December 16, 2011
Research in Motion’s chief executives, Mike Lazaridis and Jim Balsillie, frightened its investors Thursday when they said the company would not have new BlackBerry phones until late in 2012. Until then, they said, RIM would heavily promote the existing lineup.
The reaction was swift and sharp. The stock fell to an eight-year low Friday. One reason for the worry, analysts say, is that no amount of advertising will help increase the sales of BlackBerrys in the United States because the current line is a jumble of models. There are BlackBerrys that flip, BlackBerrys that slide, BlackBerrys with touch screens, BlackBerrys with touch screens and keyboards, BlackBerrys with full keyboards, BlackBerrys with compact keyboards, high-end BlackBerrys and low-priced models.
Features have proliferated on BlackBerrys as part of RIM’s move to the broader consumer market, and so have the number of models. Since 2007, RIM has introduced 37 models. The company, in a statement, said it did not know how many models were on the market.
Adding to the shopping confusion are RIM’s product names, which generally rely on four-digit model numbers and sometimes have different products sharing a name. The BlackBerry Torch 9850 and 9860 are touch-screen phones that are on some shelves next to the BlackBerry Torch 9800 and 9810, touch-screen phones with slide-out keyboards. (The model number differences reflect models adapted for different cellphone systems.)
By contrast, Apple has introduced only four iPhones since 2008 and all were basically the same phone with differences in the amount of storage, or upgrades from older models.
Shaw Wu, an analyst with Sterne Agee in San Francisco, said that even though he closely followed the company as part of his job, he was unable to keep the various BlackBerry models straight at times. “The company may not see this, but its product line is still too complicated,” Mr. Wu said. “They have all these different models, all these different model numbers and nobody knows what anything is. Apple’s a much bigger company, but they’ve made it simple for people.”
Model proliferation and fragmentation is nothing new in the wireless business. Nokia offered a wide range of cellphones tailored to appeal to specific, sometimes comparatively small, groups of buyers. And several companies, notably Samsung, also offer an array of phones.
But in the era of more sophisticated smartphones when many shoppers are already baffled by choices between operating systems and software features, some analysts and marketing experts say that RIM is only confusing consumers, rather than increasing sales, with its array of handsets.
The extensive product line has not reversed RIM’s declining market share in North America. Canalys, a market research firm based in London, estimates that BlackBerrys accounted for only 9 percent of the United States market in the third quarter of this year. At the end of 2009, it held almost half the market.
RIM’s variety of BlackBerry models present it with an additional problem that could also make a comeback less likely. The different keyboards, screen sizes and screen types used by RIM make it more time-consuming and difficult to create and test BlackBerry apps. Without a lot of apps, consumers see the phones as less useful than an Apple or Androidphone.
“It can be hard,” said Al Hilwa, the director of the applications development software program at IDC, a technology research firm. On top of the current fragmentation, he added, apps developers often struggle to accommodate older BlackBerry models that lack features, like a GPS receiver, that are now common on other devices.
Some analysts also argue that developing and supporting a smorgasbord of models is spreading RIM too thin. Its entry into the tablet computer market, the PlayBook, arrived in April without key features like e-mail, and the release of software to fix those problems is not expected until February. As a result, considerable concern has risen about RIM’s ability to successfully introduce phones next year. Those phones would be based on a new operating system that the company hopes will rekindle interest in BlackBerrys.
It is not just some financial and technology analysts who find the BlackBerry lineup overwhelming. Even some enthusiasts would like to see the company consolidate its models. On Crackberry.com, a Web site that reports even the smallest BlackBerry product and software developments, Kevin Michaluk, the editor in chief, wrote last month that the most common requests he receives are about which BlackBerry model to choose.
“Sometimes less is more,” he wrote. “In comparison over the years, RIM has taken the opposite strategy, giving customers almost too many options.”
Simona Botti, a professor of marketing at the London Business School who studies consumer decision-making, said that while people would always say that more choice was better, they were often mistaken.
“Too many options can be frightening, can be overwhelming,” she said. Her research found that people who buy complex products like smartphones in those circumstances are less satisfied than shoppers who lack choice.
Much of RIM’s decline in the United States is the result of consumers choosing Android phones. While some Android makers, notably Samsung Electronics, also make a wide array of models, Adnaan Ahmad, an analyst with Berenberg Bank in London, said that it was a mistake for RIM to emulate them. He noted that Samsung produces many of the key components for its phones in-house which, when combined with its high-volume production, gives it an insurmountable cost advantage over the Canadian company, even on niche products.
RIM’s success with low-end phones in developing countries, Mr. Ahmad said, has more to do with the popularity of BlackBerry Messenger service than its phones. All multiple models do for RIM, he said, is give it more shelf space in some stores. “But if you go to a big retailer virtually anywhere in the world, Apple’s there,” he said.
RIM declined to make anyone available for an interview about its product strategy.
In an e-mailed statement, the company said that it “continuously assesses its mix of handsets with our carrier partners to determine the best approach to serve various market segments.” The statement continued: “The smartphone market is not a ‘one size fits all’ market and RIM’s strategy of ranging its products to address high, mid and entry-levels has been important, particularly in parts of the world where smartphones are not subsidized.”
While announcing more bad financial news on Thursday, Mr. Balsillie and Mr. Lazaridis, the co-chief executives of RIM, indirectly acknowledged that the company might have too many models. They announced a major review of the company’s operations, which will include assessing its product lines.
Mike Lazaridis was born on March 14th, 1961 according to http://en.wikipedia.org/wiki/Mike_Lazaridis
March 14th, 1961
3 + 14 1+9+6+1 = 34 = his life lesson = RIM. BlackBerry.
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