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Can Research in Motion Stop the Apple and Google Onslaught in the Enterprise Arena?


If enterprise customers abandon RIM, it might be hard for the company to come back.

MINYANVILLE ORIGINAL It's fair to say that the past year has not been the best for Research in Motion (RIMM), what with sagging BlackBerry sales, cost-cutting layoffs, and two delays in the launch of its new BlackBerry 10 operating system, all of which have caused its stock price to plummet.

The latest blow to the Canadian company? The New York Times (NYT) announced that it will no longer be supporting its apps for the BlackBerry.

Trying to counter the relentless wave of negative publicity, RIM CEO Thorsten Heins appeared on a Canadian radio show earlier this month saying that "there's nothing wrong with the company as it exists right now" and that RIM was not in a "death spiral."

RIM the Enterprise King

In the midst of all the bad news, the one thing RIM has always relied on as a bulwark is its strength in the enterprise business. Indeed, while the BlackBerry's popularity in the consumer market has cooled, it remains the smartphone of choice for businesses, who favor the stability and security of RIM's BlackBerry Enterprise Server (or BES) device management system.

"Technology departments love [the BlackBerry] because they are relatively inexpensive, easy-to-use, and most importantly, come with an end-to-end management system in the from of BES, which is a very powerful integration system capable of managing tens of thousands of units for even the largest companies," Erik Johnson, mobile strategist at Lextech Global Services told Minyanville.

Nonetheless, RIM's dominance in the business market is also being threatened. In a recent survey conducted by global research firm 451 Research, BlackBerry is still the most deployed smartphone enterprise operating system, capturing 35.3% of the market share. However, Apple's (AAPL) iOS is nipping at its heels, with 33.1% of the share, with Google's (GOOG) Android at 24.4%.

The Growing Popularity of BYOD

Aiding Apple's and Google's cause is the increasing popularity of Bring-Your-Own-Device (or BYOD) policies at workplaces. According to the same 451 Enterprise study, 46.3% of devices used by employees in US corporations are BYOD.

Dan Croft, CEO and Founder of Mission Critical Wireless, a mobile solution provider, explains that BYOD polices have become popular because that's what employees prefer. "Companies seriously compete to attract qualified candidates and one differentiator is a flexible BYOD policy, especially for younger generations and recent college grads just entering the workforce," Croft tells Minyanville.

When the first iPhone was released back in 2007, companies could not allow their employees to use it as a 'locked-down' device for sensitive corporate communications. However, since then, both Apple and Google have encourage third-party app developers to come up with device management solutions that can create secure mobile computing environments for their devices.

Good Technology, for example, produces a mobile device management (or MDM) product called Good for Enterprise, which is aimed at corporations and governments and is compatible with both the Android and iOS. The proliferation of such apps enables companies to comfortably initiate BYOD policies knowing that their internal communications are secure.

The Tablet Invasion in the Corporation

Also helping to increase enterprise adoption of iOS and Android is the rising popularity of tablets, which are now viewed as productivity tools in an increasingly post-PC world. The 451 Enterprise study found that 20.9% of businesses now issue tablets for employees to use, with another 35.6% allowing employees to connect their personal tablets to email and corporate applications.

Unsuprisingly, the iPad is spearheading the tablet invasion, Vishal Jain, mobile services analyst at 451 Research, told Minyanville. "The iPad works for the manager, who's out on the field or who goes to different clients – someone who is actually out of the office. Owing to its small size and convenient form, it's a perfect enterprise productivity tool."

In the tablet arena, BlackBerry's failure with the playbook hurts the company too, since it opens the door for Apple and Android tablets. "The playbook actually has gotten a lot of government certifications," says Jain, which would ostensibly make it a great fit for use in governments and corporations, "but it just hasn't clicked well with people. So that's why enterprises think: Why not go with an iPad, rather than a playbook that people won't use?"

BlackBerry's New Mobile Fusion Provides Hope

It's not all gloom and doom for RIM. Croft said that RIM's BES infrastructure is "in just about every enterprise data center on the planet, so that's a significant position to be in."

And with market penetration comes stickiness. "As some of us who have worked in large organizations know, IT likes to hold on to tried-and-true technology. Witness the pervasiveness of Windows XP (MSFT) in the business world. By one measure, market share of XP, released over 10 year ago, is still at 25%," Johnson highlights. "It makes sense that the popular and capable BlackBerry is going to be supported by IT departments for a while longer."

For its part, RIM asserts that the BES is still the most secure device management system out in the market.

"RIM has a longstanding history of providing secure end-to-end mobile solutions for its customers. Security is built into every BlackBerry from the ground up. It is how we think, develop, engineer and deploy our products and services," Jeff Holleran, director of Enterprise Product Management at RIM, tells Minyanville. "RIM's customers have come to regard the BlackBerry solution as the gold standard for Enterprise mobility."

RIM has also released its own heterogeneous mobile device management system, BlackBerry Mobile Fusion, which is compatible with Android and iOS devices. RIM can thus still profit in the software space when companies employ BYOD policies if they choose to use BlackBerry Mobile Fusion to manage devices.

RIM's Mobile Fusion is almost a double-edged sword because if it takes off, it could hasten the demise of the BlackBerry, since companies will now be able to fully embrace iOS or Android devices. However, the introduction of Fusion was a necessary move that RIM had to make, as Tony Bradley of PCWorld pointed out.

BlackBerry Mobile Fusion may accelerate migration off of BlackBerry mobile devices, but it establishes RIM as a leading player for multiplatform mobile device management at the same time. BlackBerry as a mobile OS, and BlackBerry devices may continue to decline into obscurity or oblivion, but RIM can live on by shifting its strategy to that of a software company capable of providing the multiplatform mobile device management and security infrastructure customers need.

Blackberry 10: The Last Stand?

The latest piece of good news for RIM came from a recent survey from Osterman Research, which found that firms with BYOD policies have higher expenses as they need more IT staff to support all the different mobile devices.

As Forbes argued, "the rising IT costs of managing multiple devices will give enterprises pause as they work on moving away from RIM's BlackBerry infrastructure [which] gives RIM a chance to stage a comeback not only from a successful BB10 launch that may change consumer perception about BlackBerry smartphones, but also from its recently launched Mobile Fusion software designed to support multiple mobile platforms."

All eyes will be focused on the new BlackBerry 10 OS come 2013, as it represents RIM's best (and last?) chance to turn the tide. So far, early notices have been positive. One key measure of whether or not the Blackberry 10 will be a success will be whether or not the developer community will be committed to designing apps for the BlackBerry ecosystem. If it isn't, the BlackBerry risks becoming irrelevant compared to the apps-rich iOS and Android ecosystems.

To this end, Holleran told Minyanville that developer sentiment towards the BlackBerry 10 has been "phenomenal," with more than 5,000 developers having attended BlackBerry 10 Jam developer events thus far. An incentive for developers to create apps for its system, he notes, is that "the BlackBerry platform continues to be the most profitable for developers."

Additionally, Holleran stated that average monthly revenue from BlackBerry apps is about $3,853, compared to $2,735 for Android and $3,693 for iOS, while average cost to bring a BlackBerry app to market is $15,181, compared to $22,637 for Android and $27,463 for iOS.

Even with the delays, executives at the Canadian company are confident that their product will wow the world, as they've taken their time to perfect their product. Frank Boulben, the new global chief marketing officer of RIM, told The Australian Financial Review: "We are the clear third ecosystem, and we have a penetration in the enterprise and government market that is not rivaled by these other ecosystems. The mood [of the executive team] is very combative and there is a very strong fighting spirit in the -company right now."

Twitter: @sterlingwong

No positions in stocks mentioned.
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