RIM rocks a new tune

The BlackBerry maker has made a concerted push to woo the masses, even securing the services of iPod spokesdudes Bono and U2. But without a clearer marketing strategy, can it really trounce the Apple/iPhone juggernaut?
Toronto-based radio DJ Alan Cross flew to Boston last month with a plan to find a way into a secret U2 concert at an old vaudeville-era theatre. What he ended up with was an exclusive peek at a landmark business deal between the iconic Irish rockers and BlackBerry maker Research In Motion Ltd. After Bono and his band wrapped up their gig at the intimate Somerville Theater, Mr. Cross ended up at a crowded reception at a nearby pub in Harvard Square and came face to face with the U2 front man. To strike up a conversation, he told Bono he had friends who worked for RIM. Then he asked Bono about the new partnership between RIM and one of the biggest rock acts on the planet, which the Waterloo, Ont.-based company announced in a routine press release just two days earlier.

"I'm very excited about this," Bono told Mr. Cross about the RIM deal. "Research In Motion is going to give us what Apple wouldn't — access to their labs and their people so we can do something really spectacular."

Mr. Cross couldn't believe his ears. Was RIM working on a special U2 application that would help the band interact with fans as part of its "U2 360" tour?

"You're not far off," Bono said, before slipping away into the crowd.

A tie-up with Bono and U2 is nothing short of a marketer's dream. But what's it worth if only one man in a crowded bar hears about it?

And why was Mr. Cross getting the real story — that U2 was tapping RIM's engineers — from the music icon himself rather than the company that stands to benefit the most from the deal?

Therein lies the latest challenge for RIM as it weathers the recession and looks to its next phase of growth. An engineering and design wunderkind, the BlackBerry now needs a brand image and strategy that reach the masses. Or to use co-founder Jim Balsillie's baseball analogy for RIM — "there's two down in the second" — it's time to think about the middle innings.


RIM realizes its future hinges on winning consumers over to the BlackBerry. The company has taken several leads from Apple, the king of consumer technology, that go beyond winning the affections of one of the world's greatest rock stars. RIM has recently introduced touch-screen technology with the BlackBerry Storm and an online store for games and software known as App World, similar to what Apple has already perfected for using with the iPhone. But RIM has yet to attempt what Apple does best: sell its brand to consumers.

Experts warn that if RIM doesn't quickly fire up a global marketing machine of its own, the company will be pushed to the wayside by bigger brands such as Apple, Google and Microsoft and will be forgotten by the fickle consumer.

"RIM has every right and ability to take on Apple. It's not the same as Apple, nor should it be. But RIM should have greater confidence," said Geoffrey Roche, chief creative officer of Toronto ad agency Lowe Roche, who has done some work for the company. "They have every right to be seen as sexy."

RIM has ridden the coattails of U.S. President Barack Obama, a self-confessed Berry addict, and is spending big dollars to back U2's global concert tour. But for the most part, even as it expanded its reach from CEOs to soccer moms, RIM has left marketing responsibilities to the phone companies that sell its devices. The result is a "schizophrenic message" that will not survive the overwhelming marketing forces of the Apple brand, or those of other emerging competitors, Mr. Roche said.

"The thinking needs to change. They have an immense opportunity. RIM has not made any mistakes. They have never positioned themselves poorly. We're not sitting here with General Motors," he said.

RIM's marketing expenses have rocketed in recent quarters, as the company begins to emerge from the shadows. To broaden its consumer appeal it is running a TV ad campaign dubbed "Life on BlackBerry," which features a handset constructed of everyday items such as a soccer ball, vacation photos and music speakers, to suggest how BlackBerry touches all aspects of people's lives. The company was a major sponsor of the Major League Baseball playoffs in the United States last year. And it has expanded product distribution beyond phone companies to major retailers such as Best Buy, Wal-Mart and Sam's Club.


RIM initially created the BlackBerry to serve customers in business and government. But over the past decade, as those markets became saturated and competitors crashed the scene, it has made a radical shift to the consumer space.

Two and a half years ago, it began its march down Main Street with the BlackBerry Pearl, a sleek, candy bar-shaped phone with camera and music player.

Analysts were initially concerned that the company's new emphasis on consumers would erode the fat profit margins it enjoys with its corporate clients, since the consumer market is typically characterized by lower profitability, higher marketing costs and pressure to respond to rapidly shifting tastes.

This week, co-chief executive officer Jim Balsillie revealed that RIM's assault on the consumer market is in full force, telling analysts that consumers now comprise half of its customer base, which more than doubled last year to about 25 million. On Thursday, RIM reported record profits and growth in subscribers, 70 per cent of which came from the consumer market. The stock climbed 19.4 per cent, regaining much of what it had lost since it was hit by the recession.

It's hard to argue with that kind of success, which generated $11.1-billion (U.S.) of global sales last year, up from $3-billion just two years ago. Marketing experts say RIM is in the enviable position of "product-driven" success. But long-term viability demands that it dramatically increase its global scale, something that will require better branding and marketing.

Apple, which has a much broader product line than RIM, is outspending its Canadian rival on marketing by as much as five to one, said Rob Enderle, president of the Enderle Group, a technology advisory firm in San Jose, Calif.

What will happen if RIM doesn't change its thinking? "They will get left behind," Mr. Roche said. "I think there is a window, but it's not a monstrous window. Look at all the great companies gone by the wayside because they didn't get their message to consumers."


The significance of RIM's partnership with U2 should not be underestimated. Not only does it strike a direct blow at Apple, but brings one of the most business-savvy entertainers to RIM's team.

Mr. Cross, the disc jockey, remembers having a long conversation with Bono five years ago shortly after the band made a pact with Apple. Bono's image was used on iPod packaging and advertising while Apple built a U2 iPod.

"He gave me this long and very eloquent answer about how launching an album and launching a tour was very expensive and that a band or a record label can't necessarily do it on their own," said Mr. Cross, who is also a senior program director for Corus Interactive and Integrated Solutions. "He said, 'We need to find partners who will help us get the word out about what we're doing and we will work with partners who will create objects or devices or offer services that we really believe in.'" But there is more to building a global brand than building great partnerships, and RIM's approach to communications is still more stealth than storefront.

On its website, for example, the company plainly states that information about its marketing plan "cannot be disclosed to the public." RIM's marketing executives could not be reached for comment for this story.

Ann Nurock, president and CEO of Grey Canada, RIM's ad agency, politely declined to discuss her work with RIM. "Only RIM themselves can comment."

In contrast, Apple is known for creating and managing its own image of coolness. The company is secretive, but its marketing is not. It is well-known, for example, that for years, chief executive officer Steve Jobs has included creative agency TBWA\Chiat\Day, and the firm's global director, Lee Clow, in Apple's critical business decisions.

In the long term, the key to winning this smart-phone market will be about more than simply branding and adding consumers. Buyers are fickle and the day's trendy device can be outdated in a matter of months, Mr. Enderle said.

Instead, the race will be won by the company that can build scale fastest — and that favours Microsoft Corp. and Google Inc. over either Apple or RIM, he said.

"The quality gap between devices will eventually close," Mr. Enderle said. "The more people you have building, marketing and selling your product the more successful you will be. Then it just becomes a matter of resources."

Google has five manufacturers lined up to build phones for its Android software platform, and both Google and Microsoft have the resources to buy the loyalty of the phone companies, the kingmakers who provide access to the market. Developers always follow the money, Mr. Enderle noted.

So far, more than 100,000 developers have downloaded the necessary software to build applications that run on BlackBerry devices. But RIM is playing catch-up in this field and until it opened the online app store this week it lacked a cohesive strategy for third-party BlackBerry software.

Although Mr. Balsillie was fond of trumpeting various corporate applications coming from partner companies such as Facebook or Slacker Radio, it wasn't until Apple created a consumer sensation with its own App Store that RIM recognized the need to create a single destination where users could purchase and download their own software to customize their devices.


Research shows that when people buy a car, they pay more attention to ads after the purchase to justify their expense and make themselves feel good. RIM might need to think along those lines, too.

"There's a wonderful coolness quotient to Apple's work," Mr. Roche said. "There's a need for RIM to be there as well. There's a need for people to feel a great sense of confidence that they got the coolest product out there, and that they are a master of the universe by virtue of the fact."

The question remains whether RIM can cash in on U2's rock star cachet, and whether BlackBerry can emerge as more than the consummate mobile business tool to capture the attention of a generation of potential customers who grew up on cellphones, MySpace and iTunes.

"We used to hold up lighters [at rock concerts]. Now we hold up cellphones," Mr. Cross said. "What's going to happen if U2 can, from the stage, instantaneously communicate to each individual person? What form is that interactivity going to take? Are you going to give them a song, are you going to give them a code, are you going to give them an opportunity to text to a screen or meet each other?"

RIM engineers are probably working on some of those questions right now. Once they work it out, the company may need to borrow a line from Bono and elevate itself yet again.

Source:Saturday's Globe and Mail

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