bus752 - group3 paper - rim

Research in MotionAnalysis of Strategy & Performance

2007

Hoby Chou, Chris Alexander, Dawn Moulton, Andrew Dawson, Dora Danourek, Darren Rafferty

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[RESEARCH IN MOTION] November 7, 2007

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Table of Contents Section 1: INDUSTRY ANALYSIS .......................................................................................................... 4 Section 2: KEY SUCCESS FACTORS ...................................................................................................... 10 Section 3: ANALYSIS OF THE FIRM ..................................................................................................... 12 Section 4: THE BLACKBERRY SOLUTION ............................................................................................. 17 Section 5: COMPETITIVE ADVANTAGE ............................................................................................... 21 Section 6: RECOMMENDED STRATEGY .............................................................................................. 26 Section 7: SUMMARY ......................................................................................................................... 29


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Executive Summary

The smartphone industry continues to be both emerging and highly competitive as both established firms

and new entrants leverage their core capabilities to gain market share. This industry is characterized by 3

sectors: hardware, software, and services. Although a Porter Analyst was used to analyze the industry,

several extensions are necessary in order to more effectively evaluate a firm’s strategy and performance

in this complex industry.

In order to succeed in the smartphone industry, firms must be capable of achieving product

differentiation, adaptability, compatibility, solid relationships, strong brand image, growth, low cost and

manufacturing capabilities, security for user data, and rapid innovation and design.

RIM is a wireless solutions company that packages devices, software, and services into an integrated

solution. After establishing a firm hold on the professional market, RIM has recently expanded into

the consumer market. The entrance into this market further exposes RIM to increased competition. RIM

has implemented several design changes in its consumer Blackberry system in order to gain acceptance

from consumers. However, pricing and branding issues will have to be confronted before RIM can

successfully increase its market share in this highly competitive market.

RIM believes that a combination of tangible and intangible resources make up their core set of

competencies. Tangible resources include infrastructure, financial assets, and a highly dedicated set of

human resources. Intangible resources also contribute greatly to the firm’s success. These include brand

power, intellectual property, and the ability to build strong working relationships.

It is recommended that in order to continue its success in both corporate and consumer markets, RIM

should focus on several short term and long term goals. In the short term, the firm should focus on

pursuing favorable partnerships with cellular network providers, proliferating the Blackberry solution,

and investing in increased production capacity. In the long run, it is recommended that RIM continue their

efforts in improving the Blackberry solution through internal efforts and collaboration with 3rd party

software developers, and the expansion of their R&D and licensing programs.


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INTRODUCTION: Mobile cellular phones have been with us since 1979 when the first commercial cellular system was

erected in Tokyo.1 Since that time the cell phone has become pervasive around the world. Networks are

extensive and the service has become a viable substitute for land lines. The devices themselves have

become much more than a phone and currently have value added features such as cameras and MP3

players. In spite their current popularity cellular phones are in danger of becoming obsolete as the much

more versatile smartphone gains in popularity. Combining the functionality of a phone and a small

computer, these devices offer services beyond voice and text communication. Service like e-mail and

web surfing are now used extensively, but the true potential of the smartphone has yet to be realized.

Research in Motion, hailed as a great Canadian success story, has gained a position as one of the top 5

smartphone producers and service providers in the world with their line of BlackBerry devices. They

have achieved this success by taking a holistic approach and offer a completely integrated mobile

solution. This approach has served them well to date but the industry is changing rapidly and competition

is heating up. There are currently over 20 firms with smartphone offerings. In this analysis we will

examine the smartphone industry in North America and RIM’s position within it. We will assess their

resources and capabilities and we will offer strategic recommendations for going forward.

Section 1: INDUSTRY ANALYSIS

Definition of a Smartphone While there is no clear definition of a smartphone, they are generally understood to be mobile devices that

offer advanced functionality over standard cellular phones. While some industry experts simplify its

definition as merely a “cellular telephone with information access;”2 they are conventionally understood

to not only provide voice communication but also facilitate data transfer and personal digital assistant

(PDA) functionality.3 A smartphone provides access to your e-mail while at the same time reconciling

data with your corporate servers. On a more technical level, a smartphone is characterized by more

powerful processors and robust operating systems than traditional cellular phones. They resemble

personal computers in that they support third party applications,3 and thus the functions and services are

limited only by available software offerings. Therefore, a smartphone is characterized by three essential


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components: the hardware (the handset), the software (restricted by the operating system) and the services

(characterized by available applications).

Porter’s Five Forces Analysis

Industry Rivalry Due to of the nature of the smartphone, the industry is characterized by competition in three

complementary sectors - handset manufacturing, operating system development and value added services.

Each of the three sectors has a distinct group of firms competing for market share. Due to the

complementary nature of these components, changes in one can have a profound influence on the success

of the others. For example, a dominant handset maker that favours a particular operating system could

conceivably drive the market to adopting that operating as a standard. This would be similar to the way

that Windows came to dominate the PC industry with IBM’s early adoption of the DOS operating system

(which later evolved into Windows).

Handset development and manufacturing is dominated by 5 firms: Nokia, RIM, Motorola, Palm and

Sony-Ericsson (Appendix A).4 Because the smartphone market is relatively young with approximately

5% penetration of the total mobile industry,5 most handset producers are thriving as seen by their annual

growth rate of 46%5. Competition continues to intensify with several other immense players such as

Apple and LG begin to enter the market.

In the case of competitors such as Apple the barriers to entry are relatively low as they are established in

the hardware/software industry, have a reliable understanding of consumer needs, and possess the

infrastructure to compete the market. Highly innovation firms such as Apple arguably produce a

disruptive effect on the industry with the introduction of revolutionary devices such as the iPhone.

In the operating system segment the major players listed in decreasing market share are Symbian, Linux,

Microsoft, RIM and Palm (Appendix B). Symbian is owned by the largest cell phone makers (e.g.

Ericsson, Nokia, Motorola) and dominates this segment (>70%) and potentially threatens to become a

monopoly; however both Microsoft and RIM are currently well positioned in the business market (see

customer section below) with complementary services. Google is also believed to be a foreseeable

competitor in this market with the eminent release of its mobile software platform.


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To date, e-mail connectivity services have been the key feature to add value to the smartphone. These

services can be either “push” or “pull” in nature. The majority of business users agree that “push”

delivery, a service pioneered and innovated by RIM, effectively improves productivity.6

With the rising availability of mobile email services, software and handset producers are developing other

applications to augment their value. Features such as global positioning devices coupled with map

services and WiFi to improve internet access have been developed to add value. To appeal to the

consumer market, MP3 players and cameras have been included. Through the iPhone, Apple has upped

the ante in web surfing functionality which demands a response from the competitors. For the business

sector, services that allow field workers to access their corporate databases such as Customer Relationship

Management (CRM) and Enterprise Resource Planning (ERP) applications are being offered. These

applications are gaining some acceptance,7 although it is still not clear how much effect this will have. To

date, it is not clear that any “killer application” has emerged that will provide a competitive advantage,

much like e-mail push has done for RIM.

Threat from New Entrants Several Factors such as economies of scale, capital requirements, access to distribution channels,

intellectual property (IP) rights and brand awareness all serve as significant barriers preventing new

entrants into the smartphone industry.

The economies of scale can only be realized in the electronics industry by those firms who are producing

at volumes that will allow them to compete favourably on purchase of components and electronic

assemblies. New entrants would require significant existing operations to be able to compete on

manufacturing costs. Furthermore, as with most technology firms competing in a consumer oriented

market, the capital investment required for research and development and marketing efforts also create a

significant financial barrier (Appendix C). Also, both the development and manufacturing of technology

also has inherent economies of learning that can prove to be significant barriers to firms that do not

already possess the required core competencies.

Another significant barrier is the need to develop relationships with the cellular service providers. The

wireless communications industry is characterized by a reliance on wireless service providers to act as

distribution channels for hardware and software sales and support to the end consumer. Entrants lacking

established relationships will be disadvantaged relative to incumbent firms.


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Intellectual property rights pose significant obstacles to enter into an industry. Entrants cannot simply

copy patented technologies without risking legal and financial repercussions. Patented technologies are

numerous in this industry.

Finally, awareness of established brands can also be a considerable barrier to entry into the smartphone

market. The major players in the industry are well established and well known and consumers are likely

to be reluctant to experiment with an untested entity when given a choice. Price and/or differentiation

products are important incentives to attract customers away from known brands.

In spite of all these barriers, there are a number of potential entrants into this market including PDA and

cell phone manufacturers. The latter group of firms are the greatest threat because they can simply

leverage their knowledge, relationships, resources and reputations from their cell phone operations to

enter into the smartphone market. In fact companies such as Samsung and LG have already made the

move into this market.

Threat of Substitute Products The feature set of the smartphone offer the functionality typically found in personal digital assistants or

laptop computers. These devices coupled with a traditional wireless handset for voice connectivity pose

the most credible current threat as a substitute for a smartphone. Consumers will purchase PDA’s to get

the smartphone functionality if the price and feature set of the smartphone do not match needs. This is

evidenced by the fact that in the US ’06 PDA sales outpaced sales of smartphone. 8

Future threats could arise from the cellular phone industry itself. Cellular handsets are becoming

increasingly powerful in terms of features and functionality and the lines between smartphones and cell

phones are somewhat blurred. It is not clear if and when the functionality of these devices will improve

to meet the needs of the majority of the today’s smartphone market. Indeed today some cell phones do

offer e-mail services, however their accessibility is nowhere near that offered by smartphones.

Bargaining Power of Suppliers

Teardown reports reveal that the typical smartphone is engineered using purchased electronic

components9,10,11and there are multiple manufacturers that would be able to supply these components.

However, during R&D process design would almost certainly be based on a particular manufacturer’s

semiconductor. Once this decision has been made, switching would require significant re-engineering of

the product on the hardware and software side to transition to a different supplier which introduces

substantial switching cost. Also, in the case of specialized components, suppliers may have significant


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bargaining power. Initial specification of components will rely heavily on favourable contracts with

manufacturers to determine pricing, allocation, etc. All competing firms will face the same issues with

respect to manufacturer lock in based on the components and chip sets used in the hardware design.

Controlling handset manufacturing costs in the smartphone industry has been somewhat less important

(than the cellular phone industry) because the main target for these devices has traditionally been the

corporate market. These customers are less price sensitive than the consumer market. As the smartphone

enters the consumer market, controlling costs will become more important and the smartphone

manufacturers will have to exercise control over suppliers. Those with a large share of the cellular phone

market will have some leverage over their suppliers as will those who have the credible ability to

vertically integrate the design and fabrication of required integrated circuits into their current operations.

Smaller players will have less leverage and might have to compete through differentiation.

Bargaining Power of Buyers When considering buyers, there are two layers of customers to be considered: distributors and end users.

Distributors are retailers (e.g. amazon.com, wireless wave) and service providers (who are also

complements) and end-users are the final targets and fall into one of 2 distinct target markets, the

enterprise and the consumer. Enterprise users are corporations or institutions that purchase the devices in

bulk for managing communication and information distribution. The consumer market is made up of

individuals who purchase the device purely for personal use.

Retailers are the simplest of RIM’s customers and these relationships are governed by supply and

demand. Power relationships with these customers will be greatly influenced by the perceived desires of

the end users and the number of players in any given market. In North American retailers account for less

than 5% of salesError! Bookmark not defined. and therefore are of little concern to producers in this part

of the world.

Service providers have both consumer and partnering relationships with the smartphone producers and

account for the majority of smartphone sales.Error! Bookmark not defined. These are complex

relationships characterized by conflicting interests as it is often necessary to yield negotiating power in

order to reach target markets. This is particularly the case with respect to business and enterprise users.

Smartphone producers want to form relationships with the bigger more powerful cellular companies

which typically have the widest and most stable networks. This not only assures they will access the

largest market, but also that they can provide customers with the best possible service. Service providers


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on the other hand will only be interested in a smartphone if they believe it will be of interest to their

clients. Products that are highly priced or poorly differentiated might not be of interest to the wireless

service provider. The balance of power in these relationships is likely to be dependent on the product

offerings of competitors. For example, the negotiating power of a smartphone company that once had a

monopoly in e-mail push technology would likely decline as other producers duplicate this solution.

Another complication with Service providers is their participation in the services provided by some

smartphone companies. Customers who don’t have a mail server will require an alternative to coordinate

their service. The cellular network companies sometimes offer this service. Service providers will only

be inclined to participate in these activities if there is profit in it for them. Again, relationships will likely

change as product offerings change.

To date, enterprises represent the biggest market for smartphones. These are the most demanding

customers who require functionality, simplicity, security, and compatibility. Phones must provide

services such as e-mail and data push, personal information management, and connectivity to enterprise

systems. Price is less important to these users but differentiation and brand reputation are of value.

Prosumers (who for this paper will be considered a sub-category of corporate users) are small business

people who want some services attached to their phones (usually e-mail and personal information

management) in addition to voice communication. The customers often buy their smartphones

themselves (as opposed to the enterprise users whose phones are issued by their employers) and are likely

more susceptible to value added features like attractive designs, mp3 players and cameras. Producers

must provide handsets that meet these needs.

Finally, the consumer represents a relatively unknown entity. Smartphones are the entrants in a market

dominated by cellular phones which are being endowed with more and more features. It is unclear

whether features like e-mail push will appeal to those beyond the early adopter. Nevertheless, this market

is both sensitive to price and differentiation and smartphone producers must respond to those sensitivities

if they wish to break into this market.

Extensions to Porter’s Analysis While Porter’s five forces model is a useful starting point in analysis of any industry, it has its limitations.

Others have reworked the model to improve upon its utility and provide concepts that may prove useful in

the analysis of the smartphone industry. For example, Grundy12 points out that the static nature of

Porter’s traditional model reduces its usefulness in practical analysis. As an industry transitions from the


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growth stage to maturity, the dynamics of the industry change and the relative importance of the five

forces may change. In the smartphone industry we could postulate that as the industry matures, the firm

rivalry will increase as firms struggle to take market share from one another. This could increase barriers

to entry and the relative power of the buyers may also tend to increase, putting price pressure on industry

incumbents.

Porters model also fails to take into account complements and network effects. Grant13 argues that the

value added to a product through complements warrants that a sixth force to be added to Porter’s

framework. Complements in the smartphone industry take the shape of value added software applications

that can be developed to run on the various smartphone platforms. (we will analyze later how RIM

depends on the packaging of a core set of complementary products) Firms in the industry have released

development tools to aid third party vendors in development of these value added programs. The

availability of third party applications could create powerful network effects that would allow one or

more of the competing platforms to gain a wider market acceptance. Another important complement in

the industry is the cellular networks on which smartphones rely. Without a reliable network the phones

have little value and therefore it is in the best interest of all producers to secure contracts with the highest

performing service providers.

Section 2: KEY SUCCESS FACTORS Succeeding in the Smartphone Industry

The key success factors in any industry are defined by the wants and needs of the customers and the

ability of a firm to survive in the industrial environment. With respect to the former, enterprise users

generally want simple, secure services like e-mail push, text messaging, data transfer and increasingly

remote access to enterprise data systems. They also require compatibility with their enterprise server,

multiple standards of cellular networks and recently, wireless links to the internet. Consumers desire

many of the same features although at this stage it is not clear that push forms of e-mail and data transfer

are of value to this market, at least in the case of consumers. In addition, this market is more price-

sensitive and is generally more attracted to features such as mp3 players and cameras. These customers

are also more responsive to aesthetically appealing or novel device designs. Both markets desire access to

reliable stable wireless networks. For their part, the cellular service providers who are resellers of the


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handsets and services want basically anything their end-users want. They want a stable supply of popular

handsets and the ability to offer any service that end-users may desire.

The smartphone industry is a young and growing rapidly. Currently the market demand is outpacing the

industry`s ability to supply, especially in the enterprise market and therefore there are tremendous

opportunities for incumbent firms to grow and profit.14 These forces are encouraging new entrants into

the business and incumbents are currently attempting to secure their advantage by growing their customer

base and locking in current clients with value added features and services. To date the competition in

enterprise market has been driven by differentiation however, as services across platforms become more

uniform, differentiation is fading. Smartphone and service providers are all actively searching for the

next “killer application” that will give them an advantage in the market.

Based on this analysis, the following key factors are essential to meet customers’ needs and ensure

success in the smartphone industry.

1) Product Differentiation: A smartphone is just a cellular phone if there are no software applications or

service. Companies competing in this industry must strive to find unique uses for their phones that are of

value to their customers. If they cannot, they are not competitive and risk their position in the market to

companies that do.

2) Adaptability: In order to compete in the industry, firms must be able to adapt quickly to their

competitors innovations. New features such as WiFi or GPS functionality must be matched quickly in

order to survive. Failure to rapidly deploy the design, procurement and manufacturing needs to do this

could result in a loss of market share.

3) Compatibility: Smartphones and services must provide compatibility with a number of different

communication protocols with respect to the wireless networks and the enterprise servers. For example,

there are at least three major wireless voice and data networks and greater than four network servers on

the business side (Microsoft, Lotus, Novella, POP3). Competition now and in the future requires

companies to provide smartphones that are compatible with multiple standards.

4) Solid relationships with wireless service providers: The smartphone industry currently has a number

of big brand players that have migrated over from the cellular phone industry and these companies

already have established a reputation and relationship with the cellular service providers. They can

leverage these relationships to push their handsets or establish new relationships with other providers.

Entrants without these network relationships are seriously disadvantaged and would have to bring and


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highly valued differentiated product to the market in order to get a foothold. It is not impossible though

as Apple proved this year with the i-Phone.

5) Brand: As argued above, the number of big brands in the smartphone industry is significant enough

that it is almost necessary now to compete. Entry is only possible if accompanied by similar brand

strength in another transferable industry (cellular phones, i-Pods).

6) Growth: The current smartphone market is young and undergoing extremely rapid growth. As there

are moderate to strong networking effects in this industry with respect to brand and complementing

services, it is important for competitors to focus on growth in the near future. This is especially true in

the enterprise market where customers can get locked in once they have established a system. Similarly

the availability of applications and services will be greatest for those with the largest share of the market.

Those that fail to take advantage of the current rate of growth and increase their customer base, risk

becoming irrelevant.

7) Low Cost and Manufacturing Capacities: Low costs are more important for competing in the

consumer market where price elasticities are greater. Also, as the market grows, it is conceivable that

some producers could be left behind if they cannot keep up with demand. For most of the large firms this

is not an issue because they can leverage their manufacturing resources form the cellular phone

operations; however, smaller firms must plan carefully when increasing production.

8) Security: Security is especially important to businesses and enterprise users as the systems are of not

much value to them unless they can be used to communicate sensitive and/or confidential information.

Firms must reliably meet these concerns if they want to capture this segment of the market.

9) Rapid innovation in design: This is true for a large segment of the consumer (and to a lesser extent to

the prosumer market) where for many users their phone is an important element of their fashion sense.

Just as some consumers must have the latest styles in clothing, some smartphone users must have the

latest phone style. Producers who fail to recognize this need will fall behind in the replacement market

and loose the visibility that this market provides. The Motorola Razer was an example of this in the

cellular phone industry where competitors had to move quickly to produce their own versions.

SECTION 3: ANALYSIS OF THE FIRM


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Goals, Values and Performance Research in Motion was founded in Waterloo, Ontario in 1984 by Mike Lazaridis.15 As an electronics

and computer science consulting business, RIMs survived in those days from contract to contract. Today

RIM is a leading designer, manufacturer and marketer of innovative wireless solutions, and it recently

achieved the prestigious title of highest stock market valued company in Canada.16 This feat has been

largely facilitated by the scientific and entrepreneurial drive of Michael Lazardis and creative business

skills of Jim Balsillie, RIM’s co-CEOs. From the very start, both Lazardis and Balsillie had great respect

for their competitors. They understood that to succeed they had to focus. They chose to focus on wireless

data transfer, the convergence of mobility and digital data.15 The belief was that there was a large

potential market that yearned for small, user friendly hardware/software solution that provided time-

sensitive real-time information, including Short Messaging Service (SMS), e-mail, phone, internet and

intranet-based applications. RIM’s goal was to provide customers superior value in this target market.

Today the RIM’s award winning products are a culmination of more than 10 year of research,

development and experimentation. The perfection of wireless transmission of time-sensitive information

to handheld devises is at the core of RIM’s success.15,Error! Bookmark not defined. To maintain RIM’s

success the mantra at RIM has been to “follow your curiosity and you’ll jump ahead of the pack.”15

RIM understands that the quality and skills of its senior management team has been vital to the progress

to date.17 As such, innovation and creative thinking is both sought after and encouraged at RIM. To

ensure continued success in the future, RIM has realized that a strong recruitment program, supportive

company culture, and philanthropy is required to draw the brightest minds to help push the boundaries of

technology.

To ensure RIM continues to innovate, Lazaridis recognized that Universities were breeding grounds for

leading edge research and ideas.18 As a result of this understanding RIM has established one of the most

extensive global co-op programs, hiring some of the top students from more than 350 schools around the

world.18 To further ensure that robust research occurs near RIM’s headquarters, Lazardis donated 100

million of his own RIM profits to establish the Perimeter Institute of Theoretical Physics in Waterloo,

Ontario.19 Today the Perimeter Institute is a think tank of some of the brightest Theoretical Physicists.19

Lazaridis’ strategic philanthropy has made Waterloo, Ontario a top location for bright minds to think,

invent and innovate.


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Financial Performance RIM’s financial performance since going public on the Toronto Stock Exchange nine years ago has been

extraordinary. As mentioned previously, RIM just over took the Royal Bank of Canada as the highest

stock market valued company in Canada.16 During Fiscal 2007 revenue grew 47% to 3 billion from 2

billion, and RIM for the first time ever, sold over one million BlackBerries in one quarter.20 As a

percentage of revenue, hardware represented 73%, services represented 18.4%, software represented 5.7%

and non-warranty repairs, non-recurring engineering development contracts, and Licensing Program

provide the represent the remaining revenues. Gross Margin for the year was 54.6%, slightly lower than

2006 due to the increased percentage of revenue coming from lower margin BlackBerry Pearl sales.18 The

subscriber account base increased to 8 million, from 4.9 million the previous year. 18 RIM sold over 6

million handsets during the year, up from 50% from 2006. Net Income increased by $256.9 million from

2006 to $631.6 million. RIM’s balance sheet is extremely strong, with negligible debt and 1.4 billion in

cash, cash equivalents, short-term investments and investments. 18 RIM’s current financial position

provides a strong foundation to execute future goals.

Resources RIM has significant tangible resources. In addition to their significant financial assets, RIM also partly

owns and leases a very large facility in Waterloo Ontario. They boast a campus type layout of 21

buildings, 13 of which are leased. Outside of Waterloo, RIM also has both leased and freehold facilities.

Of these include 101,442 leased square feet for R&D and engineering in Ottawa and 283,918 square feet

owned facilities in Ottawa Ontario; Mississauga, Ontario, and Halifax, Nova Scotia. Worldwide they have

137,039 leased square feet various locations throughout the United States; 68,893 square foot leased

facility in Slough, UK; 38,902 square feet of small offices leased in France, Germany, Italy, Spain, and

U.K.; In Asia and Australia, 50,400 square feet. Not only does RIM have own and lease a significant

amount of real estate, but they are still currently building improving and expanding and the land that they

own.21

Even more striking are the intangible resources RIM has accumulated since its inception. Perhaps the

most important of these intangible resources is the incredibly strong brand power of the BlackBerry

device. In their Annual Information Form of 2007 they mention it a key characteristic that gives the

company a competitive advantage. It states “BlackBerry is recognized as a premier brand in business-

grade wireless solutions, presenting a barrier to entry for competitors attempting to offer a similar

product.”21


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Another very strong intangible resource of RIM is their very valuable Intellectual Property holdings.

Again mentioned as a key characteristic to give the company a competitive advantage in Annual

Information Form of 2007, the paper states “RIM has sought to protect the technology that it has

developed through a combination of patent, copyright and trade secret protection as well as through

contractual arrangements.” RIM aggressively pursues patents and aggressively pursues those who

infringe on their IP rights providing a credible barrier to potential competitors. RIM is not completely

closed with their IP however, as they share their technology via licensing agreements. This program

generates additional revenues for RIM and protects its products. In 2002, RIM began licensing its famous

thumb-controlled keyboard to two of its main rivals, Palm and Handspring.15

Human Resources As of March 2007, RIM had 6254 employees (34% in R&D, product development, licensing; 19% in

manufacturing, 18% in customer care and technical support, 16% in administration, MIS, finance and

legal and 13% in sales, marketing and business development).20 In comparison, when RIM introduced

BlackBerry in 1999 it only employed 270 people (Appendix E).22

One of the RIM competencies in terms of Human Resources is the ability to attract top talent from

university graduates. In a survey of 30 thousand students, RIM has been ranked as #3 by engineering

students,23 who were asked where they would like to start their careers. RIM has been able to understand

what young people desire in terms of their career and has gained advantage in recruiting and hiring top

talent. RIM offers approximately 1000 co-op and internship positions and hires around 150 new

graduates annually.23

Another critical competitive advantage in terms of HR is RIM’s executive management. Jim Balsilie and

Mike Lazaridis, RIM’s co-CEOs have both been named among Canada’s top 10 CEOs of 2007 by

Financial Post Business magazine.24 Both Mike Lazaridis (co-founder of RIM) and Jim Balsilie (CEO

since 1992) have held executive management position at RIM for an exceptionally long time relative to

the industry average. They have both achieved an almost legendary status as leaders who set an

exemplary example of work ethic and passion and providing a constant source of inspiration for their

employees. Most people would agree that without the leadership of these two individuals, RIM would not

be where they are today.


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Corporate Culture Corporate culture plays an important role at RIM. The key elements contributing to RIM’s innovative

corporate culture is the ease of information flow, company socials and the environment of energy, passion

and pride. The ease of information flow is facilited by regular “town hall” and weekly vision meetings.25

Both Mr. Lazaridis and Mr. Balsilie host these meetings for the purpose of connecting all RIM’s

employees gathered in RIM’s auditorium and teleconferenced from other offices. These meetings achieve

four main purposes. First, as employees are continuously informed about current RIM’s decisions and

goals, their focus and actions can be more successfully aligned with RIM’s strategy. Second, employees

are motivated by knowing that executive management takes time and is committed to talk to staff. Third,

Mr.Lazaridis claims that it is easy for top executives to make a mistake or fall behind when products

move so quickly from concepts to production and markets. He believes that to avoid falling behind, the

vigorous flow of information is essential. By having weekly meetings, information flow is fostered and

employees are encouraged to talk to management at all levels. Finally, collaboration, cooperation and the

flow of ideas between different divisions and departments is strongly encouraged. This contributes to

building RIM’s know-how and developing new capabilities.

Social activities such as holiday parties and summer picnics, as well as team-building sessions increase

employees’ commitment to RIM’s success. These sessions facilitate collaboration and foster teamwork.

One extraordinary example of a social activity that RIM hosted was for its 20th anniversary celebration

where the company organized a private Aerosmith and Barenaked Ladies concert for all staff .26

Every employee is given a BlackBerry on his/her first day at work. By using BlackBerry regularly, even

for personal use, employees are excited about the organization and actively seek ways to improve its

products, services and increase its success. Energy and enthusiasm has been also fueled by Mr. Lazaridis,

who strongly believes in continuous research and development and is always looking for ways to increase

RIM’s products’ and services’ potential and value. RIM has very high standards for its employees, who

are driven by challenge and are proud of achievements. All of these culture characteristics produce an

environment of energy, passion and pride.17

Core Capabilities RIM’s resources are leveraged from their core capabilities. Two of the most important of RIM’s

capabilities are the creation of strategic alliances and product innovation, research and development.

RIM is very capable at developing strategic alliances which have been critical to RIM success. RIM was

founded through strong alliances and has been operating on the same principals ever since. For example


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early on Lazaridis realized that he needed a partner with the same kind of entrepreneurial spirit and

creativity, but on the business front. As a result Jim Balsillie, a chartered accountant with a Harvard

MBA, was hired. Balsillie’s main job was to find financing to drive growth. Jim was very systematic in

how he developed funding for the company. Through detailed business plans and strong networks

Balsillie generated over 415 million dollars of funding through avenues such as federal government

partnerships, Business Development Programs, Tax credits, and initiating initial public offerings on the

TSX and the NASDAQ. Funding of this magnitude fuelled both RIM’s growth and public profile. A

recent example of this capability was shown by extending its product development to environments such

as Application Program Interfaces (“API”) and providing technical support and accommodating external

software developers through key alliances with Sun Microsystems and more currently Facebook.

Finally RIM’s most notable capability is its commitment to innovation, research and development. RIM

has clearly achieved innovative designs in their BlackBerry product line, resulting in superior value to

customers. As mentioned previously RIMs initial success with the Blackberry was a product of the

culmination of more than 10 years of innovation, researching and developing. Even after the immense

success of the BlackBerry, RIM’s research and development team consists of approximately 2,100

employees, and their research facilities are continuing to grow and expand. This shows that RIM refuses

to rest on their laurels, instead they continue to maintain a highly dynamic environment as they continue

to upgrade, extend and reconfigure as demonstrated by new alliances and research facilities.

Section 4: THE BLACKBERRY SOLUTION Research In Motion (RIM) continues to build their competitive advantage around providing a package of

tightly integrated products and services. Their principal product line, Blackberry, is a highly competitive

player in the increasingly competitive smartphone industry. Their unique strategy of providing product

lines including hardware, software, and services, positions this firm well within the entire scope of the

smartphone industry. This is in contrast to their competitors that have traditionally focused on one of the

three product lines.

Hardware Hardware is the component of the smartphone industry that is most tangible to the end user. Although

there are no industry standard differentiation between a smartphone and a traditional cellular phone, one


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may argue that smartphones facilitate a software platform for users to access advanced mobile services

such as wireless e-mail and GPS.

Blackberry is RIM’s wireless line of devices, which currently includes 15 different models. Blackberry

devices are highly specific to RIM’s software and services. Since the first Blackberry was introduced in

1999, they have not been compatible with the software platforms of the competitors. Unlike Palm, whose

devices support both the Palm O/S and Windows Mobile, Blackberries are highly proprietary and

dependent on RIM’s other products and services.

Software Smartphone software is often identified as the platform on which the user interfaces with mobile services.

This is typically known as the operating system of the device. However, software can also include a range

of add-on applications that allow users to extend the functionality of their smartphones.

RIM does not sell its O/S like Symbian and Microsoft, nor is there any known compatibility with other

brands. This results in total specificity of its platform software for its Blackberry devices. Other

competing platforms are also specific to a single device, including Palm O/S and OSX Tiger (iPhone

edition). However, there are a number of platforms that are compatible across a wide number of hardware

devices (Symbian, Microsoft mobile).

Users often base their purchasing decisions not only on the accessibility, reliability, and features of the

operating system software, but on the number of available third party applications. At the same time,

network effects shape developers’ decisions to create software for particular platform—popular platforms

attract the most third party applications. It is therefore in the interest of mobile platform developers to

promote the development of these add-on software titles for their respective operating systems. RIM has

adopted this initiative in their business strategy as seen by their release of the Facebook application on

October 24, 2007.

Services Services in the smartphone industry are typically defined as a collection of specialized software that

allows wireless communication to deliver content to the user. Push capabilities to handheld devices have

proven to be a primary source of competitive advantage for RIM’s Blackberry devices.21 This “Always

On, Always Connected” technology has differentiated Blackberries from substitutes such as PDA’s,

which depended on manual data synchronization with workstations over USB cables.


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RIM’s main service provides firms with the ability to automatically deliver corporate emails, calendar

entries, contacts, and other information to Blackberry devices through the cellular network. Due to the

support for two-way data communication, instantaneous synchronization of data between devices and

corporate servers can be facilitated. Although originally developed exclusively for Blackberry devices

and the Blackberry software platform, RIM’s “push” technology has been licensing out this technology to

select smartphone competitors since 2002. Smartphone maker Nokia has already integrated RIM’s push

technology into many their smartphones, making them both a competitor and a partner. Unlike

Blackberries and the Blackberry platform, RIM’s “push” technology is decreasing in specificity as it

increases its compatibility with other platforms.

RIM has recently adopted a strategy of sharing its proprietary “push” technology through “licensing the

Blackberry service to key handset and service vendors”21 is embedded in its core business strategy but

without further elaboration. One may argue that with increasing options for “push” technology, RIM is

finding its once favourable position at risk. In order to continue profiting from its devices, which currently

amount to 78%27 of revenues, RIM aims to secure its technology as the industry standard dominant

design.

The shift of focus towards mobile services also appears to be common among many of RIM’s established

competitors. Many large firms have already announced vertically integrating mobile services through

acquisitions. Nokia has recently announced the acquisition of Navteq, aimed at increasing Nokia’s

development of location based mobile services. Microsoft’s recent revision of Exchange server allows

firms to push data to Windows Mobile handhelds.

Target Markets With a dominant position in the corporate smartphone market in North America, RIM has recently

expanded into the consumer market in September 2006. The consumer market introduces a new

dimension of competition, success factors, and innovation—challenges to the core competencies which

have proven to be effective for RIM in the corporate market thus far.

RIM holds a commanding 44% share of the corporate North American smartphone market, seconded by

Palm at 24% (Appendix D). (the prosumer market will be integrated into the corporate market in this

paper) Its differentiated approach of integrating the primary products and services of the smartphone

industry has created an effective competitive advantage in this market. Networking effects created by the

complementary nature of its products and its increasing popularity as a business tool has contributed to its


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growth. As a pioneer in this field, RIM has also acquired economies of learning over 17 years of

experience following this unique business model.

In September 2006 RIM steered away from its traditional corporate focus and expanded into the

consumer market with the introduction of the Blackberry Pearl. RIM has shown that it recognizes the

difference between corporate and consumer needs. The Pearl integrates a camera, advanced media

players, expansion card slot, and a smaller, phone-like keyboard which helps significantly reduce the size

of the device. All aforementioned features have never existed on traditional corporate model Blackberries.

Despite added consumer features, RIM continues to bank on its core business model as it enters this new

market. When the Pearl was announced, Mike Lazaridis, President and Co-CEO of RIM, stated that

“through the integration of hardware, software and service, we are able to deliver a mobile experience that

stands apart in the industry.”28

To succeed in its new endeavor into the consumer market, RIM had to change their brand image from a

corporate solutions company to a consumer-friendly firm. Larry Conlee, RIM’s Chief Operations Officer,

described this challenge as “our attempt to take Blackberry out of the boardroom”29. To market this new

image, RIM has begun sponsorship of concerts and fashion shows in order to appeal to a wider consumer

market. Rebranding an established brand like RIM may prove to be a long and challenging procedure.

Furthermore there are inherent risks of alienating existing users who associate RIM with a professional

corporate image and a trusted brand. RIM may consider spinning off their consumer market efforts into a

separate brand while maintaining a close association with RIM. This allows the company to leverage their

existing reputation while having the freedom deviate from their core design and brand image.

By late 2007, RIM’s venture into the consumer market has shown exceptional returns, with this new

strategy having been credited for nearly doubling RIM’s revenues from last year. Despite this show of

progress, Blackberry holds only a small percentage of the North American consumer market, which

continues to be dominated by Symbian-run phones. Impressive sales of the Pearl during its initial year of

sales may have gone to early adopters, with the wider market of early majority and late majority users

still untapped. According to Geoffrey Moore, acceptance by innovators and early adopters is a key

prerequisite for adoption by the bulk of subsequent users, but does not necessary present a definitive

prediction of future success.30 Instead the ability to penetrate the wider market is dependent on RIM’s

capacity to continue with its momentum in making devices which are compelling enough for the majority

of users. To gain a wider user base, RIM may choose to vertically diversify by offering lower cost budget


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phones and horizontally diversify by offering different features across several models, each appealing to a

different market segment.

RIM’s decision to compete in two markets exposes the firm to an increasing array of competitors. While

its strategy of providing integrated products continues to be effective in the corporate market, the strategy

has inherent risks in the consumer market. These risks are derived from the fact that RIM’s core products

are almost completely complementary and dependent on one another. As more of its individual products

face competition from specialized competitors, there is an increasing risk that consumers will choose to

purchase and subscribe to products from various producers rather than a packaged solution from RIM. If

RIM’s “push” technology were to become less desirable than some other function, RIM Blackberries

would suddenly lose their appeal since they are incompatible with other technologies. Entering the

consumer market brings RIM products into direct competition with immense firms who have also entered

into this emerging market—Google and Apple. Although RIM has a reputation associated with

innovation, Google and Apple have lately become reputable for their creativity in the consumer market.

Section 5: COMPETITIVE ADVANTAGE The Secrets to RIM’s Success Values & Principles Often companies publicly post values that drive their day to day business, and most company’s post a list

of such values on their corporate websites as an external public relations device; however, RIM does not

post slogans or missions statements on their website as a means of image management. Instead they refer

to a brief and simple company description. RIM chooses to keep these private within the organization,

and in spite of keeping their values and principals private, RIM has managed to expose their steadfast

values through their many successes relayed through media relations. Some of their most notable values

include strategic philanthropy and commitment to research and innovation.

Often corporate philanthropy is viewed as little more than public relations and falls short of anything

productive. Interestingly though, Michal Porter, a professor at Harvard Business School argues that

“There is no contradiction between improving competitive context and making a sincere commitment to

bettering society.”13 Michael Porter is correct when speaking of strategic philanthropy, a competence that

RIM’s senior executive exercise masterfully. This is exemplified by their very generous contributions to


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the local community of Waterloo. In addition to creating goodwill, these investments serve to create a

high quality employment pool for years to come. Their website states under the corporate philanthropy

section “Research In Motion believes that it is important to give back to the local, national and global

communities in which we operate. The primary focus of RIM’s corporate philanthropy program is

outreach to students in science, engineering and business programs.”15 Here we can see that RIM

executives are honest and upfront about their philanthropic motives and this creates a sense of integrity,

which in and of itself is of corporate value.

RIM’s commitment to research and innovation is likely more than just a value, it is the companies ‘core

ideology’ or their reason for existence. This is evident through the amount of real estate and staff that they

commit to R&D facilities and their strategic philanthropy funding large research organizations. Again,

although there is an absence of formal mission statements, they have won awards such as ‘CRN's Top

Innovators 2004’ and ‘VAR Business, Top Technology Innovation’.

The Blackberry device alone has won dozens of industry awards for its innovation and they have also

graced multiple headlines such as “No Canadian invention has dazzled North American technology

aficionados in recent decades like the BlackBerry.”15 Because of these numerous media relations

successes RIM has gained the reputation of unrelenting top innovators. Furthermore, RIM’s ability to

focus and stick to a long term vision, to persevere through 20 years of consistent development efforts and

to survive fast paced growth through their innovative processes is reminiscent of the characteristics of the

key innovators of the Japanese corporation’s success with electronic devices in the 70’s. These companies

displayed the same pledge to a vision, patience and iterative approach to research that RIM has done with

its breakthrough success with the Blackberry device. Again, though not stated explicitly on their website,

due to their devotion to research, and the ability to see long term, values such as persistence and

commitment to research are clearly expressed in actions that have led them to success time and time

again.

Brand Power RIM’s tangible resources, their real estate and financial value previously mentioned are impressive and

continue to grow. However, it is RIM’s intangible resources that are worth significant analysis. Perhaps

the most important of RIM’s resources is the very strong, brand power of the Blackberry brand. Such a

resource is often referred to as a reputational (not a type) asset as the value is the confidence it instils in

customers.13 The BlackBerry has achieved such popular status that it has become the subject of punning.

For example the term ‘crackberry’ has become a popular derivative of the term and has even earned itself


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a spot in modern online dictionaries with the following definition: “a person who uses a BlackBerry

handheld computer addictively or obsessively.”31 Conversely though there is always a danger of over

saturation of a highly successful brand name, and the over saturation could diminish the product value

over time. Even though RIM names its Blackberry brand power as a key characteristic to maintain their

competitive advantage in their annual report, they also worry their brand is in danger of becoming weak.

“RIM apparently feels its device's brand name is in danger of becoming watered down by generic use,

with consumers referring to any of a number of hand-held devices that have e-mail functionality as

BlackBerries.”32 RIM will in the future need to be careful not to associate itself with low quality devices

or knock offs, and remain protective over its highly valuable reputational asset.

Intellectual Property Another significant intangible resource of RIM’s is their intellectual property. This is a key source of their

market value and is listed in their annual report as a key characteristic that gives the company a

competitive advantage. Due to its potentially valuable nature, RIM has developed a strong team of in and

out of house lawyers and works hard to protect each and every new innovation. RIMs patent strategy and

portfolio of several hundred patents has been a key factor to its growth to date. The owner Mike Lazaridis

states, "If you are not patenting everything you are working on, someone else might patent what you are

working on. Patenting should be a standard operating procedure for your company, a standard operating

procedure for your researchers and engineers. If they come up with an idea to solve a difficult problem,

then they should immediately apply for a patent."15 Mr. Lazaridis attention toward patents is reminiscent

of companies such as Texas Instruments in their patent protection policies who use patent portfolios to

maximize licensing revenues. Another intellectual property protection proficiency that RIM possesses is

in their low employee turnover. By maintaining their low 1% turnover rate, RIM can be fairly assured that

it’s inside secrets and tacit knowledge is not walking out the door.

Strategic Alliances Besides RIM’s already noted capability in R&D and innovation, RIM’s ability to create strategic alliances

and joint ventures is perhaps the best way the company leverages other capabilities. Building strategic

alliances is a skill they have fostered from the company’s inception. Right from the outset the CEO Mike

Lazaridis formed RIM, with a $15,000 loan from his parents and a small government grant and a contract

from General Motors. He combined that with close friendships of Mike Barnstijn and Douglas Fregin

launched RIM. His abilities to bring people and money together created Canada's largest and most

successful high-tech companies.


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RIM states in its annual report that its existing strategic alliances and relationships, access to components

and established supplier relationships, and existing customer and channel relationships have created a

significant barrier to entry in this industry.21 This is a strong statement as it implies that their current

strategic relationships are very strong it would make it hard for other to compete in this industry. Also

they state in their annual report that their key components to their business strategy include plans to

continue to foster relationships with key carriers and customers and to pursue licensing and strategic

relationships with industry leaders. Moreover, they list 28 industry association that they participate in, and

they mention that “RIM’s involvement with these and other associations includes standards development,

government advocacy, joint marketing, participation in conferences and trade shows, training, technology

licensing by RIM and business development”21 Not only do these fact show that their alliances are strong

but they will continue to grow them in the future. Some capabilities that RIM has acquired with strategic

alliances include Facebook integration, software developers API, and support for third party devices,

access to services such as Yahoo and distribution of Blackberry devices overseas, legal expertise,

successful media relations and software development.

Human Capital As RIM only had 270 employees in 1999, there was a lack of informal barriers or organizational chart.22

The company size then helped to create an atmosphere for communication, cooperation and free flow of

ideas. Within only in a few years, RIM has grown quickly to 6254 employees and continues to grow. The

phenomenal growth might present a challenge to RIM to keep developing dynamic capabilities that will

enable integration of all competencies as the company grows, instead of letting core capabilities become

core rigidities.

RIM has recognized the importance for retaining employees not only as human capital resources, but also

as a means to protect its intangible resources.20 RIM believes that in case of intellectual property, patent

and trade secrets are important, but must be supported by retaining qualified personnel. While each

employee is required to sign the non-disclosure agreements, it has been really the employee retention that

has played the crucial role in protecting intellectual properly.

The human capital resources have been one of the RIM’s critical success factors. RIM has both the ability

to attract and retain top talent. The following announcements confirm RIMs abilities:


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• RIM has been announced as one of the ‘Financial Post Ten Best Companies to Work For in 2007’

for the following reasons: turnover rate exceptionally low, recruiting rapidly as business expands,

company culture, employee rewards and focus on employees.27

• According to a study by Macleans’ magazine, RIM is one of the Canada’s top 100 employers for

2008 for “putting employees first.”33

•

Section 6: RECOMMENDED STRATEGY Moving Forward: Important Resource and Capabities Given the rapid growth of the smartphone industry and the slow decay of RIM’s competitive advantage

(i.e. more push e-mail services) in it, RIM must move as quickly as possible to solidify its position in the

market. The best way to achieve that goal in the short term is to increase their client base as quickly as

possible. To do this they must increase the number of cellular networks they supply and the number of

end-users they serve. Of course a rapid growth strategy such as this introduces issues of manufacturing

and service capacities which must be carefully managed. Similarly rapid growth will necessitate a

commensurate increase in their work force which also introduces management issues. In the longer term,

RIM must strive to further differentiate their smartphones and services to make them more attractive to

end users. The company’s entry in the consumer market also introduces new challenge that RIM must

rise to meet. They must concentrate on rapidly changing designs and features while at the same time

concentrating on costs.

To meet these challenges RIM must deploy whatever resources and capabilities it can bring to bear.

RIM’s current network of partners and collaborators coupled with their inherent ability to extend this

network should serve them well in the race to establish new relationships with wireless servers and sign

on new customers for their services. Furthermore, RIM seems to be able to manage the expected rate of

growth in terms of the human resources management as they have been handling a similar rate of growth

for the last few years.

One factor that is unknown is RIM’s capabilities in terms of manufacture and service capacities. They

have several facilities dedicated toward manufacturing but there is no way of knowing the limits of their

capacity and it is likely that capacity will be the limiting factor in their growth in the near future.


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Furthermore, competing in the consumer market may introduce cost pressure that RIM has not had to deal

with in the business and enterprise market. RIM may have to consider contracting certain production

functions which is a break from their current business model. It is not clear if RIM would function well

under this model.

Expectations for RIM’s growth are optimistic for the foreseeable future due to the strength of the

BlackBerry brand which should compensate for the products eroding position of differentiation. Of

course the company has a complete spectrum of excellent products and service to offer which should

support the brand’s strength. RIM is also leveraging this brand to break into the consumer market which

is their only real advantage here. It is unlikely that this will carry them very far as the competition has

currently increased with the entry of the iPhone into the market and will only intensify as players such as

Google enter the market. Also RIM must be cautious about diluting the strength of the brand that is

recognized as an invaluable tool in the workplace. Brand management is not an issue RIM has had to

deal with to date beyond the drive to produce a strong high quality product line. It is unclear whether this

is an issue that they can control. They might consider releasing a line of consumer products under

another brand name that is recognized by association with the BlackBerry, but is not a BlackBerry.

In pursuit of new customers RIM must make sure that its focus on the consumer market does not detract

from its effort to secure new business and enterprise users. The latter two are proven markets which still

have a huge potential for growth. That is there are in excess of 600 million business e-mail account of

which RIM only service approximately 800 million (ca. 1.2%).34 In contrast the consumer market is

unfamiliar territory for RIM although the potential for growth here is tremendous as well. RIM should

move cautiously however as the consumer market is currently very volatile and the competition is in a

much stronger position.

For the medium to long term, RIM must continue to mobilize it’s competencies in research and

development and innovation in order to maximize its chances of staying ahead of the competition. These

efforts should be focussed on all aspects of their business include software hardware and services. By

continually trying to improve upon their products in this way, they will not only make incremental

improvements in their own product line but may also be in a better position to respond to changes in

competitors products, as it will keep them at the top of the learning curve. In addition, R&D efforts may

ultimately lead to entirely new lines of business. This would certainly not be unusual for Mr. Lazaridis

who started out as a contractor in the computer service business and moved on to pagers and then

smartphones. Indeed Mr. Lazaridis’ interest in quantum physics could lead almost anywhere.


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In addition, R&D efforts produce patents that sometimes lead to licensing opportunities providing another

revenue stream. In RIMs hands, patents provide solid protection for IP because they have the resources

and inclination to protect them in court.

In addition to mobilizing their internal forces on trying to improve service for the BlackBerry solution the

company should aggressively pursue participation of third party software makers in order to increases its

changes of adding value to its product line. The more minds they have working towards a solution (or

solutions) the better the chance they will come up with one. BlackBerry actually holds a weak position

here due to giants like Symbian who command more attention from software makers due to their huge

market share. On the other hand, RIM’s strong position in the enterprise market may give them some

leverage because this is potentially a much more lucrative market.

Based on the analysis of the key success factors and the analysis of RIMs resources and capabilities we

propose the following strategy which focuses on growth.

In the short term:

• Focus on aggressively pursuing partnerships with cellular network providers around the world.

• Focus on bringing the BlackBerry solution to as many business and enterprise users as possible.

• Invest in production to increase capacity as necessary or alternatively seek third party contract

manufactures to take on some BlackBerry lines.

For the long term:

• Continue to improve the BlackBerry solution through internal efforts and by increasing

interactions with third party software providers.

• Continue to invest in R&D and pursue licensing opportunities.

Limitations: These recommendations are based on an analysis of incomplete data. Detailed up to date

information on the industry and the participating companies is not readily available. Much of the

available information was obtain from company literature, various press releases and the editorial

comments and it was these sources that shaped our understanding of RIM and the industry. Lack of

information also necessitated several assumptions around issues such as manufacturing capabilities and

the relative strength of the competitors. The results and conclusions presented here


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Section 7: SUMMARY While the short and medium term future of the smartphone industry looks promising, competition is

heating up, and firms wishing to compete in the industry face challenges. The industry is undergoing

rapid growth but it is still in its infancy and there is still plenty of room to grow. However, incumbents are

facing pressures from new entrants and customers who are demanding more and more from the devices.

Also as the industry matures, it is becoming more difficult for companies to differentiate their products as

all the players ascend the learning curve.

To date, Research in Motion has performed extremely well in this environment, especially in the

enterprise and business markets and they have several advantages moving forward. The company has a

particularly strong brand in the BlackBerry line of products and they have taken every conceivable

measure to maintain their position as an industry leader. The smartphone industry is innovation driven

and innovation is at the core of the company’s value system. They maintain their innovative edge by

focusing on their culture and human capital. They invest heavily in research and development which has

placed an impressive portfolio of patents at their disposal. Also, they augment their innovative value

chain by seeking out partners outside the firm such as third party software producers and service

providers.

Given these parameters, we have analyzed RIM’s future potential in the industry and have made

recommendations based on this analysis. We believe that RIM should take advantage of the growth

potential and focus on penetrating the market as much as they are able. They should concentrate on

increasing their distribution chain by forming partnerships with as many cellular service providers as

possible. RIM should also aggressively pursue the enterprise and prosumer markets to capitalize on the

lock-in potential there. We make these recommendations to grow their business while cautioning that this

growth be managed prudently. Quality of their products should not suffer. While they grow RIM should

leverage its considerable financial resource to continue in its efforts to add value to its products through

aggressive R&D - both internally and externally. Finally we recommend that RIM should tread

cautiously in the consumer market which is in a state of flux with the entry of Apple and their disruptive

iPhone. RIM is a recent entrant in this industry and it is not clear if and where they can find their place.

We feel that RIM has good prospects in the foreseeable future. They have the necessary resources and

capabilities to succeed and they hold a very strong niche in the market. It would appear that the company


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sees the same future for themselves as their stated strategies are very similar to what we have proposed

here.21 Barring any unforeseen misfortune, we anticipate that RIM will continue to prosper well into the

future.

CONCLUSION: In the analysis of RIM, there were three main areas that could be investigated reasonably from outside of

the organization without access to insider information. These researchable areas for the purpose in this

paper included, the smart phone industry itself, RIMS position in the smart phone industry and an

overview analysis of RIM as a firm, and how it operates. Within the industry of smart phones a Porters

five forces analysis was conducted to analyze RIM’s rivalry threats and substitutes, and suppliers. Perhaps

the most striking feature of the analysis was the inherent barriers to entry that RIM has created in its

industry. Also, the weakness of the Porter model was discussed as it did not take into account

complements, network effects and industry change, all of which are very important factors in the smart

phone industry. The key success factors of RIM were also analyzed, and in spite of having limited

information, the analysis breakdown provided in this report matched closed with many of the success

factors listed in RIM 2007 Annual Report.

The analysis of the firm first covered a view of the firm’s values that could only be analyzed by reading

between the lines and there is no public value statement for this company. However the reasoning is

sound and it is likely that this is close match to RIM actual values. Further firm analysis conducted of

their most notable tangible and intangible resources, matched closely with the barriers to entry listed in

their Annual Report. Specifically the standouts included Brand Power and Intellectual Property. Also

capabilities were discussed in which RIMS distinct abilities to create and maintain strategic alliances were

highlighted. Finally, one of the most important parts of RIM as a firm discussed was that of their human

resources. Although no inside information about the company was available, through other sources it was

indicated the there is a strong corporate culture that leans toward innovation, attracting top talent and

valuing employees.

RIM’s position in the industry of Smart Phones was carefully analyzed which highlighted the unique

points of RIM and why they hold a competitive advantage in their industry. Mostly this lies in the

advantage of levering their philosophy of providing 1) Hardware 2) Software 3) and Services in a tightly

integrated packages. This strategy positions this firm well in the scope of the smart phone industry. Most

importantly, the service of providing ‘Push’ technology, allowing, the customer can get the added value

of receiving email and calendar entries in real time, is their single most notable competitive advantage.


BUS752 | Group 3 30

References:

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