11/19/2016

Casestudy:ResearchinMotion

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Work & Careers

Case study: Research in Motion

DECEMBER 2, 2010 by: Partha Mohanram

Thestory.
ResearchinMotionisaleadingmanufacturerofwirelessdevices.TheCanadiancompanys
breakthroughproductwasandcontinuestobetheBlackBerry.However,thebusinessfacesa
numberofstrategicchallenges.RIMhasseenitsstockperformancestagnatewhilerivalssuch
asAppleandGooglehaveperformedstronglyandstartedtoerodeitsmarketdominance.
Thechallenge.
Anumberofstrategicshiftsinthesmartphonemarkethaveaffectedthecompanyadversely.
First,ApplehasfundamentallychangedthesectorwiththelaunchoftheiPhone.Thedevice
hasestablishedadominantposition,especiallyintheconsumersegment,andisnowmaking
inroadsinthecorporatemarketthathastraditionallybeenBlackBerrysdominantspace.
Morerecently,ApplehasenteredthetabletPCmarketwiththeiPad.
Second,thesharpgrowthintakeupofsmartphonesusingGooglesAndroidoperatingsystem
isalsoeatingintoBlackBerrysmarketshare.
ThesetwochallengeshavehadadoublewhammynegativeimpactonRIMasbothvolume
growthandmarginshaveerodedwithincreasedcompetition.
HowisRIMresponding.
WhilesomeinvestorsandanalystshavecalledforadramaticchangeinRIMsoperations,
othersfearthatthecompanywilldiluteitscorecompetencebytryingtocompetewiththe
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iPhoneandtheAndroidplatform.
Instead,RIMhastakenamultiprongedstrategicapproach.First,thecompanyhas
strengtheneditspresenceintheenterprisemarketbyintroducinganumberofnew
BlackBerrymodels,manyofwhichhaveimprovedtouchscreenstomaketheuserexperience
moreakintocompetitordevices.IthasalsotrumpetedthedatasecurityofBlackBerrys,which
offerheavilyencryptedcommunicationsservices.
Second,thecompanyhasmadestridesingettingitsAppStoreofftheground.Whileitstill
lagsbehindtheiPhoneandAndroidappstores,ithasreachedacriticalmasswithmorethan
15,000apps,whichatleastgivesitapresence.
Finally,RIMisenteringthetabletmarketwiththeexpectedlaunchofthePlayBookinearly
2011(http://next.ft.com/content/caa91d88ca7b11dfa86000144feab49a).
Keylessons.
First,thedangerforanycompanywithablockbusterproductisasenseofinvulnerability.The
BlackBerryhasbeenagoldmine,givenitsdominanceoftheenterprisemarketforwireless
technology.However,asthesuccessoftheiPhoneandAndroidplatformshaveproved,thisis
notenoughinthelongterm.
Second,companiesmustnotjuststicktotheirknittingespeciallywheneveryoneelselearns
howtoknit.Thisisespeciallytrueinthetechnologyindustry,wheretheparametersof
businesschangequicklyanddisruptersareconstantlychallengingestablishedplayers.
RIMmustlearntomakeitsproductsnotonlyeffectiveandpowerfulbutappealingaswell.
Foralongtime,RIMreliedontheassumptionthatcompanieswouldrequireemployeestouse
theBlackBerryplatform,anassumptionthathasweakenedovertime.
Third,companiesneedtoconsiderallpotentialcompetitors.BothRIMandAppleareguiltyof
focusingtoomuchoneachother,andbeingslowtorecognisethegrowingthreatfromthe
Androidplatform.
RIMwillhavetocompetebothwiththestyleandfinishoftheiPhone,aswellastheopen
sourcedrivenflexibilityandlowercostofAndroid.
Theverdict.
RIMsmultiprongedapproachshouldhelpitpreventfurtherdeclinesinmarketshareand
consolidateitsposition.
Inrecentyears,avidBlackBerryusersweretemptedbytheiPhone.Now,theBlackBerryline
hasallthemultimediafunctionalityofthecompetitors,alongwithitscorestrengthof
security.
Thecompanysrecentmarketingstrategyshowcasingthemultimediaandsocialnetworking
functionalityofdevicesalsosuggeststhatRIMisseriousaboutexpandingitsconsumer
marketshare.
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Finally,RIMismakingaseriousattempttoenterthetabletmarket.Whileitisunlikelythat
thePlayBookwillovertaketheiPadintermsofvolumesales,itcouldbetheApplesmost
crediblechallengerasitisaimedatRIMscorebusinessusers.
ThewriteristheCGAOntarioprofessoroffinancialaccountingattheRotmanSchoolof
Management,UniversityofToronto
Printasinglecopyofthisarticleforpersonaluse.Contactusifyouwishtoprintmoreto
distributetoothers.TheFinancialTimesLtd.
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