Tablets and smartphones have shaken up the computing world. Their impact may be most profound for Nokia and Research In Motion (RIM), two pioneers in wireless communications that are now scrambling to adjust to relative newcomers such as Apple and Google.
Both companies are struggling against the success of smartphone and tablet rivals that include Google’s Android and Apple’s iPhone and iPad. Both Nokia and RIM were clearly powerhouses in mobile phones a decade ago, “seemingly bulletproof,” said Jeff Kagan, an independent technology analyst.
“Success or failure [in the wireless industry] is all about hitting the right marketing, public relations and advertising cord…,” Kagan said. “Nokia and RIM are struggling with that very issue.”
Ramon Llamas, an analyst at IDC, said that while RIM and Nokia are the “old persons on the block, they are facing an evolution in the market that means their means and methods really need to change drastically.” Just as RIM faces the need to upgrade successfully to a QNX operating system (OS) for its smartphones, Nokia must adjust as it replaces Symbian with other OSes, he said.
Two recent reports underscore how Nokia and RIM are trying to adjust, Kagan and Llamas said.
In the first report, Nokia is reportedly building a new OS codenamed “Meltimi” to be used in low-cost smartphones priced at less than $100 without subsidies. Several analysts said Meltimi is a sign that Nokia is moving away from plans to build a high-end OS for high-priced smartphones. And they said Nokia’s incipient relationship with Windows Phone will do little to deliver phones to the lower-priced smartphone market that is growing fast in emerging markets.
Nokia could lead in the lower-priced segment, said Kagan, “if they don’t blow it … They should focus on what they do best: making plain cell phones and lower-end smartphones.”
Llamas said Meltimi appears to be Nokia’s replacement for Series 40 used in its low-cost phones. “Series 40 was not great when it first came out, and users noticed,” Llamas said. “These users may be poor, but they are not dumb.”
In a different report, this one regarding RIM, one analyst at Collins Stewart claimed that production of the company’s PlayBook tablet had stopped—a claim that RIM immediately called “pure fiction.” Officials went on to say that RIM remains committed to the tablet market and to using the QNX OS in future products.
The company is scheduled to show developers an update to the PlayBook later this month that includes a native email client, a feature many said was sorely lacking.
Despite RIM’s denials about abandoning the PlayBook, other analysts said the Collins Stewart report made sense, given the fact that RIM sold just 200,000 PlayBooks in its second quarter, well below first-quarter sales of 500,000.
QNX powers the PlayBook, but it won’t appear in new RIM smartphones until 2012, which may be too late to help the company, analysts said. RIM has fallen to third place in U.S. market share behind Android smartphones and Apple’s iPhone. It now holds 11% of the market, according to IDC, having reached nearly 50% just five years ago.
Kagan said RIM’s development of the PlayBook was partly a reaction to the decline in its smartphone market share. “They said, ‘Keep your eye on our new entry in the tablet marketplace with the PlayBook,’ [and] we all watched and hoped,” Kagan said.
If RIM really did exit the tablet market a few months after PlayBook’s April launch, “that would be an incredible stunner,” Kagan added.
He faulted RIM for losing key senior executives over the last year, including Chief Marketing Officer Keith Pardy in February. His departure came only a month after RIM executives told analysts, during a Boston session showing off a trial version of the PlayBook, that there was a thorny question of whether the Playbook was suited for RIM’s traditional business users or for a growing consumer market.
Bridging the consumer and business markets with PlayBook was “the marketing challenge,” said Ryan Bidan, RIM’s senior product manager for the PlayBook at the time.
Kagan agreed that RIM has indeed faced marketing challenges and has also been dinged for a poor browser in its smartphones and for other technology problems.
He said RIM should “refocus on their core customer group, the business community,” while also updating the browser and beefing up the BlackBerry application store. “They have to refresh their brand in the fast-moving marketplace before they are lost forever,” he said. “RIM is currently running in so many different directions that they have no focus.”
Llamas said RIM needs to “get QNX right” with smartphones in 2012, after having a rocky 2011. “RIM completely missed a smartphone cycle by not releasing a smartphone for the first half of the year,” he noted.
Kagan said Nokia’s move to lower-cost smartphones puts them in a better position to succeed than RIM. “If RIM cannot update their technology and bring their smartphone technology up to speed, I am afraid to say they may indeed be in serious trouble.”
Llamas said both RIM and Nokia need to make big changes. “This is the reality of things,” he said. “You have to shift your entire paradigm. It’s going to be big and it’s going to hurt and take time and resources. Paradigm shifts are not without growing pains.”
This story, "Nokia and RIM, pioneers in wireless, seem to be on the ropes" was originally published by Computerworld.