RIM's secret weapon? 80M 'very loyal' customers

In an interview with CNET, Research In Motion CEO Thorsten Heins confirms that two BlackBerry 10 phones are in the works, explains why a delayed first-quarter launch is actually a good thing, and talks up the BlackBerry fan base.

RIM CEO Thorsten Heins at the company's BlackBerry World event in May. Brian Bennett/CNET

It's funny how a company with nearly 80 million subscribers can be considered to be in a death spiral.

But that's exactly where Research In Motion finds itself. On the heels of a disappointing quarterly loss, a warning of further losses ahead, and the delay of its next-generation BlackBerry 10 platform, many are questioning the company's ability to continue to operate. Shareholders voiced their displeasure with the company yesterday even as executives pleaded for patience.

RIM CEO Thorsten Heins, however, believes people are underestimating the company's odds for a revival. His key argument: that base of tens of millions of BlackBerry customers, many of whom pay a monthly fee for services, security, and access to a global data network provided by RIM. The services play is what sets the company apart from the typical handset vendor, he argued.

"Other handset vendors don't have a services play, and we're in a different situation," Heins said in an interview with CNET. "I'm not starting at zero."

Heins wasn't the delusional executive he's been made out to be over the past week, following a Canadian Broadcasting Corp. radio interview in which he denied anything was wrong with the company. As he has been in past public forms, Heins was more direct than former RIM co-CEOs Mike Lazaridis and Jim Balsillie. He was quick to admit that the company has significant challenges, and he acknowledged that its share in the U.S. market was eroding.

But he was unwavering in his confidence that RIM was addressing those issues and had brought in the necessary assets to spark the company's resurgence, from a new executive team to an even tighter focus on the development of BlackBerry 10 (staffers are working weekends and holidays to get the software ready). With the company essentially going dark for the rest of the year with no major product launches, everything rests on the new platform.

"I'm confident we have something special and exciting that lives on its merit," Heins said.

Delayed launch a good thing?
The doom-and-gloom talk reached a fevered pitch when RIM opted to push back the launch of its first BlackBerry 10 phone. The company already took a lot of flak when Lazaridis and Balsillie pushed the launch back to the second half of the year, citing a necessary LTE part that wasn't immediately available. Heins said there were complications with the coding and adding BlackBerry services to the new platform, requiring more time.

The new schedule won't hurt RIM, said Heins, who made the case that the company could actually benefit from a first-quarter launch.

How does a product delay help RIM? BlackBerry 10 could receive a more focused promotional push in the first quarter as one of the few products out there, Heins said. While the fourth quarter represents a crucial holiday selling season, it's also a crowded time with many flagship phones competing for attention. Many of the promotions and activity often veer to the prepaid side, Heins said, and he preferred a more concentrated push for the high end.

"Carriers really do strong launches in the first quarter," he said.

In addition, Heins said RIM bought a lot of goodwill with the carriers by being forthright about the product delay and not stringing them along. He said the carriers want a viable third platform and he believes BlackBerry can be that No. 3 player. He also knows the spot won't just be given to RIM.

"We have to prove we're competitive and offer a great value," Heins said.

Such a delay, however, could prove risky as iOS and Android continue to extend their leads and RIM fades further in the minds of consumers.

"We continue to be concerned about device demand ahead of the BB10 launch," Standard and Poor's equity analyst James Moorman said.

Keyboard makes a return
Heins also confirmed to CNET that RIM would follow up its initial touch-screen BlackBerry with a keyboard version to ensure the company wins over its base.

"Our customer base is very loyal," Heins said.

The keyboard is a marquee feature for BlackBerry, making it easier to fire off an e-mail or long message to a colleague or friends. While BlackBerry World focused on the BlackBerry 10's virtual keyboard, Heins isn't abandoning the CrackBerry faithful by dropping the physical keyboard.

Heins had previously said the growth in mobile devices with keyboards had flattened out, and the company needed to take advantage of the growth in full touch-screen phones.

RIM will be without a major product launch for the rest of the year, relying on smaller launches like this week's announcement of an entry-level Verizon Wireless BlackBerry Curve, but the company will work hard to convince consumers and developers that BlackBerry 10 is worth taking a chance on.

Globally, the company is still showing healthy growth, particularly in emerging markets where entry-level BlackBerrys remain popular. Heins said there remains an opportunity to upgrade customers to the latest BlackBerry 7 devices, which he believes are competitive with what's out in the market.

The company plans to take steps to educate the customer on BlackBerry 10, he said. RIM will talk about the product and its benefits, specifically addressing BlackBerry users about what the new platform can still do and what it will be able to do down the line. Heins, however, declined to be too specific about the company's marketing plans for the next few months.

RIM also needs to have a more integrated marketing message, Heins said, which is why he hired Frank Boulben as chief marketing officer. He said Boulben was honest and direct in criticizing the fragmented branding from which the company currently suffers.

Calls Windows Phone strategy "confusing"
Microsoft's Windows Phone operating system is another platform angling to be the strong No. 3 player. But Heins believes Microsoft is overwhelming its customer base with the different versions of Windows Phone, including Windows Phone 7 and 7.5, which aren't compatible with Windows Phone 8. Windows Phone 8, meanwhile, is more tightly integrated with the upcoming Windows 8 desktop and tablet operating system.

"It's confusing at the moment," Heins said. "But that's the way they communicate."

RIM and Heins should be rooting for Windows Phone to fail. AT&T and T-Mobile were banking on Windows Phone to be its No. 3 operating system behind Android and iOS through phones made by Nokia, but they have seen only modest success. Some believe the other carriers will give it an even bigger push once Windows Phone 8 comes out.

Heins didn't bite when asked about how Windows Phone would fare, but he noted that he takes every competitor seriously.

"Microsoft has a lot of experience in software," he said.

Heins also dismissed the notion of moving to Android, saying RIM couldn't succeed with a me-too product in which it only competes on hardware. He has a point with Android, as many of the vendor partners are now struggling, aside from smartphone leader Samsung Electronics.

"We need to be differentiated," he said. "There are a lot of me-too products out there."

 

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