blackberry-10

RIM's plan to license its new OS: Pros and cons of the strategy

When companies sail into desperate straits, they often make desperate decisions.

Research In Motion (RIM) is in such straits. Although it managed to show small profit on its balance sheet for its last quarter, it came after three quarters of hemorrhaging cash.

Thorsten Heins
Thorsten Heins

It was outmaneuvered in the smartphone market by rivals Apple and Google and now, approaching the launch of its line of BlackBerry handsets running its new mobile operating system, RIM has a lot of ideas about how to change its fortunes. One of them is to start licensing that new operating system, BlackBerry 10.

Whispers of such a move have been heard for months, but the idea became more concrete Monday as RIM's CEO Thorsten Heins acknowledged in an interview with the German newspaper Die Welt that licensing BB 10 is "conceivable," as is RIM bolting from the hardware business entirely.

Licensing BlackBerry 10 has both pros and cons for RIM. Here are some of them.

Pros

  • Allowing others to build devices based on BlackBerry 10 lets RIM expand its reach. It can touch more people if partners are making devices. Moreover, since RIM wants BlackBerry 10 to be more than just a smartphone operating system, such licensing agreements may be necessary if it wants to enter something like the automotive market.
  • By the same token, licensing partners could increase the visibility of the BlackBerry brand by putting BlackBerry 10 products in more retail channels.
  • Licensing agreements, too, could help rehabilitate BlackBerry's image as a straight-laced business product. In addition to falling behind in the technology race with Apple and Google, RIM also lost the "coolness" war. Coolness is largely determined by consumers and licensing agreements could, by putting more BlackBerrys in more consumer hands, deflate the platform's stodgy image.
  • Executing licensing agreements while BlackBerry 10 is hot will allow RIM to maximize the worth of deals and help its beleaguered bottom line.
  • Licensing is consistent with RIM's new mindset of giving its customers more choice. For instance, at the end of last year, the company announced it would allow its users to "cherry pick" the BlackBerry services they want based on their needs, not RIM's.

Nevertheless, the licensing move has some cons, too.

Cons

  • Premature talk of licensing, before BlackBerry 10 is market tested, could detract from the product's momentum when it actually ships January 30. Signs have already emerged in the app development channel that BlackBerry 10 will launch with momentum, and spreading uncertainty about the future of the product with licensing palaver could reduce enthusiasm for the platform.
  • Allowing others to use one's technology can damage a brand. With RIM determining what BlackBerry is, its customers have no doubt about the product's identity—just as Apple's customers have no doubts about the identity of an Apple product. When that control is loaned to others, their devices will further define what BlackBerry is. So, like the Windows OS and Android, a degree of  uncertainty exists about what one's getting in a device running those operating systems.
  • One attraction of the BlackBerry platform—like the attraction of Apple's—is its tight integration of hardware and software. Licensing could undermine that integration and make the platform less attractive.
  • If RIM continues to produce BlackBerry hardware, it could create a sticky situation with itself. Not only might partners make a competitive play for existing RIM customers, but RIM could find itself competing with partners for the new customers that RIM hopes to garner with BlackBerry 10.
  • Even if RIM goes shopping for licensing agreements, it could be difficult to land a major player to buy into the idea. Enlisting minor players to produce BlackBerry devices would probably not enable RIM to meet its goals for licensing its technology in the first place, namely expanding the reach and visibility of the BlackBerry brand.

Although licensing may be in the idea hopper at RIM, even Heins concedes that talk of licensing BlackBerry 10 is premature. First we have to fulfill our promises, he told Die Welt. Without such proof, he added, licensing is inconceivable.

For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

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