Couple of words about RIM

RIM is in a lot of trouble. The situation is a bit similar than Nokia had. Their own old OS is not competitive anymore against iOS and Android, and their own new OS is not ready yet. The new modern OS will utilize Qt heavily and will be hopefully be shipping soon.

Today's Qt announcement (Digia acquires Qt asset and core personal from Nokia) should be good news for RIM in two ways. Firstly the news means that Qt will have a future. Digia has been doing successful business with it already and it has clear motivation to expand the business and improve Qt. Second thing is that now RIM can utilize Digia better. Previously, Digia was mostly involved with non-mobile clients, probably due to contractual reasons with Nokia. After the deal Digia and the brightest trolls it employes can support RIM's efforts of building a Qt based OS a lot more. This could bring a big boost in what the OS can do and how it performs.

Industry Analysts and business people are eager to give advice to RIM's leadership. The most popular suggestions are 1) Start making WP8 devices 2) Start making Android devices and 3) Licence your new OS to others. I think all of those are bad ideas. Major strategy changes are really painful and could only solve the problem in long-run and thus would probably burn all the cash RIM has and thus lead to bankrupt, unless there would be big monetary support from somewhere (for example MS). Nokia's WP choice shows how rocky road that is. Also in the Android camp there only seems to be two players that are profiting: Samsung and Google.

Licensing out the new OS initially sounds like a nice idea. It should expand the ecosystem and help in cash flow as license income should help paying R&D bills. The reason I do not like this approach either is because of two major downsides.

The first one is that licensees will very likely cannibalize the most lucrative part of the market. When Apple started licensing Mac OS, licensees focused most of their efforts on high end where Apple had its highest profit margins. So instead of expanding market, the licensees mostly just ate away Apple's profits. It's likely that this would happen also to RIM.

Second issue is that when you license a mobile OS to an OEM, the contracts are very complicated. Since mobile operating systems are much more tightly bound to device hardware than traditional computer operating system, the operating system vendor and device manufacturer will have a quite intimate relationship. This would not be a problem for a pure operating system vendor, but it is a problem when vendor like RIM that develops its own devices and then licenses the OS out to others. The problem comes from licensees requiring similar kind of treatment as the internal device development teams.

In practice, one solution is to establish firewall between the OS development team and device development teams or separate the OS development to separate company. The problem is that this leads to bloated organization and makes communication a lot harder. Nokia's S60 licensing business was one example of this. Having the licensees meant that Nokia had to have quite complex organization in building S60 and S60 based devices. This led to a lot of inefficiencies. Since RIM is already behind in features and desirability of its major competitors, becoming a more complex organization is unacceptable. The need to reduce complexity in their operation, not increase it.

If I led RIM, I would just continue on the current path. I would definitely try to avoid major reorgs or strategy changes. Those are the quickest ways to doom. Instead, I'd focus on operational excellence and R&D efficiency. I'd prefer to keep R&D teams small, smart, agile and hungry, instead of big bloated armies of outsourced and offsite engineers as seen in so many corporations nowadays.


  1. Anonymous13/8/12 20:10

    Nice blog posts! So what do you think, who has more chances to succeed with the Qt strategy, RIM or Jolla ?

  2. Thanks.

    Well, that is a tough question. I think Jolla has good change of becoming a profitable company, since the company is small and agile. If it can challenge the current big players and become a widely known brand and a big success, I do not know.

    RIM on the other is a big corporation and this will be a painful transformation, since it has a lot of legacy as burden. On the other hand if it can come up with modern device, with few new useful features for it's existing clients it has a good change it would already be enough to be a success, since it still has large customer base.

    Interesting to see what happens.