Who Really Killed RIM, and Why Canada Needs a National Telecommunications Strategy

The declining fortunes of RIM paint a bleak picture for the future of high technology in Canada. Although the company is still earning money from its many existing subscribers, the future of the organization that invented the “iPad” of email/calendar/contacts is dim. There might be ways to re-factor RIM into something new, but I don’t see a clear path forward. Instead, RIM looks committed to follow Nortel into the chasm of tragedy. Why?

There are proximate causes for RIM’s failure:

• The development experience on the platform is pretty rotten
• There are too many devices with only incremental differences that cause confusion
• RIM itself exists as a hub in the network, so central failures with its infrastructure expose many users to service interruption or degradation
• RIM being a hub also shattered the illusion of first-class security. Various governments demanded the keys to the kingdom in order to spy on protect citizens, and RIM acquiesced

However, I believe that the ultimate cause of failure was that RIM was started in, and never left Canada; therefore, it matured in, and had its destiny shaped by two factors that played substantive roles in its undoing. First, the general risk-averse nature of Canadians led RIM to act cautiously–and even arrogantly–when brazen competitors starting placing big bets, and when Microsoft’s ActiveSync started to deliver push mail for free. Canadian risk aversion was likely amplified by RIM’s large legal team. All that was damaging, but probably not fatal. Second, the company’s birth and evolution in a oligopolistic telecom market that remains slow to innovate, and that, for so long, charged extortionately high rates for data led RIM to focus on (and remain preoccupied with) something that ended up being of relatively limited importance. This was deadly.

Primarily as a consequence of the second issue (cf. 2007 data pricing graph by Tom Purves), RIM focused on building a highly optimized communication solution for its devices. RIM did this very well, and as smartphones go, Blackberry devices are very efficient with data communications. Unfortunately, as illustrated by Smith Corona, the problem with building the very best typewriter in 1985 was that everyone eventually realized that you could type with a computer, and you could build spreadsheets, and you could endlessly share and revise documents for nearly $0 marginal cost, and, and, and… By focusing on data optimization, RIM became the new Smith Corona. They created the market for mobile personal information management (calendar/contacts/email), and invested so much effort to protect users from bill shock that they ignored other firms who were building phones with real (if basic) browsers, decent cameras, and good music players. And, as they do, data prices finally came down. Users then stopped really caring about data use, and flocked to devices that helped them find great restaurants, connect to friends, manage online profiles, play music and movies, and share photos with the world. The irony of all of this is that RIM was propelled to prominence because its devices were embraced by corporations who were unlikely to have cared deeply about mobile telecom costs in light of the value the initial devices delivered to mobile users.

When Apple released the first iPhone in 2007, RIM benefited from the enthusiasm, and the irrational hope that they would soon deliver an iPhone killer. Of course, RIM did not deliver an iPhone killer, and they could not ever have done so. The iPhone is so much more than the physical device itself. The iPhone is lovely, but its success is not just based on the hardware. Rather, the iPhone wins because of the giant ecosystem of developers, apps, and content available through that device. If RIM devices synced with iTunes, could run apps from the Apple store, were speedy, and provided a great browser experience, RIM would still be in a great position (cf. Samsung and Android which offers a similar benefits package to users). But, they do not. And thus, RIM end seems to be a fait accompli:

• Existing BlackBerry applications won’t run on devices that use the new operating system
• Few developers are building applications for their new operating system (because there are so few users)
• Using an emulator to allow Android apps to run on new devices exposes users to an incoherent set of gestures, and interfaces designs, and invites one to ask why not just use Android as the base OS

It is tragic to see a once-great Canadian company in the throes of death. Yet this tragedy also serves a salient reminder that in order to become more than just a nation selling whatever we can dig, suck and chop from our land, we need a real national telecommunications strategy. If we continue to allow our incumbent operators to assert that real competition exists, and if preventing operators from meddling with the open nature of the network is to mean something other than years of legal proceedings, leading technology companies will never emerge and thrive here.