The best way to describe RIM’s year so far? Very good, but a bit rocky. One the one hand, the company has much to reason to celebrate. It recently shipped the fifty-millionth BlackBerry, and sales hit a record of 7.8 million devices in the fourth quarter, beating estimates. RIM’s market share also continues to climb, jumping from 10.9 percent to 19.5 percent in the fourth quarter worldwide, according to Gartner (Apple is at 10.7 percent). And devices like the BlackBerry Bold and Curve 8900 have been very well received. On the other hand, the much-hyped BlackBerry Storm has been criticized by many—including us. And at least at this early stage, the reaction to BlackBerry App World has been lukewarm compared with the iPhone’s App Store, both in terms of the sheer number of apps and how easy it is to purchase premium content. With an even better iPhone and the Palm Pre on the horizon, can RIM keep its momentum? We sat down with RIM co-CEO Mike Lazaridis to discuss these subjects and more. Among the highlights:
RIM recently announced that the company had shipped its 50-millionth device since 1999. Meanwhile, Apple has shipped 30 million iPhone and iPod touch devices in two years. Are you concerned that it has taken you this long to reach that milestone? The fact is that nearly half of our devices were shipped in the last year! We continue to grow and the number of devices we’re selling is increasing. At the same time, the number of phones doesn’t matter right now, because we’re still at the beginning of the transition from feature phones to smart phones. We’re kind of riding a wave that’s well below the surface. Why do you think you’ve been able to surpass analysts’ expectations? What have been some of the key ingredients for RIM maintaining its growth? When the economy is challenged, people flee to trusted brands. BlackBerry is certainly a trustworthy brand. That’s the key in this market. The Storm is the biggest departure yet for RIM in terms of traditional design, and depending on who you talk to, some people love it and others hate it. What has been your take on consumers’ mixed reaction to that device? I think what the story between all these devices continues to be that there’s no one-size-fits-all BlackBerry and that offering choice is good. I think that it’s a very healthy reaction if there’s a tension between which products customers like more. If you just put everything in one device it becomes big or expensive or complicated. And so you really need to optimize what you’ve identified as the segments you’d really want to go after, whether it’s the Bold, the Storm, the Pearl or Curve. Co-CEO Jim Balsillie was criticized when he said that there was a “new reality” to making smart phones when it came to scrambling to get the Storm to market. Many interpreted his comments as an excuse for RIM for releasing a buggy or unfinished product. Do you disagree with that interpretation? I think there’s some truth to the fact that these devices are becoming much more complicated, and of course we do a lot of testing every time before releasing these devices. And I think that it’s unfair. That’s our first touch product, and you know nobody gets it perfect out the door. You know other companies were having problems with their first releases. How has RIM responded to user complaints since the Storm’s launch? We didn’t stop and we’ve never stopped. We just keep making our products better and better and better. We’ve got really passionate engineers here, and developers, and you know they want to win. They want to make the best products. They really want to make their customers happy with them. They want them to be delighted. Were you stung a bit when you read some of the negative reviews? Quite frankly we are very open with our design teams. I hold vision meetings here where I go through reviews. I want to get everyone centered on the current reality out there. And we don’t hold anything back, we really don’t. In fact, we love to put more bad reviews on the screen than good reviews just to make the point. Because I want people to make the products better and this is all part of our continuous improvement program here. Apple is making a lot of noise around push notifications for its iPhone 3.0 software. How does what they’ve shown off compare to the BlackBerry experience? I think for years I’ve kind of been shouting in the wilderness. You can’t do push in a sloppy way. It has to be optimized for wireless, and that takes a great deal of investment and a great deal of evolution. You know that’s one of our core strengths, and you know there’s a lot of value in the BlackBerry push technology that we’ve got running. It works across any device, anywhere in the world, any technology and between devices. Now that’s quite an accomplishment. That was deliberately engineered and innovated over the last fifteen years. What about multitasking? Does it take too much of a toll on battery life as Apple claims? If you don’t do it right. If you don’t make the right trade-offs, you have what we call a catastrophic effect on battery life. Unlike voice, data usage is growing exponentially. There just never seems to be enough bandwidth for Internet-based applications. So all the optimizations and conservation techniques we have developed for the BlackBerry system over the years are now paying huge dividends to our subscribers and carrier partners. The fact is that the BlackBerry was designed to multitask from day one. I think our operating system has constantly been underestimated. So how is your architecture better? We offer a full push, multitasking operating system, where all the applications that actually have a wireless push registration with the OS are continuously updated. And when a push certification comes in, that push certification is authenticated and given to the app. That’s a big deal, and we’ve had that for a decade. We not only do multitasking but we do full-push-based-in-the-background wireless multitasking. Whether it’s a social networking app, a music app that’s getting updates, or a Ticketmaster app that’s sitting in the background, it’s not even on and yet you know you’ll see the little star come on that’s saying there’s viewer information. They’re not wasting battery or network time trying to figure out that there’s something for them. That is a significantly more efficient way of doing wireless push technology than fast polls, which is what most other technologies use. How do you think RIM stacks up to the competition when it comes to your Web browser? I look at it this way. I say that our browser technology was developed with very different requirements. By writing our browser in Java, that provides our CIOs and wireless managers the assurances they need, to allow the browser to access internal information at the same time it accesses external information. So the overriding design criteria for our browser has been to not compromise on that experience in the enterprise phase. That being said, we have come a long way in offering a full Web browsing experience, now that we have larger, high-resolution screens, faster processors and faster download speeds. We’ve always been very careful and very sensitive to network bandwidth, battery life, screen size, screen real estate, and how we display Web content. There’s no reason why our technology can’t keep getting better and better. What kind of response have you received thus far from users of BlackBerry App World? It’s been wildly positive. Yesterday I was having dinner with my parents and my dad downloaded a golf game right there at the dinner table! When it has that kind of an impact to that generation, you know that it’s a success in anyone’s book. Why did you make the decision to make $2.99 the starting price for premium apps as opposed to 99 cents? Well, we have a lot of respect for our developer partners and their skills and their talents, and so we’ve worked very closely with them, the carriers, and others. We came to the conclusion that we really needed to give more power to them. We needed to give them much more flexibility and freedom as to how they price their applications, and they just didn’t feel they were making money at anything less than that. Today you need to sign up for a PayPal account in order to purchase premium applications, which must be done on the PC. Are you looking to make it possible to sign up for PayPal directly from your BlackBerry? And what about engaging the carriers for direct billing? The easiest answer and the correct answer right now would be all of the above. That being said, we’re putting most of our attention to working with our carrier partners. What do you think about Acer, Dell, and other PC giants making a serious smart phone push this year or next? And do you see that trend as a threat because these companies will be a one-stop shop for PCs and smart phones? Well, I can tell you if you’re getting into this for the first time, it’s a fairly expensive undertaking, and it’s a very, very ambitious undertaking. They’re going to have a lot of challenges getting into the market. We’ve got well over a decade of experience in this space. You have to sit down and ask yourself what strengths a new player is bringing to the table. There’s lots of Windows mobile devices in the market already.