“The iPod touch Effect”, or Why RIM Could Have Been a Contender… but Isn’t


Yesterday a post on Cult of Mac related some bad news for the Canadian-based RIM. They noted, “Realizing its failure, the handset maker is ready to surrender to Apple in the consumer ring, and focus on its business roots… an arena which iPhone is also increasingly dominating.” Their comment was, in part, based on a report from Wunderlich Securities analyst Matthew Robison who reported, “We no longer anticipate Research in Motion recovering to participate in the mainstream of smartphone industry growth,” As a result Robison cut RIM’s target price from $76 to $46.

I expect they are correct in their assessment of RIM’s dire circumstances, but I don’t need numbers and metrics to make such a call. No, all I need to do it look at my students.

Just two or three years ago the vast majority of my high school students had BlackBerry’s. They loved them for email, IM and texting. When I asked why they chose a BlackBerry over an iPhone, the usual response was something as simple (and unhelpful) as “Oh, I love my BlackBerry and will never give it up!”

Fast forward to this past year.

In class after class I saw fewer BlackBerries than ever in the hands of my teens. In their place… a growing number of iPhones and Android handsets. And while this is by no means a scientific study, right there is BlackBerry’s problem. If younger and younger people continue to turn to either iOS or Android handsets, then RIM has little hope of ever winning them over.

I suspect this is, in part, the result of the “iPod touch effect”. Take, for example, my niece and nephew. They each have an iPod touch and they share an iPad. They love them and use them all the time. When their parents finally cave and let them get cellphones, which platform do you think they will choose? Of course they will get iPhones and I, quite happily, will help accessorize them.

It makes perfect sense. Once anyone makes an investment in apps on any particular platform, there is a clear disincentive for them to switch to another. On that count RIM is completely out of the game, since BlackBerry’s aren’t really considered gaming and media devices. We have yet to see a serious Android-based touch competitor, although Samsung has released one based on the Galaxy smartphone. If Google were truly thinking in a strategic way, they would get an Android version of the touch on the market as soon as possible — and for as little as possible. Undercut Apple now, and Google could reap the benefits later. That is not, however, the current landscape. No, currently a huge number of kids have an iPod touch, and the ground is set for them to choose Apple when it comes time for a cellphone. Google might be able to get in the game but RIM? Poor RIM won’t even be a contender.

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