RIM Beware: Consumer Segment is Appealing but Risky

Implications: RIM aims to leverage its enterprise and pro-sumer Blackberry success into the consumer market.  The transition will not be easy and comes with risk.

Analysis: In the beginning Research in Motion (RIM) came up with a superior mobile email solution and took the enterprise world by storm.  RIM conquered the financial, legal and government sectors with its end-to-end mobile email offering.  Building on its success, RIM began to incorporate voice and mobile Web into its products and dove into the smartphone market.  Now the company has decided to expand beyond its enterprise and pro-sumer base and into the consumer market with its unique rules of engagement.

To transition into the consumer market RIM has to act like a true global mobile phone company and offer a wide variety of products to fickle and demanding mobile consumers.  Blackberry products will increasingly be judged on form factor, software, services and “coolness” as much or more than the effectiveness of the email solution.

The move is under way…RIM has developed form factors beyond the traditional QWERTY brick, including the Pearl and Pearl Flip, and there are other rumored device designs in the works.  On the software and services front, RIM has begun the process of creating a multimedia offering by inking deals with the likes of Facebook, MySpace, Yahoo!, MSN, AOL,  and TiVo.

Entering the consumer space brings with it the potential to significantly grow RIM’s customer ranks (from roughly 16 million Blackberry users today) but is not without risk.  RIM is now in the trendy and often-changing mobile handset business and can look forward to added competition from the likes of Nokia, Samsung, LG, SonyEricsson Apple and HTC over the consumer segment as well as the mobile pro-sumer market.  It also means that RIM has to spend time and effort partnering with the right software, hardware and media companies to cater to ever-evolving customer needs.

To be successful in its new phase, RIM must view itself as a consumer-driven mobility company and adapt to changing customer desires (better than Motorola has, for example).  RIM must execute this without alienating its core enterprise and pro-sumer customer bases that still drive its earnings, while continuing to defend its turf against competition from Microsoft and others who would love to dis-intermediate RIM in the enterprise world.