from Commentaries:
Humbled giants eye business phone market
LONDON, Aug 13 (Reuters) - Once they were warriors battling one another on the digital battlefield. Nowadays, Microsoft and Nokia are worriers, huddling together for comfort.
The world's top phone and software companies need each other to compete with Apple, Google and Blackberry-maker Research in Motion (RIM), whose products increasingly define what users expect from phones and charge premium prices in consequence.
In the market for so-called "smartphones", Deutsche Bank estimates Apple and RIM now take home more than half of all profits, despite producing less than a third of high-end mobile phones. Nokia held a 45 percent share of the smartphone market in June, according to Gartner Inc. (Table 2 in Gartner release)
The news this week that Nokia will feature Microsoft's office software -- features such as Word and Excel -- on phones aimed at business users is symbolic of what is possible rather than significant in itself. It fell short of predictions in the gadget trade press that Nokia might introduce phones running on Microsoft's own Windows Mobile software.
But that doesn't mean their collaboration should be dismissed. There's more to this budding relationship than meets the eye.
First and foremost, Microsoft and Nokia say they are taking on the Blackberry email-phone, a must have among corporate professionals. So far the they haven't done very much, for all the big talk. But they have pledged to make Microsoft Outlook work smoothly on Nokia phones.
This is crucial in overcoming Blackberry's key advantage -- the underlying software that companies rely on to securely manage corporate e-mail.
BlackBerry’s biggest rival may be itself
– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
Research in Motion officials do their best not to laugh when asked if they fear the rise of a BlackBerry-killer, some theoretical device that does everything its coveted e-mail phone does, only better.
But BlackBerry’s biggest threat may come from itself. As the company’s latest quarterly results suggest, there is a gulf between its pricey corporate phones and price-sensitive consumer models that are cutting into margins.
When a loyal Research in Motion (RIM) customer such as a corporate IT manager discovers he’s paying more than twice the price at work that his the 16-year-old daughter is paying at retail, he feels ripped off. That in a nutshell is the crisis RIM faces.
Of course, RIM’s crown jewel remain its corporate business. Its franchise there stems from the thousands of company network managers who rely exclusively on RIM’s e-mail management software to ensure corporate communications are securely delivered to their intended recipients. Companies pay a premium for this reliability. Those investments lock customers into BlackBerry services and prevent other competitors from breaking in. However, this is changing.
After years of failures, Microsoft and Nokia now have secure e-mail systems that offer credible alternatives. They give these away to corporate clients, putting longer-term pressure on BlackBerry’s corporate franchise.
The success RIM has achieved in consumer markets has defied all analyst predictions. But consumer success has come dearly in terms of profit margins and falling average selling prices. Eighty percent of its new users in the quarter ended in May were non-enterprise, retail customers rather than mainstay corporate clients. The key difference between corporate and consumer markets is that RIM lacks the customer control over consumers it has had in offices.
I bought my first blackberry in 2008. I can’t live without it! And since that happens all my birthday present for my family and closest friend have been a Blackberry! I really don’t care if they are expensive or if I find out that I am paying twice or whatever. But I think I am this loyal because I’m from Venezuela! I think we’re one of the principal consumer or something like that! But it’s unbelievable how Blackberry became one of our first necessity!
Nice article, Eric. Also in terms of what it elegantly understates – that nobody in the lucrative U.S. phone market is remotely satisfied with their phones or the cost of ancillary services the subscriber has to come up with.
There’s a lot of room for growth, if somebody would just listen to what the customer wants and deliver something like that instead of slowly bleeding users to death with costly add-ons and phony rebates instead of decent service at a fair price on a not-too ugly handheld device series.
Apple’s iPhone is a promiscuous lifestyle product unhappily married to the ogres of AT&T while flirting with the enterprise user market. Microsoft has Windows and Outhouse to contend with, tripping over its own necrotic brand software in the process of whatever they might try to do next. The Windows decal on any phone is a deterrent to buying it, at this point. I mean, what size of chip would one really need to store all the viruses and spam you’d be getting if one went down the MS route? That one hasn’t been invented yet.
At times like these, one might expect your last sentence to ring true with the makers and sellers of such devices. Hopefully, they’ll get the message soon.