Expanding the consumer base with this increased competition, will not be an easy task, especially since RIM has traditionally focused solely on the enterprise business consumer
“The wireless communications industry is characterized by rapid technological change, evolving industry standards, frequent new product introductions and short product life cycles” [1]. In this challenging industry, Research in Motion Ltd (RIM) has consistently shown growth in terms of sales volume and revenue [1]. RIM is engaged in the research, design, manufacture, and sale of wireless solutions, primarily the BlackBerry wireless devices and e-mail services [2].
With increasing competition from products such as Apple’s iPhone and Google’s Android, RIM intends to foster future growth through continued innovation and expansion of their consumer base [1]. RIM has had success through international expansion, such as in Indonesia, and also intends to branch out to new customer segments beyond their traditional company focus while staying true to their core competencies.
Although there has been recent media coverage of governments threatening to ban BlackBerry products, the ban actually highlights one of RIM’s selling points: unbeatable security. RIM has a number of competitive advantages, including: secure e-mail and online transactions, lower bandwidth usage, and BlackBerry to BlackBerry global instant messaging capabilities [3].
According to their 2010 Annual Information Report, RIM’s current strategy involves expanding the customer base using opportunities in under access market segments.
Customer Expansion: The Future is Low-Bandwidth and Emerging Markets
The smartphone industry is becoming increasingly competitive as consumers demand one mobile device to manage all types of information. Both RIM and Apple aim to become the provider of choice for such a device, along with other well-established mobile phone suppliers, such as Nokia, Samsung, and Google [13].
Expanding the consumer base with this increased competition, will not be an easy task, especially since RIM has traditionally focused solely on the enterprise business consumer. With enterprise market saturation in the developed world and increasing competition both locally and globally, we believe RIM must focus on international growth – including enterprise users, small to mid-sized businesses (SMBs) and consumers in emerging markets.
In general, multinational corporations are interested in focusing on global consumers as it can be costly and cumbersome to modify products, services, and communications to suit local tastes. For example, Apple offers the iPhone and its apps globally with little localization. This gives local companies an advantage as they focus on those individuals who want global products at local prices or more customized solutions for their needs [4].
While RIM has traditionally focused on enterprise business solutions, their market expansion success in Indonesia shows they are well equipped to localize their global offerings – something competitors cannot offer as easily or as well.
One challenge with focusing on other market segments is that mass-market consumers are more influenced by price than are early adopters. But RIM is already well positioned for this challenge as it offers a wide range of devices that are highly subsidized by wireless operators. Verizon Wireless offers a buy-one-get-one free program for BlackBerry devices [5]. This price competitiveness is another strength allowing RIM to “think globally and act locally.”
So, how should RIM expand within this competitive landscape? Its current strategic course does not need to be markedly changed; rather they should gradually move towards expanded market identification and acquisition. Perhaps most important, the strategic choices that RIM makes must keep intact the company’s core heritage as it relates to enterprise consumers and partnership development [6].
RIM has demonstrated success in building its customer base through international expansion. For future expansion, however, we believe RIM should focus on countries with low bandwidth availability, areas where their offerings and judicious use of bandwidth would align with local needs while still serving the global customer.
Competitive Advantages Strengthen International Market Expansion
International expansion is one example of a progressive and innovative way for a company to grow using their existing product line portfolios and core assets. In quotation of a 2006 HBR article, RIM can latch on to the ideology that typically, “well-managed companies [will] spread their wings over time and enter many geographic markets” [4].
RIM has well-known brand names and sophisticated technologies, which meet the needs of target consumers and newly identified demand categories in global markets.
As identified in the RIM 2010 Annual report, the company has “an increasing number of significant global carrier partner customers” and has “added over 75 new carrier and distribution channel relationships for a total of approximately 550 carriers and distribution channels in 175 countries” in fiscal 2010 [1]. With an intensified demand for RIM products on an international scale, there are growth opportunities in the basic stream of device sales. For example, the forecasted penetration rates in South America and Europe are likely to equal that of the United States within a few years [7].
RIM’s smartphones have been a solid success in “Indonesia, one of the world’s hottest mobile phone markets with a population of 240 million” [8]. According to Edleman, “RIM has sold 1.2 million BlackBerrys in Indonesia [8], which totals more than the combined number of iPhones and Google Androids” [8] by a large margin. The key success factors in Indonesia stem from two advantages: 1) their first mover strategy and 2) their ability to take advantage of developing nations’ broadband limitations.
RIM has worked to perfect bandwidth efficiency such that bandwidth usage originating from BlackBerry devices is ten times less than that of an iPhone [9]. Therefore, RIM can be successful in areas where there are more congested bandwidth markets and limited internet access, as seen in the case of Indonesia. In contrast, Japan demonstrates a market with much greater bandwidth and internet availability, such that research suggests that RIM is less successful in that market [9]. As a result, we recommend focus be placed on expansion into countries with limited bandwidth, such as China.
In China, the BlackBerry is currently only available through China Mobile, the mobile market leader. China Telecom is expected to also start offering the BlackBerry, but only to corporate customers. This approach should allow RIM to create inroads with reliable markets that exist in China.
[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]