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RIM CEO mulls hardware arm sale, BlackBerry 10 licensing
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Jan 21, 2013, 08:41 AM
 
Research In Motion is considering selling its hardware production arm after the launch of BlackBerry 10, as one of a number of potential actions. RIM CEO Thorsten Heins said that a strategic review could lead towards the sale, or potentially offering licenses for its software to other manufacturers, opening the door to non-RIM BlackBerry devices in the future.

In an interview with Die Welt, Heins confirmed the company was mulling over various courses of action it could take. When asked about licensing its software in a similar manner to how Microsoft licenses out its Windows Phone OS, Heins said that such a thing could only take place after their own products are released. "Before you license the software, you must show that the platform has a large potential," said Heins, who also claimed the delay for BlackBerry 10 was due to the company building a platform "that is future-proof for the next ten years." He also suggested that BlackBerry 10 could be used in devices other than smartphones, such as in cars and other vehicular systems. The perception that BlackBerry was a tool for business was also attacked by Heins, referring to large consumer markets in Indonesia, South Africa, and the UK. While BlackBerry 10 will be launching globally, Heins will be looking at the less developed mobile markets for growth, as opposed to the US and Europe, which the company hopes will more than recoup the 1 million users that left the BlackBerry platform between the second and third quarters, leaving it currently at 79 million. RIM's most recent financial results saw revenues fall 5 percent to $2.7 billion, and an adjusted net loss of $114 million. The launch of BlackBerry 10 will see the company increase its marketing spending, and expects to still have an operating loss by the time the fourth quarter results are released.
     
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Jan 21, 2013, 12:19 PM
 
There is a long and sordid history of hardware vendors deciding to go "software only" and to license their OS. One of the big failings of Palm was the division of the company back in 2000 into the hardware vendor PalmOne and the OS licenser PalmSource. The division of hardware and software made it impossible to update PalmOS into a more modern operating system. By 2005 Palm was stuck using Windows CE on their devices. They never recovered.

One of Apple's biggest mistakes was licensing their OS, System 7.5 to various clone partners. These partners started producing systems that undercut the price of Apple's own offerings driving Apple's share of the PC market even lower than before.

Apple's strength relies on the fact that it can tightly integrate hardware and software producing a whole system that operates quickly and smoothly. Even Microsoft is moving into that direction.

The question RIM has to ask is who would be interested in licensing BB10? People don't buy iPhones because they come with iOS. They don't buy the Samsung Galaxy because it is Android. They buy a piece of hardware that works well and is part of an environment that allows them to do what they need.

BB10 without hardware is just another OS which must compete against Android. Android has a bigger marketshare and has a smaller licensing fee (some manufacturers pay Microsoft for MS patents that Microsoft claims is in Android. Ironically, making Android licensing fees a bigger income source than Windows Phone).

What would make me pick BB10 over Android? Yes, I know RIM claims that BB10 has a faster web browser, but this is no longer the 1990s when browsers could take 30 or more seconds to load a page. A browser taking 5 seconds vs 20 seconds to load a page was big news back in the early 2000s, but one taking 1.4 seconds vs. 1.8 seconds today isn't going to get people to care. BB10 has to offer something more.

It's hardware that will sell phones, and no one else will sit there and make hardware for a manufacturer that is starting out a distant 3rd, but has been losing marketshare for years. The best RIM can offer right now is that they will be able to duke it out with Microsoft much like Cadillac and Lincoln duked it out in the 1990s while BMW, Mercedes, and Audi took over the American auto luxury market.

If RIM has wants chance for survival, they'll have to combine BB10 with hardware, and business features that will make companies still want to standardize their mobile devices with RIM. Unfortunately for RIM, they are quickly losing their corporate market to iOS and Android devices.
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