The US analyst community has been holding a wake for RIM in the last few days. Henry Blodget has been beating the drum for some time, and now he’s been joined by Colin Gillis of BCG, Adnaan Ahmad of Berenberg, and Pierre Ferragu of Bernstein. It’s a pile-on that has driven the stock price down from the upper fifties to the mid forties in the last month.
And yeah, RIM’s stock price is going to suffer in the short term, not just because of these analyst reports, but because their existing software technology is long-in-the-tooth, to put it politely. With each new Blackberry hitting the market, it’s becoming more and more painfully obvious. Blackberry OS is a relic, and needs to be replaced. Developers see this, and are flocking in droves to modern platforms built on OS offerings delivered by Apple and Google.
I wouldn’t count them out, though.
RIM’s secret weapon is the man I nearly bumped into last week at the Future Shop in North Waterloo, Dan Dodge. Dan was on his way out, deeply focused on the Blackberry in his hand, and I was in a hurry so I didn’t stop to chat. In April Dan Dodge sold his company QNX Software Systems to RIM, after a stint as a division of Harman Kardon. For those of you who don’t know QNX, it’s the bullet proof real time OS that runs high speed trains in Europe, manufacturing systems the world over, and esoteric systems like the space arm on the shuttle. It’s a mission critical OS the likes of which Apple, Google, or Microsoft have never been able to produce. And soon, my bet is that it will run on your telephone. QNX is the answer to solving RIM’s OS problem.
The biggest potential problem RIM could face, if QNX is the new Blackberry OS, is re-recruiting the software developers who have been faithfully supporting them all these years – corporate IT departments, and application vendors who potentially could be forced to port all of their code to the new OS. But even that’s surmountable. After all, Blackberry applications are Java applications, and one ought to be able to simply run the Blackberry JVM as a virtual machine on QNX.
Gillis, Ahmad, Ferragu and Blodget are focused on short term results, which is the reason they’re downgrading RIM stock. There’s no doubt that RIM is going to suffer in the near future. If they can weather this storm, however, and respond quickly to the threats posed by Apple and Google, then they have a bright future ahead.
[UPDATE: Some confusion has been expressed over the second last paragraph. The reason it’s important to allow the Blackberry JVM to run on a future QNX based Blackberry OS is to preserve backward compatibility. RIM, however, would need to deliver a new experience on the handset and encourage new developers to focus on the next generation OS, not the compatibility layer. Over time, that layer could be phased out. This is the same strategy that Microsoft has used to move developers from legacy Windows implementations to the NT code base, and that Apple used to move legacy OS developers to OS X]
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