ThoughtPiece: Why RIM and Verizon Need to Get Closer


With all of our new staffers breaking in their shoes, it’s nice to have a nice worn in piece of work like Thought around for familiarity sake (and, you know, a good read, too). This week he examines the somewhat paltry relationship between RIM and Verizon and why things could and should be better.

Why RIM and Verizon Need to Get Closer

Let’s face it: last week Steve Jobs spoke and the whole world listened. When was the last time the announcement of a cell phone attracted such widespread attention? There is no doubt that the iPhone will sell, as long as it delivers on its promises. That is significant not just to Apple, but to the carrier with exclusive US rights for at least the next few years, Cingular/AT&T.

Which brings me to my point: there is a huge opportunity for RIM and Verizon in the consumer market if they can just bring out the newer, more exciting BlackBerry models soon enough on the Verizon network. Cingular will have the iPhone, and there is no doubt that the iPhone will hold the title of the coolest, hippest mobile device around. However, in the US Verizon has almost as many subscribers as Cingular, and is on course to surpass them. Many may be attracted to the iPhone on Cingular compared to the aging designs like the BB 8703e or 7130e on Verizon. However, a BB 8900/9xxx type phone on Verizon will be a different story: many will find the value added proposition of such a BlackBerry enough to stay or migrate to that carrier. Consider how it would differentiate itself from the iPhone: the best network, 3G, internal GPS, voice dialing, all in a form factor that would still be sleek and stylish, with the added bonus of a true keyboard for better text inputting and the vaunted BlackBerry email system. Now that’s a device that can compete very well against the iPhone, and even more so if it could be released before the iPhone hits the market in June.

Some may wonder why it matters. The iPhone will sell, but even Jobs admitted he is only aiming initially for 1% of the worldwide market by the end of 2008. That’s a niche product. There will still be plenty of sales and growth to go around for everyone, including RIM.

But that’s only part of the picture. The market that Apple is aiming for may be a niche, but it is the high end niche, which means the greatest profit margins. I’m sure Apple is all too glad to allow competitors like Motorola, Nokia, LG, and Samsung fight it out for the free cell phone market.

Success in the high end of the market tends to carry the greatest influence on corporate image and reputation. That in turn can drive sales of other products by the same vendor, as well as create demand for the future.

Most importantly, we know that Apple will not stand still, and will aggressively follow up with new versions of the iPhone that will carry better features and lower prices. Consider the iPod lineup of today versus the very first iPod, and you get an idea of the evolutionary branching that can occur. Plus, there are even more possibilities with the roadmap for the iPhone than with the iPod. What that means is that Apple stands a very good chance of going on to capture far more than 1% of the market.

RIM’s biggest market is the US, and it’s time they stopped relying mostly on Cingular to drive sales of their new products here. Cingular already treats RIM like a second class citizen when it comes to marketing. In the next several months it will be even worse, as it will be all iPhone all the time with Cingular marketing. Verizon’s large and loyal market represents a huge opportunity for RIM as they introduce their next generation models, and a nice response to the increased competition in the consumer space. Now if only RIM will seize that opportunity.

14 Responses to “ThoughtPiece: Why RIM and Verizon Need to Get Closer”

  1. 1 justelise

    Personally I think that RIM leaning on Verizon is a horrible idea. RIM needs to always go with a GSM provider first and fall to the others afterwards because GSM phones sell bigger on a global scale. To put out a phone in CDMA first would be like shooting yourself in the foot from RIM’s perspective. They want to aim for the interest of the biggest markets first and those are obviously not CDMA carrier markets. If RIM releases a phone on Cingular or T-Mobile first, customers on GSM carriers worldwide know that the phone will be coming their way eventually and it peaks their interest early. Furthermore, RIM will get additional sales from early adopters buying unlocked phones to use abroad (Orange, etc..).

  2. 2 fact

    What the above said regarding GSM vs CDMA, plus the fact that the iPhone and any BlackBerry product are not competing for the same market share. Please let me know about the server backend for the iPhone, oh ya, that’s right - doesn’t exist.

    Think about current BB Connect offerings - that’s right, I bet you forgot, RIM already has their cards in place for products like this.

    The author seems to have forgotten (never knew) the market place they are writing about. That said, I love Apple products and I wouldn’t mind having one for free to play with… but it’s not going to replace my BB.

  3. 3 Jason

    The important thing that I never forget about Verizon is that that they ‘lock down’ their phones. Prevent customers from using physical capabilities of phone that the customer paid for, i.e. blue tooth functionality. Why buy a newer, fancier BB from verizon if I have to worry about parts of the phone being disabled?
    When I buy a $300 piece of hardware I want to be able to use every part of it, not just the features someone in an office at verizon decided they couldn’t charge a monthly fee for.

  4. 4 Verizon User

    I get the feeling that Verizon is not overly excited about selling BBs to consumers. They seem to like Windows Mobile smartphones - witness the big push on the Q. For one thing, standardizing on Windows would simplify consumer technical support. Also, I assume the BIS infrastructure is expensive for them to license and maintain.

    RIM contributes to this. I don’t understand why simultaneous release of CDMA and GSM BB devices is so difficult, and the lag time between CDMA and GSM versions of the same device is so lengthy. This seems like purely an engineering issue that a well-run company could address.

  5. 5 aviationwiz

    I think a closer RIM/VZW relationship would be great. Some of the stuff I hate about the iPhone is the lack of true 3G, and that it runs off of Cingular instead of also being offered on VZW. If RIM could get me a great BlackBerry on VZW, I wouldn’t even question switching over to the iPhone, which I am now.

    More than likely, I’ll stick with my tried and true BlackBerry on VZW, but the iPhone is ever so tempting…

  6. 6 Eric T

    VZW finally lost me as a customer to the pearl. I just dont want to wait another year to get it so i thought i would try cingular - guess what? the cingular network has improved dramatically in my area and the service works for me. VZW, you snooze (and rest on your laurels), you lose….

    As for BB vs the iphone, i think the iphone rocks BUT i don’t want an ipod in my phone. also, using pop3 email will kill battery life. unless they come out with a cut down version with less functionality i’ll pass.

  7. 7 L. M. Lloyd

    You know, your theory about Verizon and the BlackBerry is interesting, but there are a couple big problems. First, the BlackBerry doesn’t really get much of a boost from the faster network. I have done head to head comparisons between the 8700 (on T-Mobile) and 8703 (on Sprint) and there just wasn’t that big a difference. Certainly nothing that would make someone say “man, I have to switch to 3G!” I know the theoretical network speed difference is enormous, but in practice, the speed of rendering in the BB browser just slows the whole thing down so much that you hardly notice any network speed difference, and the lack of any HTML mail on the BB means that you don’t need, or in fact notice any speed over GPRS.

    The second big problem is price. Verizon service is so expensive that it really makes the device cost look unimportant. A big benefit the BlackBerry has over a lot of other solutions is price, and they should play that up, not play it down by partnering with an expensive service.

    All in all, I think most of what you say would be dead-on, if you just replaced Verizon with T-Mobile. T-Mobile already has a good history on selling BlackBerry service, and the cheapest unlimited data plan around. I think they would be the better fit. Verizon, I think, will shift their focus to REALLY high-end devices like notebooks and UMPC-type devices that can really show off the speed of their network, and appeal to the “price is no object” crowd.

  8. 8 Billytickets

    phone as modem rocks witht eh Blackberry 7130e on Sprint. I wish RIm would make more delas with Verizon or Sprint… I like speed. and CDMA is very very fast for runnning laptops and Blackberry

  9. 9 Thought

    First, let me thank everyone for their awesome comments…

    Now, a few follow up thoughts:
    For the first 2 commenters: I never meant to suggest that RIM give CDMA releases priority over GSM. My suggestion is to release both versions of a new device concurrently, or at the very least with far less lag time for the CDMA version to hit the market after the GSM.

    I realize that engineering the CDMA version is not a trivial exercise, and would require additional resources be applied. However, given the size and value of the VZW market, I have to feel that this additional cost may very well be justified.

    Robb Dunewood of RIMarkable makes an excellent analogy: most people in the world drive cars with the steering wheel on the right side, but here in N. America we have cars with the steering wheel on the left. The car manufacturers do not have a problem creating vehicles for both markets. It’s worth it.

    To commenter “fact”: I agree that in the enterprise space the BB rules and will not face competition from the iPhone; my article endeavors to make it clear that I am speaking of the consumer market in this article.

    To commenter “Jason”: agreed about VZW disabling features on phones…that’s a pity. Indeed, when the new 89xx/9xxx series comes out on VZW, they really need to keep the internal GPS enabled.

    To L.M. Lloyd…I’ll save that for my next comment…

  10. 10 Thought

    My bud Lloyd: Granted, sometimes the difference between 3G and EDGE is not that noticeable. However, my experience is exactly the opposite of yours (maybe because my experience was on different carriers, as you will read). I have used both the 8700c on Cingular and the 8703e on Verizon, and there was a huge difference in pulling down web pages. For the record, I will also say that in trying out the 8700 on T-Mo once in a store, that their EDGE service did seem faster than Cingular’s. However, since the aim of the article is more to compare with Cingular, I still hold by my assertion.

    Also, I do believe that just in the world of buyer’s perception, that a 3G phone will have the advantage. Plus, with more and more apps coming out that benefit from a faster connection, like Google Maps, I believe that 3G will become more and more an important selling point.

    As to pricing: Verizon service pricing so far has not hurt their sales; in fact they are growing faster than any other American network and have the lowest churn (customer loss) rate. I always am amused when people cite the cost of VZW as some huge disadvantage; if it were, people wouldn’t be running to sign up for Verizon, nor would current Verizon customers be so loyal and reluctant to leave.

    On top of that, I’ve read studies that say that Verizon customers tend to be a more affluent demographic.

    I don’t believe that BB sells because of any perceived price advantage; in fact, compared to most consumer phones, they are still towards the upper end of the price scale. Plus, most people who buy smartphones are already having to eat a higher service cost for the data, so this demographic doesn’t seem to be as price sensitive. Add in the advantage that Verizon customers are more willing to pay for quality.

    The problems with T-Mo is that they have a subscriber base less than half of Verizon’s; their coverage is much more limited. In short, T-Mo is not nearly the player in the US market that VZW is.

    So the Verizon market is far larger and more affluent than T-Mo; that is the market I would aim for. VZW customers are more likely to be satisfied with the network signal, which influences overall satisfaction with the device as well.

    Therefore, I still say: RIM, please go after the VZW market more aggressively.

  11. 11 L. M. Lloyd

    Thought, of course 3G is a big selling point, and I am not trying to say that there isn’t a noticeable difference. What I am saying is that if you hook up a notebook or UMPC to EDGE, and download a page, and then download the same page on the same notebook or UMPC over EV-DO, the difference is one of those “I’m never going back to EDGE again!” kind of moments. If you do the same thing on an 8700 and 8703, the difference is more of a “oh yeah, that was a little faster,” variety. I just don’t think that is the sort of experience Verizion is looking for to hype their network. I’m sure you are right that results will vary from carrier to carrier, and even from location to location, but in my opinion 3G on a BlackBerry, while nice, is a mostly underwhelming experience compared to the 3G experience on just about any other device.

    Also, I am not saying that Verizon’s pricing is a huge disadvantage for Verizon. What I am saying is that when an unlimited data plan is going to cost you $50+ a month, whether your device cost $50, $300, or $600 quickly becomes irrelevant. When you are paying $600+ a year for unlimited data (not even counting voice service, then you probably aren’t going to be dissuaded by a $1,000+ pricetag on a UMPC. Yes, Verizon has a lot more customers than T-Mobile, but how many are using BlackBerries? I haven’t seen figures recently, but last I checked T-Mobile had the largest consumer BlackBerry user base of any carrier. Sure, they don’t have anywhere near as many overall customers as everyone else, but the customers they do have are very smartphone-heavy.

    You say that the BlackBerry is already expensive compared to most consumer phones, and all I can say is that it is really expensive compared to a jelly bean, or baseball cap too. The BlackBerry is not a normal consumer phone, and does not compete with consumer phones. It is a smartphone, and as such it competes with smartphones. In the smartphone market, it is one of the cheapest solutions out there! I know that absolutely the only reason I have a BlcakBerry is because it is so much cheaper than a RAZR and an OQO. If price were no object, the BB would have been gone long ago. I think that is true of a lot of people. Most of the Windows Mobile devices are more expensive than the BB, the Treo is more expensive than the BB, even some of Nokia’s fancier phones are more expensive than the BB. I really do think that, at least in the consumer world, the BB lives in that same realm as the Sidekick, where it is seen not as a “price is no object” device, but as a really good bargain. I honestly don’t think (especially in the coming years where tablet PCs, notebooks, and the like start becoming more viable all-day devices) that the BlackBerry could fare very well against a lot of devices out there in a “I don’t care how much it costs” consumer competition.

  12. 12 Thought

    Lloyd: thanks again, as always for some great comments.

    Interesting about T-Mo perhaps being the carrier with the largest number of pure consumer BB users…if that’s true…and as you say, it’s difficult to find the breakdowns from the carriers…then I would submit to you that this is evidence that there is great growth for BB in the Verizon market…that if VZW doesn’t have a larger base of consumer BB users, it’s because they always lag behind in the release of the newer, cooler phones. I guarantee you that if RIM had released the Pearl on VZW prior to the holidays, they would have sold a lot of those units.

    Costwise, you are correct in that the BB competes against other smartphones, not necessarily other phones in general, certainly not those free or almost free phones. Your perspective on BB’s representing a price bargain in that market is interesting…I never really thought of BB as a price leader. When I think about it, you certainly are correct in that the Treos generally have cost more than BB’s…of course, their newer 680 model is about the same. Some WinMo devices are indeed more expensive…some much more expensive…but others, like the BlackJack, are about the same. So I’d say in that market the BB is about average in price…I know also, that it’s only recently that some of the models like the 8700 have come down in price to make them seem like more of a bargain. Either way, though, your perspective on price is fascinating.

    However, I still maintain my thesis only in that I am advocating a more aggressive push by RIM into the VZW market, in *addition* to whatever they would normally do in the GSM space…not as a substitute for that. So if RIM wanted to go after T-Mo customers more aggressively, that’s great too…they’d already have the GSM version out anyway…and with the Pearl, they certainly are going after the T-Mo market aggressively anyway, and releasing before they do on Cingular. All I’m really saying is that there is a large base of consumer business for RIM on VZW, which is largely untapped, and it’s time they to pursue that in a more vigorous way.

  13. 13 hell no


    Why should RIM waste its time on a limited proprietary technology like cdma? Which has less than a 1/8 (and dropping) compared to industry leading, open, standard, GSM, the Global System for Mobile communication.

    Why should RIM waste its money on paying royalties to Patent holding company like qualcomm? RIM was just forced to end Patent games with NTP.

    Why should RIM waste time, money, and consumer good will on a device for verizon which will only be locked down with buggy vzw firmware changes for removing features, functions, and applications.

    Claiming to be a fan of RIM is one thing, but trying to convince RIM and others into thinking vzw and cdma is the way to go is the worst forward direction for RIM. Thank goodness for RIM they are smarter than that.

  1. 1 “Why RIM and Verizon Need to Get Closer” | RIMarkable | The official, unofficial BlackBerry Weblog

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