For this edition of the N4BB Audio Show we were honored to interview Research In Motion’s U.S. Managing Director, Richard Piasentin. In what could quite possibly be one of our best interviews, Richard discusses the crucial implementation of BlackBerry 10. He even tells us why RIM chose to first release an all-touch BlackBerry 10 device. Check out the interview via the podcast audio or from the transcription below to see how RIM is “bringing the revolution”.
1.) How will RIM regain momentum of BlackBerry sales with carriers?
Clearly we look forward to expanding our business in the US with BB10. We have, as you’ve heard from Thorsten Heins, laser focus. BB10 represents, for us, not just a refresh, but a technology transition that will be BlackBerry for the next 10 years. The level of excitement and focus inside BlackBerry is unprecedented, particularly under Thorsten’s leadership. I like to tell people that Thorsten has the heart of an innovator and the mind of a German businessman, which is exactly what this company needs to execute on our transition.
In the context of our carrier partners, it is clear that they want us to win. Our carrier partners have built their smartphone business, if you go back in time a bit, as partners of ours in the smartphone space. They are very interested in a rich ecosystem of operating systems and particular ecosystem that doesn’t have a “over the top element.” BlackBerry has always been a partner to our carriers in delivering services to their end clients and allowing the carriers to have control and capability to be apart of the value proposition services to the client. All that means to them is that a vibrant BlackBerry community is important in their business. So, they’re working very closely with us to release BB10 and are very enthusiastic about it. Really, the task is on our shoulders to execute.
2.) What will be the hardest part about targeting the US market?
The hardest part is, well, there is a tremendous amount of work to do. None of it is easy. I will say from my perspective of what is absolutely crucial is that we nail the marketing campaigns associated with this product into the market. The first thing we must do is launch the highest quality, best performing product we’ve ever launched as a company. If I forget to mention it later, let me address it head on. None of the executives or employees are happy that we had to move the launches into the first part of 2013, but we’ve made that decision in the context of the realization that when we launch BB10 it has to be the highest quality smartphone experience they’ve ever had. From our perspective getting the quality product in their hands right the first time is job number one.
I explained to another interviewer that if you imagine stepping forward in time two years from now, if you look back from the successful launch of the quality BB10 product, that first substantiation of our new mobile computing OS, when we look back, how we tried to meet the holiday period of 2012 will be irrelevant. What will be relevant is whether or not we launched a quality product.
Leaving that piece apart, the other side is to nail the marketing campaigns and channel enablement at launch. What you will see from BlackBerry is a completely different approach to the marketing of our product. We are introducing people to a new mobile computing platform that also happens to run on a really great class. You will see us involve the marketplace in ways you’ve never seen before the launch. This will be executed by Frank Boulben, our new Chief Marketing Officer. His mandate to execute this program extremely impresses me with his knowledge of the nuances of the US market, consumer intent behavior, alternative vehicles to use to generate positive news and understanding the value proposition of the product and integrate that into our marketing plans. You will see something completely different from us. It’s not something easy to do, but we’re well underway to doing it.
3.) What is RIM doing to penetrate the ‘Bring Your Own Device’ market?
That is a fantastic question. You guys are absolutely dominant in QWERTY keyboard devices. When you look at the US market, keyboard bearing devices compose somewhere between 13 to 14 percent of the overall smartphone market, which we are completely dominant in. We build the best keyboards in the market, in my opinion of course. But if you’ve used the Bold 9900 or any Bold product, you will probably agree with me. So, many people ask why are we making the first product an all-touch device. There are a couple reasons why we are doing that, but first and foremost in conjunction with a lot of discussions with our CIO partners, we’ve recognized that in order to be completely relevant and expand our unfair share of the space, which despite of all the negative rhetoric in the press we do maintain presence in 90% of the Fortune 1000 companies, and they are upgrading at a significant rate to our BlackBerry 7 portfolio, but the key element to reinforce our position in the enterprise market is that we create a consumer attractive device that folks bring into the corporate environment in that BYOD case.
Clearly, the vast majority of BYOD devices are touchscreen devices. That’s why we took the decision to execute on an all-touch device first. Also, from an overall BB10 development perspective, the hardest development path is to execute a touchscreen device. It is a relatively minor software effort to go from touchscreen device to releasing the subsequent QWERTY keyboard device. To answer the question explicitly, we are over rotating on executing a consumer value proposition with an all-touch device first, but at the same time we’re doing that in the context of an enterprise manageability model that our CIO partners have come to appreciate from BlackBerry. For them, if we execute it correctly and we get the expected consumer drive that we are expecting, what it looks like to CIOs is that they’ll be very happy, as BB10 is a platform that respects security down at an enterprise level. We’re also working to ensure that BlackBerrys today are BYOD elegible. We’re working with CIO partners to ensure that they are.
4.) Will BB10 be more focused to consumers or corporate sector? Or, both?
Both. We clearly understand where our high-ground is and we are aggressively defending it.
5.) How does the US market differ from others?
There are many characteristics in the US market. First of all, consumer intent and consumer purchasing patterns change very rapidly in the US market. That’s a double-edge sword, as it means your marketshare can drop off very quickly, but if you can capture the imagination of the American consumer your marketshare can increase very rapidly. US consumers are a technology savvy market. Consumers utilize a lot of different tools as part of their buying proposition. The research they use is really interesting. Frank Boulben, the CMO, has brought in a lot of analytics around their buying criteria and process for us to review. The US market is the most fundamentally different market and also the most fiercely competitive in the world. The final dimension, which might not be a characteristic of the US market itself, but the way the rest of the world looks at the US market. The US market represents roughly the overall 20 percent of smartphone shipments, but it represents 80 to 90 percent of the tech and press voice of the world. For BlackBerry, in the last 16 months has not been a strength for us. Our performance in the US market has not matched the rest of the world. We’ve expanded our userbase up to 78 million in the last quarter, we’ve maintained number one smartphone share in places around the world, we have fantastic brand recognition in major European and Asian markets. It is literally in the North American market where we have issues. Another reason we have such an excitement for BB10 is despite being successful without it, when we bring it, it will have a resonance with the rest of our success around the world. I think it really will represent a turning point for the company.
6.) Will RIM appease carrier demands to reduce BIS fees?
It would be highly inappropriate to comment on the business conversations I’ve been having with our carrier partners. However, the way I will answer this question is to say that BlackBerrys have always delivered a unique value to our carriers as a consequence of our network architecture. We had cloud before anyone knew what cloud was. The BlackBerry service itself is a differentiation. Our relationships with our carriers are around the fair exchange of that core value and we continue to do that.
Additional comments from Richard:
There has been a lot of misquoting from the traditional press. We ask that you paint a different story of the truth behind what relates directly to the people at RIM. We do have a fighting spirit here at RIM. This is an innovation-based culture that knows that the decisions we took two years ago to make the acquisitions and tough choices around executing this technology transition are now coming to bear. RIM folks are excited and optimistic about BB10 and the products we’re bringing to the market.
When we as executives talk about the optimism and fighting spirit of our employee base, that’s what we’re talking about. We’re not blind to the fact that the tough decisions we’ve had to take in order to reinforce our very solid foundation: we have $2 Billion cash, 78 million customers, we’re present on 650 carriers, 56 million BBM users, etc., we’ve had to take very, very difficult decisions to reinforce that solid foundation. Driving $1 Billion in operating expense out of our business allows us to compete aggressively in the long-term. To be clear, we understand the impacts of those decisions to the employee base. Counter balance by the sense of enthusiasm and optimism with what we’re bringing to the market in the context of BB10. We care deeply about our people here. These are tough decisions we’ve had to make and we’re taking them in the best and most respectful way that we can.
I will love to continue to discuss this with you as this transformation unfolds as we bring a new OS that’s fashioned as something different. I think the traditional grid such as iOS 6 or Jellybean or whatever variant may run on an Android device, these are just evolutionary steps. We’re bringing out a revolution that’s going to do things and empower people and connect things and people around them in ways they’ve never thought of before. It is really exciting.