RIM has demonstrated why it’s never a good idea to rest on your laurels in a market you’re not leading in the first place. The current-model Blackberries sold OK but older models were down in sales and the PlayBook was a disaster. Now the company is pushing for a next-quarter refresh, the line of everyone who has no clear prospects for getting refreshed at all.
The big problem, according to some pundits, is the refresh of RIM’s old OS platform for the acquired QNX. One of several (including iOS, Android, and MeeGo) Linux/UNIX variant platforms for appliances, QNX was originally designed for embedded systems, meaning small industrial computers and communications. It is much friendlier to developers familiar with other “x-OSs” but the GUI RIM intends to plant on it is said to be not compatible with either iOS or Android, which means it wouldn’t be a seamless shift for applications. The delays in QNX release have stalled efforts to recruit developers but have also given competitors plenty of time to push onward on their own. The tablet market is also clearly getting mature, meaning getting harder to create a role in, harder to sustain profits.
I think that QNX is less an issue than simple inertia. Every company who succeeds at anything, via any strategy whether deliberate or serendipitous, fights the tendency to hunker down on their newly won ground and take root. This, despite the fact that the market itself virtually signals the need for change. RIM, when Apple launched the iPhone, could have and should have realized that larger form factors were next. Had they moved at that point, they’d have been number one or two at worst in tablets, and likely in a strong position today. The market has signaled again; cheap tablets are the only new game possible, and that’s a game that RIM can’t afford to play.
Netflix also has its problems, not that I’d not expected this when they announced their new pricing plan. The news to me is less that Netflix lost customers (who gains customers by raising prices?) but that the streaming business was so precarious a balance between demand and margins. Portal plays like Netflix and so many OTT businesses are really parasitic business models; they depend on essentially free transport and free goods, meaning that their profit is based on an unrealistic assumption that others in the food chain aren’t making one. As you get a streaming movie service going you can draw on old cheap material, but you’re continually pushed to get newer stuff simply because there’s not enough old stuff to keep your subscribers happy. The new stuff not only costs more naturally, your own success prompts the owners of the content to recognize their higher value, and the next thing you know, you’re caught in a squeeze. We’ll see if Netflix finds a balance here; there may not be one that works for all.
In the enterprise space, Huawei has announced lofty ambitions as a provider of network equipment to businesses. The company expects $7 billion from this segment in 2012, though most of that will come from the China market. It’s widely expected that Huawei will push more into the enterprise market internationally even in 2012, though. There’s considerable price pressure on enterprise network operations managers because there’s been a general lack of new benefits to drive up spending without compromising overall return. That mirrors the situation in the service provider market, of course. Huawei is a formidable risk to any network equipment vendors who don’t learn a lesson from RIM.