications-centric," Fogg said. "This focus on communications also will go a long way to winning back ex-BlackBerry owners."

Delivering reliability as good as existing BlackBerry smartphones would be especially impressive, since BlackBerry 10 is the first version of a brand-new operating system, complete with a new user interface as well as new apps. This makes it highly differentiated compared to older BlackBerry phones that have changed very little since the arrival of the iPhone nearly six years ago.

"Operator backing will be critical for BlackBerry's future success. The company needs operators to support its marketing efforts and to communicate that BlackBerry 10 is not just another brand, but a genuinely differentiated product from the scores of Android smartphones." Fogg contended.

Luckily for BlackBerry, it has many potential teammates in the mobile market that will help it play in the big leagues with the behemoths of Google, Samsung, Apple and Microsoft. The operators, which are key to the sale and distribution of modern smartphones in most developed countries, greatly desire alternatives to the current smartphone market leaders.

"Further concentration of the smartphone market would weaken the position of operators with those smartphone leaders in negotiations over sourcing devices or in ensuring that operators' content and communication services products are not bypassed by smartphone software," Fogg said. "Operators must spend now to support the BlackBerry 10 products if they wish to avoid the current smartphone duopoly becoming entrenched for the long term."

The BlackBerry 10 launch could be also aided by Microsoft's stumbles with Windows Phone.

Two years after the platform's big relaunch, Microsoft has repeatedly failed to establish Windows Phone as the third mobile ecosystem that operators desire. According to IHS, in the fourth quarter of 2012, lead Windows Phone backer Nokia shipped just 4.4 million Lumia Windows Phones. Furthermore, Microsoft has failed to leverage its strength in enterprise software from its Microsoft Office and server product lines to drive Windows Phone adoption. This opens opportunities for BlackBerry 10 in the enterprise as well as among operator partners.

"BlackBerry 10 is a smart launch from a smart company that has marshaled its relatively modest resources effectively to create a range of next-generation smartphones that are differentiated compared to what's on the market now," Fogg said. "However, to compete with the big boys, BlackBerry will need to execute every part of its playbook perfectly during the next 12 months. If BlackBerry fails in any phase, it will be 'game over' for the company's comeback story."


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