Introduction
Research in Motion Limited (RIM) was started in 1984 as a software development company intended to fill a specific
niche market. Its founders soon began expanding their portfolio to include hardware products that filled a need they
saw in industry. Its hardware offerings began with a 2-way pager in 1992 but RIM’s most wildly successful effort to date
is arguably the Blackberry line of mobile computer/cell phones. Today, these Smartphones allow their users to
communicate on the go with internet, email, voice and text messaging and have become the mobile computing device
of choice for 56% of North Americans.
RIM’s product portfolio also continues to include software such as its proprietary wireless platform and related
applications. One further source of significant revenue for RIM is the licensing agreements for its hardware and
software.
RIM is a fast-growing, reputable company with a loyal customer base and it has made its name by consistently being at
the forefront of the industry that its innovations created. However, it is far from the only company in this fast-evolving
field and as a consequence, has and will continue to face stiff competition both at home and abroad.
The primary North American competitor in the Smartphone market is the iPhone produced by Apple, Inc which holds a
solid and steadily increasing share of this market. RIM’s main competitor in the global Smartphone market is Nokia, a
Finnish company that claims 46% of the global market share in this industry, twice RIM’s 20% global market share.
Not only must RIM deal with these already established competitors but, in such a potentially lucrative field there are
also plenty of companies eager to break into this market themselves; Google, Palm, HP, Sony, Dell, and Microsoft among
them.
In order to stay ahead in the coming months and years, RIM must not only win the current battle of the brands in the
Smartphone market, it must develop marketing and product-development and release strategies to not only mitigate its
current weaknesses but also to take full advantage of current and upcoming opportunities in this fiercely competitive
marketplace.
Problem
How does RIM stay competitive and ahead of its counterparts and challengers in the current and future rapidly changing
Smartphone markets?
Key Facts
Company Name
Address
Phone/Fax
Web Address
Market Share N. America
Market Share Global
Revenue/Turnover
Financial Year End
Employees
TSX/NASDAQ
Research in Motion Limited
295 Phillip St.
Waterloo, Ontario
Canada
N2L 3W8
(519) 888-7465 / 7884
http://www.rim.com
55%
20%
11065.2
March
12,000
RIM/RIMM
In the 2009 Financial Year (FY09) that ended in February of 2009, RIM reported $11,065, 200, 000 in revenue, a strong
increase (roughly 84%) mainly credited to a growth in hardware (BlackBerry device) revenues from the previous year in
spite of a slump in the mobile phone market generally. Its net profit was $1,892, 600, 000 for FY09, approximately 46%
above its net profit from FY08.
Assumptions
Research
In the global Smartphone market, RIM currently holds a 19.5% market share (up from 10.9% in FY08). Nokia holds the
lion’s share of the market at 40.8% (down from 50.9% in FY08), while Apple Inc’s market share is up to 10.7% in FY09
from 5.9% the previous year thanks to strong iPhone sales. Other strong competitors in this marketplace include HTC at
4.3% (up from 3.7% in FY08) and Samsung at 4.2% (a nearly four-fold increase from 1.8% in FY08).
In the North American Smartphone market, RIM held 55.3% of the US in the first quarter of FY09, up from 40.4% at the
end of FY08 and beating Apple’s iPhone which held 19.5% of the US market at the end of Q1 (down from the 30.3% it
held at the end of FY08).
Trends in Industry
Technology (hardware and software)
Consumer Preferences
Competition (besides Apple)
S.W.O.T. Analysis
SWOT ANALYSIS
Strengths
Growing Brand Image
Comprehensive Product Offerings
Robust Financials
Narrow Focus
Software Compatibility
Opportunities
Global & Overseas Markets
Increasing Promotion
Increasing Market Share of Personal
Smartphone Users
Positive Outlook for Smartphones
Weaknesses
Dependence on Small Customer Base
Product Supply Issues
Lack of Public Promotion
Threats
Increasing Competition
Difficulty Expanding Into Asian Markets
Experience in PDA Market
Involvement in Legal Issues
Environmental Concerns
Strengths:
Growing Brand Image:
RIM’s BlackBerry product lines already have a strong positive brand image among business consumers, both in North
America and abroad. With the release of the Storm and, just recently, the Storm2 RIM has managed to begin building its
BlackBerry brand’s recognition among non-professionals and students. The BlackBerry has been consistently in the Top
100 best global brands as rated by two separate companies (Interbrand, Millward Brown Optimor) since 2005 and its
estimated brand value at the end of 2008 was $13,734 million; doubling to $27,478 million by July 2009.
Comprehensive Product Offerings
These offerings include the BlackBerry Smartphone lines (BlackBerry, Pearl, Curve, and Storm). These handheld devices
include wireless fidelity (Wi-Fi) & unlicensed mobile access (UMA) functionality and the ability to operate on all current
operating mobile networks.
RIM is consistent with new product launches and continues to add to its hardware and software portfolios, both through
its own research and development unit but also through others thanks to its control of a venture capital fund to finance
new mobile technologies and applications research.
Robust Financials
RIM currently controls 55.3% of the North American market share and 19% of the global market share through its
holdings in Europe and Asia-Pacific. This is an increase over its FY08 shares in both markets, eating into Apple and
Nokia’s holdings, respectively.
The company itself currently carries no debt burden and maintains a strong equity position, which in turn strengthens its
investors’ confidence. RIM keeps enough cash and cash-equivalents available to continue to fund its own research and
development.
Narrow Focus
The market for Smartphones remains strong, even in the face of the recent economic downturn when mobile phone
sales fell and RIM’s singular focus on the Smartphone market above all allows the company to leverage its experience
and focus its research and development into staying ahead of the competition in this industry, most of whom are
primarily invested in cell phone and computer manufacture.
Superior Software Compatibility (Relative to Competitors)
RIM’s primary competition in the North American market (Apple Inc) has a tendency to use proprietary hardware and
software that has limited compatibility with other systems.
Weaknesses:
Dependence on Small Customer Base
Three customers accounted for 47% of RIM’s total revenues in FY09, the same three accounted for 48% of its revenues
in FY08. In FY07, RIM’s four biggest customers accounted for 55% of its total revenues for that year. A large part of the
reason for this is that RIM relies on its carriers (its B2B customers) to launch and market its products to individual
consumers as well as to support BlackBerry services. This reliance on a limited, if currently both loyal and lucrative,
customer base could easily backfire on RIM as it decreases the company’s overall bargaining power and negatively
affects its competitive position.
RIM has attempted to mitigate this weakness recently by retailing its BlackBerry product lines more directly through
chain stores worldwide including Walmart, Futureshop, Carphone Warehouse, Reliance Digital, and Planet M.
Product Supply Issues
In the last financial year RIM has had several problems meeting demands for its products, particularly of newly released
product lines such as the Blackberry Storm. It misjudged the demand for the Storm when it first released it through
Vodafone and Verizon in North America and could not fill the initial demand in that market.
Its efforts to fill that demand as quickly as possible incurred higher than expected production and delivery costs for the
new models that were in high demand. There is the risk, as RIM ramps up its production capacity, of loss of quality in the
product or of delays and extra costs associated with higher-volume inventory management procedures. The company
will need to implement best practices in quality management and inventory management systems in order to mitigate
this risk.
However, assuming its product supply issues are resolved in the long term, this is an issue that will affect only its shortterm revenues and performance.
Lack of Public Promotion
Reliance on a small number of large volume (if loyal) customers also means that RIM does not have the same public
profile, and as a consequence lack the brand recognition, of its main competitors, Apple and Nokia. Relative to these
competitors, RIM has a low public profile due in large part to its low volume of advertising on popular public media such
as television and billboards.
The company currently relies primarily on its service providers to advertise its products to personal-use consumers
rather than advertising to the public directly. Instead, it has focused its efforts on negotiating licensing and service
agreements with mobile service providers such as Telus, Rogers, Vodafone, Verizon, etc… While this business model has
proven effective for RIM in the past, it is facing tougher competition in the Smartphone market with companies,
particularly those such as Apple and Google, that have pre-established and fiercely loyal customer bases for their
products and have reputations for creative and effective marketing campaigns targeted directly to the end-users of their
products.
This lack of direct promotion to end-users also has the effect of hindering RIM’s attempts to break into Nokia’s hold of
the overseas Smartphone market. It also means that in comparison to their primary competitor in North America
(Apple’s iPhone) there is a perceived lack of user-friendly features offered by BlackBerry. Take Apple’s near-immediate
extension of their iTunes music store into an App store accessible from the iPhone itself.
Opportunities
Global and Overseas Market
Opening firms globally and overseas could have a large market waiting if there have been promotions happening and
customers are aware of the product. This would be a huge opportunity to increase revenue from customers who would
not have been able to purchase or try a black berry locally. The market and demand for smartphones is expected to
grow at a compounded annual rate at 19% during 2008-2011. Black Berry could introduce their product before any other
company in certain areas giving them a lead on the competition.
Increasing Promotion
Consumers would be more aware of a product if they were to see promotions with pictures of the actual product so
they could be attracted towards it over others. Promotions play a big role in the amount of phones sold since if
consumers aren’t aware of the phone or the features they may not purchase it. If features are presented in
advertisement consumers would be able to make a stronger decision if the phone could be applicable to them.
Promotions could let consumers become more aware of RIM’s products and how they could benefit business and leisure
performance.
Increasing Share of Personal Smartphone Market
RIM has opportunity to grow in the personal Smartphone market. Since they are mainly targeting business professionals,
the personal Smartphone market is a large opportunity to expand.
Positive Outlook for Smartphones
More and more people are relying on smartphones to do business, keep track of schedules, ease of direct internet, and
more. There is a very positive outlook for smartphones since there will be a market for the latest features and styles.
With the competition someone will always come out with something others don’t have therefore making another
market attracting different target markets. There are many target markets of all ages demanding smartphones to help
them ease their daily lives.
Threats
Increasing Competition
Competition in the mobile market has been increasing as they see the opportunities to make technology improvements
to consumer needs. RIM is currently facing competition from Nokia, HTC, Apple, Samsung, and Palm due to the features
and technology which has advanced. The increasing competition could affect the company’s revenue in coming years
unless they take the opportunities needed to beat the competition.
Difficulty Expanding Into Asian Market
There may be threats to RIM from other phone providers who are already well known to consumers in the Asian market.
Experience in PDA market
Other companies such as Palm or HP being more experience in the PDA market have an advantage with their experience
making it harder to Blackberry to compete but not impossible. This would be a great threat since it is their competition
with the experience. It could be likely for more experienced companies to come up with new ideas and fulfill the
demand by the market. Those companies have already gone through phases which RIM is experience to get where they
are now. They know what consumers want and expect from their previous products hitting the market. The threat to
RIM is greatest from these companies with experience.
Involvement in Legal Issues
RIM is involved in various legal issues. The company recently settled its historical stock option granting practices review
commenced in 2006 with the Ontario Securities Commission, Canada and Securities and Exchange Commissions, the US
in 2009. Although various issues were settled there are still legal issues faced related to infringement of patents.
Minerva Industries and Saxon Innovations both filled complaints against RIM for infringements of their patents. The
constant legal issues affect the company’s brand value and expenses are incurred for legal proceedings and settlements.
These could serious affect the company’s operations.
Environmental Concerns
The environment concern does not only attract customers but is also crucial to the company’s long term market
position. If no steps are taken to minimize waste from production or pollution it could increase expense from having
someone to eventually do it but most importantly the plant could get shut down do to too much pollution ending RIM.
Consumers may not consider their company if they see there are no steps being taken to help save the environment.
Same would happen if consumers see there is unnecessary pollution being emitted.
Competitive analysis
Brand
Model
Camera
Wi-fi
Touch
Screen
Operating system
Memory
Price (Cdn)
w/o contract
Apple
iphone
3gs
3.15mp
Yes
Yes
iPhone OS (based on
Mac OS)
16-32gb
$400-600
Blackberry
Storm
3.15mp
No
Yes
BlackBerry OS
1gb
(expandable 16gb)
Blackberry
Storm 2
3.2mp
Yes
Yes
BlackBerry OS
2gb
Blackberry
Bold
2.0mp
Yes
Keypad
BlackBerry OS
1gb
(expandable 8gb)
$600
Nokia
N97
5mp
Yes
Slider
Symbian OS v9.4,
Series 60 rel. 5
32gb
$900
Yes
Yes
Symbian OS v9.4,
Series 60 rel. 5
8gb
(expandable 16gb)
$400
Slider
Microsoft Windows
Mobile 6.1 Professional
(expandable 32gb)
$600
Nokia
5800 3.2mp
3.15 Yes
$600
Unknown
Sony
Ericsson
Sony
Ericsson
Xperia
Idou/
Satio
12.1mp
Yes
Yes
Symbian Series 60, 5th
edition
8gb
(expandable 32gb)
$950
Samsung
Omnia
3.15mp
Yes
Yes
Microsoft Windows
Mobile 6.1 Professional,
upgradeable to
Windows Mobile 6.5
(expandable 32gb)
$450
Palm
Pre
3.15mp
Yes
Slider
Palm WebOS
8gb
$850
HTC
Touch
3.15mp
Yes
Slider
Microsoft Windows
Mobile 6.5 Professional
256mb
$650
Motorola
A3100
3.15mp
Yes
Yes
Microsoft Windows
Mobile 6.1 Professional
(expandable 16gb)
$410
LG
KC 910
8mp
Yes
Yes
Microsoft Windows
Mobile 6.1 Professional
(expandable 16gb)
$380
Target Market
Business to business: business professionals through the company (baby boomers, generation x, generation Y).
Business to consumer: business professionals (generation x, baby boomers, generation y), students (generation x),
personal users (tweens status symbol (through parents) generation x, baby boomer, generation y)
Income: middle class (30,000-70,000) upper class (70,000 plus)
Applicable VASL Categories:
- Innovators
- Strivers
- Experiencers
-
Believers
achievers
Alternatives
Option 1: Marketing and Communication
Pro:
1) wider target audience than word of mouth
2) properly designed campaign could help break into other markets (overseas/personal use)
3) engender increased product and brand awareness
Con:
1) Cost
2) Primary competitor already known for creative and high quality promotional material
3) Time (market research, campaign design)
Option 2: Globalizing Distribution
Pro:
1) Much larger available market
2) Increase brand awareness
3) Increased revenue
Con:
1) Cost (patents and licensing, restrictions, legal issues, technical issues – network availibility0
2) Big risk (competitors already in)
3) Transportation and production
Option 3: Offer additional features
Pro:
1) Fills consumer wants
2) Would aid the expansion into other target markets (ie personal smartphone market)
3) Might be able to grab some of Apple’s market
Con:
1) Cost of research and development
2) Puts them more directly into competition with apple
3) Brand recognition of known apps could be a stumbling block in new markets
Final Recommendation:
Promotion
Reasons: most cost effective, area of greatest opportunity for breaking into new markets, smallest risk for largest reward
Implementation Plan:
Step 1: Identifying primary markets to be targeted (new and old)
Step 2: identifying best media sources to reach proposed target markets
Step 3: Analysis of best strategy for launch of new campaign (i.e. hire marketing firm or find talent in house to put
together topical and relevant campaign)
Step 4: Put the campaign together
Step 5: Launch campaign
Plan B
Extension of Plan A: Leverage new promotional material into globalization of distribution
Course Concepts:
Same as last time: SWOT analysis, 4Ps, target markets,
References
(White, 2009)
Bibliography
White, A. (2009). Blackberry is awesome. vancouver: random house.