Research In Motion has nearly finished developing its BlackBerry 10 operating system. New smartphones from the Canadian manufacturer are expected to be released at the beginning of 2013, but they may not be the only Blackberry 10 devices. According to reports, RIM is open to licensing BlackBerry 10 to other manufacturers. Such an move would have been unthinkable only two years ago, but now it seems to be a real possibility. But would any other manufacturers go along with it?
Sizing up BlackBerry in the Smartphone Ecosystem
To understand what companies might license BlackBerry 10, it is important to understand the dynamics of the smartphone ecosystem. Specifically, where does the operating system that runs your smartphone come from?
Apple designs its iPhone and iPad and the operating system that runs it - iOS - in-house. The devices are assembled at factories in China (you may have heard of Foxconn) and shipped to destinations across the world. Historically, this was the model RIM followed. For all intents and purposes, RIM alone designed the hardware and software and managed the manufacturing of BlackBerry devices.
In-house design and production used to be the standard throughout the cellphone industry. Motorola, Samsung, Nokia and Palm either made or still make their own operating systems. Yet, that approach is no longer the default. Internal production takes a wealth of resources and expertise. If a company aims for the top of the market and its OS falls flat, it can be set back several years and risk its livelihood in the process. This happened to both RIM and Nokia in recent years as they fell behind the market leaders in iOS and Android.
Google and Microsoft do not follow the internal-design-and-build model. Instead, they build the operating system (Android for Google, Windows Mobile CE and, more recently, Windows Phone for Microsoft) and license it to manufacturers that wish to build their own variations. Their approaches are not identical, however. Microsoft charges a fee for a Windows Phone license, while Google provides Android to manufacturers for free (with stipulations if Google services are used).
This strategy explains why Android and Windows Phone devices are available from a variety of manufacturers including LG, Sony and HTC. Microsoft has employed the same strategy in the PC market for decades.
Research In Motion cannot give away BlackBerry 10 in the way that Google does Android. That avenue would essentially lead to the end of the company. It will have to employ the same strategy that Microsoft does with Windows Phone and charge manufacturers per license.
Possible BlackBerry Partners
There is one obvious company RIM could turn to manufacture BlackBerry 10 devices: Samsung.
The South Korean manufacturer is the perfect candidate to build BlackBerry devices. It is the world’s largest smartphone maker and does not seem to discriminate in what it builds. Essentially, Samsung will try just about anything to see if it catches fire. Its primary revenue driver is Android and its Galaxy series smartphones. But Samsung also builds devices for Microsoft’s Windows Phone (though they do not sell particularly well) and builds its own low-end operating system called Bada. Samsung is also linked to Tizen, the bastard child of the OS that was once called MeeGo. The company will likely produce a Tizen device once that platform is ready for the market.
Samsung is such an obvious choice to build BlackBerry devices that, if for some reason it declines, RIM may be in serious trouble. Few other manufacturers are poised to take on new operating systems right now. Samsung and Apple have squeezed the smartphone and tablet market so tightly (between the two, they take up about 90% of mobile hardware revenues) that almost all other manufacturers are just trying to keep their heads above water.
HTC is having a down year despite critical success with its Android-based One series devices. The company does not have its own operating system, and it has made Windows Phone devices in the past. As Samsung’s little sister in the smartphone ecosystem, HTC is the next logical choice, but only if the company can put together the resources for a new product launch.
The same applies to other second- and third-tier device manufacturers. Sony Ericsson has never been able to make a serious dent in the market with Android, and LG is performing much better in the waning feature-phone market than with any of its smartphones or tablets. Chinese manufacturers like ZTE and Huawei might be interested in BlackBerry 10 if the price is right. Both companies have an expanding footprint in international markets that RIM would love to reclaim.
The problem is that all these manufacturers are doing just fine with Android. Android is free and manufacturers can do just about anything they want with it. The design of Windows Phone is inflexible in comparison and it costs manufacturers money to license. If RIM is to follow Microsoft’s Windows Phone plan, it will have trouble convincing these manufacturers to play its game.
In addition, partnering with RIM would constitute an alliance with a competitor. RIM is not like Google and Microsoft, which do not make their own devices (overlooking Google's Nexus and Microsoft's Surface). RIM will build its own BlackBerry 10 smartphones and tablets, devices that will be on store shelves next to any partner's offerings.
Reaching Beyond Smartphone and Tablets
One area of potential growth for BlackBerry 10 is in devices that aren't smartphones and tablets. BlackBerry 10 is built using a system called QNX that the company acquired in April 2010. QNX was a platform that ran many different kinds of computers, such as those found in airplanes and cars. RIM will definitely be looking to non-traditional partners to license BlackBerry 10.
Looking beyond the smartphone could be RIM's best bet. At the company’s BlackBerry Jam in Orlando in May, CEO Thorsten Heins showed off a car that had BlackBerry 10 integrated into almost every aspect of its computing system. RIM could also push its new operating system into other infrastructure-based industries such as healthcare and utilities (electric and water systems, for instance).
All this boils down to one simple fact: If BlackBerry 10 fails, so does RIM. We will know by this time next year if any strategy RIM pursues pays off or if it's time to write the obituary of a once-great technology company.