RIM's challenge: unlocking the value in software

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Crises for mobile phone makers are like buses: you wait for ages then two come along at once.

First there was Nokia's "Burning platform" crisis, and its decision to abandon Symbian in favour of Windows Phone 7.

Now, Research in Motion, the BlackBerry maker, is under pressure to reorganise its senior management following results which disappointed the market earlier this month.

Like Nokia, RIM is making the transition to a new operating system, in this case to QNX. QNX already runs the PlayBook, but QNX-based BlackBerry phones are not expected on the market until the third quarter of this year, if then.

But, although RIM's current mobile operating system lags behind Android and iOS, moving to QNX may only solve some of RIM's problems.

RIM is suffering from lower than expected handset sales (although it is still selling more phones, year on year, in absolute terms). The average selling price for a BlackBerry is thought to have fallen too, possibly by as much as $40 per phone, according to financial analysts quoted in the Guardian.

The real value to enterprises, however – and the reason so many companies have deployed BlackBerries – does not lie in the OS, or the even handheld itself. It is in the software, and specifically, the BlackBerry Enterprise Server (BES), the push email, and the platform's security features.

Businesses that want reliable, secure email are not especially bothered about touch screens, or media features, and find messaging services such as BBM something of a nuisance. But BlackBerry needs to invest in those features, so as to compete in the consumer market.

There is, though, another option: split the BES and email from the hardware, and allow it to run on iPhones, Androids, and even Nokia Windows phones. Unthinkable? Well no. RIM did develop a software option for Windows, Symbian and Palm phones called BlackBerry Connect, although it is unclear whether this is still available. Certainly, it has not been developed for devices such as the iPhone.

Reviving the software-only BlackBerry service could boost both RIM and enterprises with mobile workers. Businesses could allow staff to bring their own phones to work and the company could drop on the BlackBerry software, keeping work communications managed and secure. RIM could sell software where it has expertise and where margins are good.

And by doing so, they would be ahead of the trend, rather than playing catch up. As industry analyst Ray Wang, chief executive of Constellation RG, points out, software, not hardware, is where the future lies in technology.

"RIM's strength is its BES. Enterprises need and trust Blackberry to deliver rock solid security," he said.

"What's happening is that software is where the value add is. Software delivers scale to a vendor. Five years ago BlackBerry's software was what drove customer delight. Customer needs change over time and it's the intersection of design and function that gave Apple the edge. Software once again drives the winners and losers."

Putting BlackBerry software in Apple's App Store could benefit RIM, and its customers.

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