Why RIM can’t ditch consumers and focus on the enterprise
RIM’s momentum has hit the wall. Yet again, yesterday, the company reported disappointing results. And its transition to a new BlackBerry platform called QNX looks increasingly like a Hail Mary attempt.
Some observers wonder why RIM doesn’t stop trying to sell to consumers — it’s clearly behind Apple and Google in that market — and focus solely on the enterprise.
RIM can’t do that unless it wants to shrink to a tiny fraction of its current size. The reality is that even though RIM’s heritage is enterprise, the majority of RIM’s business is driven by consumer purchases.
- In the U.S., comScore estimates there are about 17.8 million BlackBerry subscribers. Of those, just 2.8 million — or 16% — are considered enterprise subscribers. That is: Phones paid for directly by employer, fully reimbursed, or partially reimbursed. Important caveat: comScore only measures primary devices, and a lot of BlackBerry phones — particularly those handed out at work — are probably considered secondary devices.
- That’s higher than smartphones overall — about 10% are considered enterprise. But it’s still a small percentage of RIM’s U.S. subscriber base, as measured by comScore.
- And it’s shrinking: According to comScore data, enterprise BlackBerry subscribers peaked around last October, with around 4.4 million U.S. subscribers, or about 20% of RIM’s overall U.S. subscriber base at the time.
Now, the trend is toward more employee-purchased devices in the enterprise, and many “consumer” BlackBerry sales are probably largely driven by what system their employer supports. (And, again, this survey data reflects only primary devices, and is only from one source, in one country.) Both of these factors likely push the percentage of RIM’s enterprise-minded subscribers higher. But I don’t think it’s enough to bring that 15% closer to 85%.
What about globally? RIM used to disclose the actual sales proportions on its earnings calls, but it stopped a while ago. The most recent mention I can find via Seeking Alpha transcripts is from December 2009, when RIM said that “over 80% of net new subscriber account additions came from non-enterprise customers again in Q3.” Six months prior, RIM had disclosed that “these customers now represent over half of the total BlackBerry subscriber account base.”
More recently, in March 2010, RIM said “The tremendous success of attracting entry level smart phone customers to BlackBerry is an important strategic development program and the percentage of non-enterprise subscribers in our account base continues to grow at a rapid pace.”
But RIM has since stopped disclosing the actual percentage of its subscriber base and new subscribers that it considers non-enterprise. (Along with a bunch of other stats it stopped disclosing on a quarterly basis, including BlackBerry subscriber count and average smartphone sales price.) Last night, I requested the latest stats from a RIM representative, but haven’t heard back.
Anyway, bottom line: While RIM’s heritage is in enterprise, its growth is largely from consumers, and well more than half of its subscribers are likely non-enterprise. Focusing entirely on enterprise is a non-starter, not only because of how much revenue RIM stands to lose — and how much of its size it would have to shed — but also because of the trend toward consumer-owned phones being used for work email.
The smartphone is a consumer device first, now, and an enterprise device second, and RIM has exploited that for significant growth. The trouble is that RIM has slipped behind Apple and Google in the consumer’s mind. And as RIM’s price advantages start to slip away, and app story continues to erode, it’s now at risk of collapsing.