Welcome to Freaking Helsinki, RIM

by Scott

As a stalwart member of the last pocket of Blackberry “dead-enders,” I was stunned last month when I actually found myself considering buying a Google Android device.

It was a shocking moment that laid bare how crushed RIM (the maker of the Blackberry) has been by the forces at work.

It also took me to the top of the mountain with a view of the breathtaking strategic power of Google.

Now much has been made about the fact that Blackberry has been feeling the squeeze from the iPhone and other competitors in the smart phone space, notably the small but surging Android platform from Google.

Competitors have taken some market share yes, but the lost mind share is worse. iPhones came into the enterprise just like PC’s did.  Workers bought them on their own and brought them in on their own.  There were no multimillion dollar iPhone sales with server licenses and support agreements and roll-out plans.  No, employees bought them and told IT to deal with it.

Do you think the CIO wants to do a big Blackberry roll out when his/her entire staff is carrying iPhones? This is the effect of a loss of mindshare.

RIM realizes they need to be more “with it,” more consumer-centric.  World’s a changing and a little grassroots uptake of our products into corporations would really help. And it generally seems like there are a lot of small-consulting-company-type setups these days—the “New Workforce” and all.  Need to get some of that consumer savvy.

I am sure inside of RIM some false prophet of “youth culture”—some “J Allard of RIM”[11.MSFT’s 41-yr old Xbox wunderkind: J Allard [link]]—got a bunch of corporate juice by saying “social media is hot,” and “today’s kids are always connected, always on.”

So they come up with this Shite:

From San Francisco’s Market street, Blackberry’s store-front advertising [PIC].

Yes, I will caption that for you in case you don’t believe your own lying eyes. It does in fact say:

[Bros] – [Sisters] – [Mates] – [Homies] – [Girlfriends] – [Besties]

In addition to the pop-up storefront adverts[22.As Storefronts Become Vacant, Ads Arrive, nytimes.com, 5/11/09 [link]] and the saturated advert coverage in the transit (BART) stations, I am sure there are “street teams” around here somewhere looking hip and loudly talking about how much they love messaging their “homies” with their dope Blackberries.

But, I actually find these much more deeply offensive:

Blackberry Rooftop Party [PIC]

Blackberry BFFs [PIC]

Blackberry Indiscretions and Gossip [PIC]

Blackberry Platonic Friends w/ Sexual Tension [PIC]

Does this remind you of anything?  Yes, the claw of the cryptkeeper Nokia and their death rattle marketing of the last 5 years. Namely: multi-cultural Europeans enjoying their exciting European bonhomie, enabled somehow, unseen off-stage, by the Nokia N97.[33.Symbian Guru Quits, 7/1/10 [link]]

A nearby park during lunch break at the Hague? Nokia Wildsets marketing, March 200 [PIC]

Now, perhaps the Finns (Nokia) passed on their old market research reports to the Canadians (RIM), but you would think that RIM, with their strong market perception as “a powerful, no-nonsense business tool” might actually look to deliver to consumers just that: a powerful no-nonsense business tool.

How did we get here?

The Blackberry originally rose to prominence in the late-1990′s/early-2000′s because of its advanced messaging and wireless groupware collaboration features. The Blackberry device was the poster child of “it just works.”  Email would show up in your device automatically, and it was reliable and fast enough that you could have rapid fire email exchanges with your coworkers who were still stuck in the office. Wirelessly, you could make calendar invites with coworkers using a corporate directory. If you added an appointment on your Blackberry it’d show up in your Outlook client back on the desk and show your coworkers your availability. Wirelessly, seamlessly, without thinking or intervention on your part. Basically it was your trusty MS Outlook client in your pocket.

Blackberry was also the example of the power of one company integrating the hardware–software–service into a single user experience that really delivered the goods.  And all of the necessary technology had to be created by the company.  To get corporate employees working together, RIM developed server software that companies would deploy alongside their MS Exchange groupware server to communicate with the wireless Blackberry handhelds. They called it Blackberry Enterprise Server (BES).[44.Blackberry Enterprise Server (BES) diagram [pic]]  This worked for everybody; RIM didn’t have to create a collaboration suite on their own from the ground up, which is a separate and difficult undertaking and would be a barrier to sales by requiring companies to perform costly migrations.  Companies liked it because Blackberries worked with their existing (best-of-breed, i.e. Exchange/Outlook) infrastructure—no need to move their corporate email server/ calendaring solution over to some jank Blackberry email and calendar server.

On the service side, RIM had to create its own data center, where they maintained some data communication magic to every extant Blackberry device; for this RIM would charge corporations, through the wireless carriers, a monthly service charge, per Blackberry handset.  RIM was getting fat off of these recurring monthly charges. Industry analysts questioned whether these fees were sustainable and raised strategic questions to RIM about wireless networks going to the “dumb-pipes” model. They’d ask: “if ‘data is data,’ won’t corporations eventually bristle at the monthly per handheld charge for ‘Blackberry wireless service’ that is added to regular data charges?” RIM would answer something along the lines of “push email is hard; we have 200,000 lines of code to make it all work.“  (I don’t know the KLOC count of the current release of BES or RIM’s data center systems). Regardless, in the early years, corporations were content to pay these fees because the overall Blackberry solution met their needs.

Another big selling point to corporations back then was security. Both private corporations and the government already had a sense of the large numbers of laptops they were losing in the field—resulting in security breaches—so a lot of the initial resistance to a Blackberry rollouts was this terrifying prospect of having all of these small devices out there with a direct tube into the soft underbelly of their internal network. RIM made much of the fact that Blackberries had “Encryption” built into the foundation of the devices, an information security power word second only to “Firewall.” And Blackberries had great manageability, like wireless provisioning—and in an industry first, they had remote wipe capabilities. In a moment Peter Graves would love, you could send a signal to the device that would commence a complete self-destruction of the data.

Selling this server software for wireless handhelds to large companies was such a lucrative gig that startups rushed in.  One of the classic examples of the “Bubble 1.0 Big VC model” was Good Technology. The full slate of VP’s on the “team” page, hundreds of engineers, general counsels, BD, “Big Mo(mentum)”—the whole nine yards. They were going to rewrite BES functionality, but for multiple handset operating systems (PocketPC, Palm, Symbian—remember those?) and sell it to corporations as an alternative to the RIM software server offering.

And again, Blackberries were great. They just worked.

The Consumer Experience

But if you’re a consumer Blackberry user in the current era, and if, as is the current fashion, you bought your device yourself (in the same way that people buy the iPhone and the Android phones), you have also heard of the dreaded cousin of BES: the BIS (Blackberry Internet Server).  Your wireless carrier and RIM put you on their neutered BIS servers if you don’t have your own in-house, on-premise MS Exchange server setup. It’s a big deal to host your own MS Exchange server, and being an Exchange Admin is a well-defined and well-compensated subfield in IT. A new and expanding small company these days would be really hesitant to take that step and go to an in-house, on-premise MS Exchange Server. And usually consumers don’t run their own MS Exchange Servers, either. As a result, most new Blackberry users today are on BIS.

Once you move a Blackberry to BIS, your Blackberry suddenly becomes a little broken.  It’s like half there. Push email is still there, but no live wireless integration with the calendar, no over-the-air syncing of contacts, you can’t see your coworker’s schedules and there’s no remote wipe option if you lose it.  The official method for consumer access to his/her contacts and calendar on his/her Blackberry is… USB Sync.  That great Office Tether that corporate employees used to complain about is now a data bucket-brigade. So dust off that cradle and make sure you never leave the office without syncing!

There is, however, a way to get that “real Blackberry” experience at a small company. The following is the state of the art for getting “real Blackberry” functionality at a small company (Summer 2010):

  1. Get your Blackberry at ATT Wireless and make sure you go for the Blackberry Service plus the BES capability add-on. (Cost: a $15 per mo. charge in addition to the regular monthly Blackberry service charge).
  2. Make sure your corporate/personal email domain is on Google Apps (you should be on this anyways)[55.Google Apps [link]].
  3. Upgrade your domain to Google Apps Premium. Premium has “Google Apps Sync”[66.Google Apps Sync for Microsoft Outlook [link]] which allows the Google Apps servers to replicate the functionality of an MS Exchange Server. Now you can connect your MS Outlook client to your Google Apps account. (Cost: approx. $5 per user per month for Google Apps Premium, but you need to upgrade your entire domain account, so this could be much more expensive if you have a large domain and just a few Blackberry users).
  4. Connect your MS Outlook client to your Google Apps email account using the downloaded Google Apps Sync software.[77.Download Google Apps Sync for Microsoft Outlook client software [link]]
  5. Now you should be able to make a calendar entry on your MS Outlook client, and it should show up, almost instantly, on your Google Apps calendar on the web. Check to make sure that this is working.
  6. Google Apps also recently released the Google Apps Connector for Blackberry.[88.Google Apps Connector for Blackberry [link]]  This is an on-premise software server that replicates BES functionality on Google Apps’s replicated MS Exchange functionality.
  7. Luckily, Google Apps has allowed this software to be hosted by third-party companies. Go to ExchangeMyMail[99.Hosted Blackberry Enterprise Server for Google Apps, ExchangeMyMail [link]] and sign up for their Hosted BES for Google Apps service. (Cost: $10 per user per month). This will sync your Blackberry changes with the Google Apps data repository.
  8. Now you should be able to make a calendar entry on your Blackberry handheld and it should show up, almost instantly, on your Google Apps calendar web interface. Check to make sure that this is working.
  9. And by the transitive property, all of the changes you make on your MS Outlook client, Blackberry handheld or the Google Apps web interface should show up on all of the others, almost instantly.

Phew. So now in 2010, you can enjoy what you had as a young buck at BigCo back in 2002.

But it is safe to say, that this method is not all that practical for the majority of consumers or small business customers.  It’s not a great way to deliver the “real Blackberry” experience to this customer base.  Essentially, you are asking your clients to roll their own cloud enterprise infrastructure.

Yes RIM, you got push email but:

Give the masses live wireless integration of calendars and contacts. Consumers need wireless groupware/productivity!!

Come’ on RIM you “own” this problem area!!

This would allow a person to say to their friends:

“Hey, maybe I can’t tune my guitar with it (there’s an app for that) but it allows me to connect calendars with everyone in my 5-person architecture firm, and I never have to worry about being out of sync.  It does what I need. It just works.  And I don’t have to think about it.”

But instead the positioning we get is this: we’ll get a guitar tuning app soon[1010.Blackberry App World, a world of apps. [link]]… and don’t worry about that boring calendar and contacts thing, it’s all about hooking up with your buddies and chatting up babes at outdoor parties where they have antiquarian light bulbs.

It must be an emperor’s new clothes moment, sitting in that executive meeting talking about the progress of these efforts to sell directly to consumers, to raise your hand and say: “Am I going insane here, you guys do realize that we have never, not once, actually sold a ‘real Blackberry’ to a consumer. You know that ‘crackberry experience’ we always talk about around here? You do know consumers don’t get that, right? You guys do realize that?”

And technical challenges aside, consumers, even/especially well-off consumers, are sensitive on price.  Consumers just don’t like paying more for what is obviously the same thing.

The monthly cost of getting data in and out of an iPhone[1111.DataPro 2GB for iPhone [pic]] and a “real Blackberry”[1212.ATT Blackberry pricing [pic]]:

iPhone"real Blackberry"
Total$25.00$60.00
Wireless Data service$25.00$30.00
BES data service add-on$15.00
Google Apps Premium$5.00
Hosted BES$10.00

The “dumb pipe” data pricing on the iPhone is $25.  This gets you all of the data that you care about (pull email, pull calendar, etc) in and out of your device. The Blackberry tax, the monthly tack-on charge billed through your wireless carrier for the RIM data center magic, has been decreasing over the years, but it’s still at $20 per month on ATT Wireless.  The total cost difference between the monthly iPhone base pricing and the “real Blackberry” is 140%.

I am a big believer in scenario analysis.  And I am a big believer that looking at the right data to analyze will get you better answers then refined analysis on merely very good data. I also believe in those ‘turning point moments’ where rational people make rational choices because of the constraints they’re facing, signaling that the world has shifted.  And I buy those little tell-tail signs that don’t necessarily have a tangible impact but are a mark of something significant.

In my mind one of those little events happened when Apple released their remote wipe functionality to consumers in June 2009.[1313.Apple MobileMe Debuts Find My iPhone, Data-Wipe Services, InformationWeek, 6/17/2009 [link]]

7 years? 8 years? After RIM had remote wipe, Apple was the first to deliver that functionality to consumers.

What does this tell us? Yes, RIM is a “spent force.”

Oh, but RIM’s working on it. There have been rumors that it’s in the works, and there was even a screenshot found last week of the Blackberry Shield, a service to allow consumers to remotely wipe their handhelds  ((Updated! Blackberry users get ready for remote wipe on a phone, soon,,,, real soon. bgr, 7/12/10 [link])).

Other indications?  As of Summer 2010, there is still no functional web browsing on the Blackberry (do I need to remind everybody, the thing has PUSH EMAIL!! And “push email is hard”).  Non-Blackberry users have a hard time believing this.  The conversation goes like this: Bad reception? No, I was on WiFi. What happens? Well there’s this blue progress bar at the bottom of the screen that completes a few times, and then just stops, and it’s just frozen there saying something like Loading [ 12 / 27 ]. Hmm,,, I don’t have that blue bar or numbers on my iPhone…

Yeah, anyways, no functioning web browsing—X number of years into this whole “smart phone” thing.

Oh, but RIM’s working on it.  There’s a new browser in development.  It’s based on Webkit, you know, Apple’s web browser.  It’s coming in a new release of their operating system.[1414.BREAKING: July 10, 2010, Blackberry users get ready for “Fluid, Fast and Snappy” web browsing on a phone, soon,,,, real soon. A breathless Blackberry user’s sneak peak at the upcoming webkit-based web browser [link]]  In this new release, a lot of the GUI widgets are now finger-sized, so the same operating system can be used on both keyboard and touch devices. (It always struck me that when scrolling down your contact list on old Blackberries, like my trusty 7230, there was absolutely nothing on the screen but the spelled-out names of your contacts. No borders, no shading, no scroll bars.  Only what you needed: a stark black and white list of names.  They could have put a 1-pixel black border around the list, kinda box it in so you feel “safe,” but they didn’t. The first letter of the contact names started 1-blank-pixel away from the left hand border of the screen. Google minimalism, before there was a Google).

But, I read a report from someone about “touch” being the future.

Other indications that RIM is a “spent force”?

Realizing that the MS Exchange server + BES + $100k per year Exchange Admin babysitting the on-premise server software was a bit much for small businesses, RIM undertook the programming and development of a Blackberry server targeted exclusively at smaller businesses.  It was called the Blackberry Professional Software and it lagged behind in features and really had no purpose other than being a 1/3rd of the price of BES. [1515.RIM Kills Projects, berryreview.com 2/29/09 [link]]

A few years into development they cancelled the project.

The company that once did everything necessary to make the user experience it envisioned (Made the hardware! Made the software! On the handset! On the server! And integrated it with existing corporate infrastructure! Inked crazy back-end deals with pager data networks for the service! And then Teir-1 carriers once they proved the model!), now can’t get the basics done.

The Choices We Face

We took the plunge on getting the “real Blackberry” experience with Google Apps using the method detailed above.  It’s working flawlessly, and there are huge payoffs in coordination. The “real Blackberry” experience is wonderful.  But before going down that path, we asked ourselves, is there an easier way to get comparable live wireless integration with Google Apps?  We are an existing Google Apps customer, so what about Android?

Android has never appealed to me, even despite my long term involvement with the Linux operating system.  Although I will admit to feeling the perverse appeal of the recent advertising for the bulky, wireless dreadnaught, the HTC EVO. In a brassy lead-with-your-weakness marketing ju-jitsu roll, Sprint is out there hyping the “Big and Powerful” thesis for the HTC EVO with the marketing slogan: “First [it] has a freaking kickstand”[1616.Sprint HTC EVO advert, San Francisco’s Market Street, July 2010 [pic]].

There is a certain alluring liberation in their offer to just NERD-HULK-OUT, buy a phone with a freaking kickstand and say to hell with society![1717.Even uber-nerd striver Michael Arrington taps out and cries uncle on the HTC EVO [link]]  As a side note, marketing like this will not help Android’s heavy male skew (male Android users outnumber female Android users 3-to-1[1818.Survey Says: Android Users Mostly Male, engadget.com, 02/26/10 [link]]), but there is probably some interesting dynamics about building adoption for a platform (Android) and first adopters (as there is a large segment of male tech early adopters) that may make such a male skew beneficial or at least an acceptable part of the plan.

Do Android devices come out of the box with live wireless integration to Google Apps? No, we are not there today. But if you look at the huge amount of solid, enterprise-ready code that Google has cranked out (detailed in the list above—App Sync for Outlook, BES Connector, etc.) with so little fanfare or drama, you can tell that one day we will have an Android that works perfectly out of the box with Google Apps. And it will work over “dumb-pipes” wireless.

The day will come when all Android devices, across all manufacturers, will have flawless live wireless integration (calendar, contacts and more) with Gmail or your Google Apps domain, built-in. No integration required. The Google Apps domain administrator will have a “Wireless” tab in their admin console, and the consumer will have a “Wireless” tab in their Gmail settings page[1919.And this is not mentioning the additional inevitability of Google integrating their Google Voice offering into the Android platform.].

Wow.

Now you start to see the absolutely breathtaking strategic power of Google.  How does RIM counter this?

Google “owns” the actual “user accounts” with corporate users at Google Apps and consumer users at Gmail.  According to Google’s latest released numbers for Google Apps there are 2 million organizations, with 25 million users[2020.25 million People Have Gone Google, googleblog, 3/17/10 [link]], and 8 million  users of “Google Apps for Education.”  The numbers at Gmail are a little harder to come by, but it’s probably safe to say that Google has at least 100 million active consumer email accounts and could have as many as 200 million.[2121.Why Google Buzz Will Be A Hit, cnn.com, 2/11/10 [link]]

The decision shifts away from: “I’ve selected my wireless device (Blackberry), now how do I integrate it with my existing email/groupware account (MS Exchange)?” to: “I’ve got my existing email/groupware account (Google Apps), now which wireless device should I select (any Android will do)?”

Whoa, wait a minute, wait a minute, I thought we were competing on wireless devices. RIM’s are really good: they have great battery life and the keyboard is great, and we’ve seen some really whack Android devices. And isn’t Android going to be facing a lot of the same problems that held Microsoft back in the wireless market? Namely, selling the OS to different OEM vendors. So is there going to be fragmentation and that weird disconnect between the handheld’s hardware and the software?

Yeah, ok, I am feeling better now. Yes, I’ll give it to you that Android devices are getting better, but it’s still going to be a long OEM/user adoption slog. Maybe Android gets a good streak of “design wins” on different handheld models and then perhaps goes through a dry spell, but RIM’s got time because it’ll have the edge on unit volumes for the duration of this long adoption slog.  Yep, that’s how RIM beat the Treo.

Except, the game has changed.

It’s kinda not about the device anymore. It’s kinda like which camp you are in.

Cloud or On-Premise.

Consumer/Small business sales or enterprise sales.

In February 2010, RIM announced a free BES server download option. From the coverage[2222.RIM to Give Away Server Software, news.com 2/16/10 [link]] of the announcement at Mobile World Congress:

BlackBerry maker Research In Motion(RIM) is trying to hold on to business customers with a free version of its BlackBerry Enterprise Server(BES) software. Co-CEO Mike Lazaridis announced here Tuesday during his keynote address to the Mobile World Congress that the company will offer a free version of BlackBerry Enterprise Server software for small and medium-size business customers, as well as for businesses that want to let employees use their own phones to access corporate e-mail [SDO- emphasis mine].”

What percentage of the Total Cost of Ownership (TCO) of an on-premise MS Exchange/BES installation is the BES license fee?  Probably not much. Why did RIM drop the price to zero? Why not less than zero?  Notice how we’ve just shifted into reverse while driving full speed ahead on the freeway. Companies used to come to RIM and pay them big bucks for the functionality in BES and now it seems that BES is bolted onto a software model (on-premise) that is, if not in decline, then distinctly not on the rise[2323.The same type of questions could perhaps be asked of MSFT’s recent launch of the free use of Microsoft Office Web Apps at the same time as “the ole Croesus-maker” (as “Uncle Bill” is known to call it) – MS Office (2010 CD version) was launched. Microsoft Office Web Apps Officially Launched, tomshardware.com, 6/9/10 [link]].

Now the MS Exchange/BES stack is a barrier to adoption and sales.  It used to be a profit center. But now? Is it a loss leader? RIM should give away the server software to sell the monthly service fees and the devices, right?

And the services fees?  Google is fully embracing the “dumb-pipe” model of wireless data. And their Android wireless integration is and will be “dumb-pipe,” meaning no additional charge on your wireless bill for “value add”—just your standard data charges.  RIM may find that it’s hard to charge for something that others offer for “free.”  Okay, so nothing’s free, but Google already has a service billing relationship with its Google Apps customers and a monetization model for its consumer Gmail accounts (adwords and miscellaneous “ecosystem” stratagems).  Yeah, it’s expensive to run data centers in support of wireless services, but Google will just slip that charge into the whole price you pay for Google Apps—the price that you’d gladly pay for even just 20% of Google Apps’ functionality. Google doesn’t need to come through the front door of the wireless carrier’s billing system like RIM does (or at least has been doing).

So RIM should just be the best hardware device company out there, right?  Well, it was the three legged stool of Software Revenue, Service Revenue and Hardware Revenue that gave RIM its staying power.  Knockout Software Revenue and Service Revenue and go with hardware-only? Shit. It could be done. But it brings up memories of the final watch at Palm when everybody was waiting around for the release of the Pre. This was to be the hit with consumers that saved the company.  But it didn’t happen.  Maybe a better or earlier Pre could have saved Palm but the point is that you don’t want to get into a position where you need to be saved by the next consumer electronics hit product.

And being a hardware-only company requires certain DNA, the type of DNA that you only get by growing-up and surviving on the hard scrabble as a hardware-only company.  Sooner see a camel through an eye of a needle than see someone whose gotten rich (and fat) off of software license fees get into HW heaven.

Bottom line is this: if you’re RIM, you’re feeling pretty naked right now for not “owning” corporate and consumer “user accounts.”

But how does RIM counter this increasingly acute threat of Google “owning” user accounts—this pincer movement between their “user accounts” and their mobile software platform that has taken 5 years to unfold?

Can RIM just follow the Google game plan?  Launch “Bmail.com” for consumer email accounts and “BB Apps” for corporate customers?

I had to take a breather and get a seltzer after merely contemplating the amount of time and effort that would take. It would be a gargantuan undertaking.  And one fought from a reactive place, a desperate place.  No “invite only beta” for Bmail.com here.  No playful 5 year “beta” label here either[2424.Gmail loses beta label, zdnet.com, 7/7/09 [link]]. It’s at this point in a chess game when a player, looking at these prospects and seeing the moves ahead, lays down their king.

But it’s not like RIM is hurting for resources. They could fund this massive undertaking.  As East-Coast Blogger/Venture Capitalist Fred Wilson pointed out[2525.Fred Wilson: Why I Don’t Like Stock Buybacks, avc.com, 6/25/10 [link]], RIM has recently implicitly stated that they have nowhere to invest their cash hoard when they announced that they would be using their corporate treasury to buy back their shares in the public market. Mr. Wilson is right when he rhetorically asks: “Can’t you think of anywhere to spend this money? Any big projects come to mind, RIM?”

But RIM is sort of at an over-under bet on this one.  It’s either go-for-broke, bet the company and use all your resources to take a run at owning “user accounts” or keep investing at the low current rate.  Spending at an increased rate in the middle, even a rate substantially above the current rate, doesn’t get you much.  And RIM has, as is in part indicated by the share buyback announcement, taken the “under” proposition.

And it’s hard to blame them.  It’s a much larger topic than I have time to address here, but it’s situations like these that speak to the limitations of the public company governance structure.  Even in today’s era of the “Imperial CEO,” it seems that on a certain level the CEO lacks the authority to make decisions like this.  Not the formal authority but the “moral authority.”  In a certain sense what is needed is the authority of a “unified executive,” if you will, an owner-manager in the Henry Ford tradition. And it is this function that the PE industry, when it’s at its most noble, provides. But this topic, along with the topic of when the PE industry is at its most base, warrant a full discussion at a later date.

Google Astride All The Kingdoms of the World

How did Google arrange things whereby the old market leaders, the guys that owned this market, are now on the outside looking in?

It is fortuitous that these two pieces, Google Apps plus Google’s mobile software platform, came together. Even if some brilliant Goog Wonk thought 5 years ago they would, it was no sure thing.  It took long term investment and continual developmental iterations.

This is what gives Google its strategic power: loot + execution.

Google has a small white hot burning core of profitability. It uses this “excessive profitability” to fund projects in strategic adjacencies in order to build their ecosystem and evolve the company as the tech industry shifts.  It can fund these projects indefinitely.

Execution. You can’t go into all these strategic adjacencies like Google does if your software development looks like the pained labor of RIM building Blackberry Professional Service (BPS).  It doesn’t work. Embark on any type of strategic movement and you’re kinda taking a flyer. And the longer and more ponderous the project becomes, the more vulnerable you are to everybody in the room (not just the “short-sighted bean counters”) asking “why the hell are we doing this?”

If the development of the first version of Google Apps looked like the first half of the development of Windows Vista, it wouldn’t matter how persuasive the Goog Wonk’s PowerPoint presentation was about the strategic value of these efforts, they’d be on the chopping block, and we’d be living in a different world.

But, you say, Google has a ton of people loafing around, etc. It’s got PhD’s working on “javascript hacks” and all of these small 3-person harebrain projects that go nowhere. These projects never launch and it burns people out. True, but through that parade it gets something done even if it’s really “inefficient” and comes with “a high price tag.”  That’s the important part—because the alternative is Microsoft’s recent efforts.

Microsoft bought Danger, Inc., the maker of the Sidekick smart phone/service, for $500 million to help its strategic efforts in the mobile space. The product of that union was recently realized when Microsoft released, and then pulled from the market, a flawed device called the KIN. The complete and utter desultorily defeat of this effort sent recriminations flying[2626.Post mortem: KIN’s tragic demise (and the fading of Danger), arstechnica.com, 7/2/10 [link]].

I want to quote some inside commentary[2727.The KIN-fusing KIN-clusion to KIN, Mini-Microsoft, 7/6/10 [link]]  on what went down in its entirety, because I think it’s important:

“To the person who talked about the unprofessional behavior of the Palo Alto Kin (former Danger team), I need to respond because I was one of them.

You are correct, the remaining Danger team was not professional nor did we show off the amazing stuff we had that made Danger such a great place. But the reason for that was our collective disbelief that we were working in such a screwed up place. Yes, we took long lunches and we sat in conference rooms and went on coffee breaks and the conversations always went something like this.. ‘Can you believe that they want us to do this?’ Or ‘Did you hear that IM was cut, YouTube was cut? The App store was cut?’ ‘Can you believe how mismanaged this place is?’ ‘Why is this place to dysfunctional??’

Please understand that we went from being a high functioning, extremely passionate and driven organization to a dysfunctional organization where decisions were made by politics rather than logic.

Consider this, in less than 10 years with 1/10 of the budget Microsoft had for PMX, we created a fully multitasking operating system, a powerful service to support it, 12 different device models, and obsessed and supportive fans of our product. While I will grant that we did not shake up the entire wireless world (ala iPhone) we made a really good product and were rewarded by the incredible support of our userbase and our own feelings of accomplishment. If we had had more time and resources, we would of come out with newer versions, supporting touch screens and revamping our UI. But we ran out of time and were acquired and look at the results. A phone that was a complete and total failure. We all knew (Microsoft employees included) that is was a lackluster device, lacked the features the market wanted and was buggy with performance problems on top of it all.

When we were first acquired, we were not taking long lunches and coffee breaks. We were committed to help this Pink project out and show our stuff. But when our best ideas were knocked down over and over and it began to dawn on us that we were not going to have any real affect on the product, we gave up. We began counting down to the 2 year point so we could get our retention bonuses and get out.

I am sorry you had to witness that amazing group behave so poorly. Trust me, they were (and still are) the best group of people ever assembled to fight the cellular battle. But when the leaders are all incompetent, we just wanted out.’

This is proof again that we’re in an industry where an “X-factor” is still needed. And this case also helps characterize what “execution” means.  Execution doesn’t mean that you can deliver a great product with 50 engineers when the other guy needs 100.  It’s not that you can deliver the 9/10 product when the other guy can only deliver an 8/10 product.  No, it’s about having the ability to produce something, anything in fact, that clears the bar (and be able to do that repeatedly, in small steps, over time).  Because the alternative is not just a so-so product, that costs a little too much to develop or took a little too long to produce. No, the alternative is driving the $500 million truck (Danger, Inc.) into the ditch.

What is RIM to Do?

RIM has some options. I think they lead with their strength and try to become a thought leader with wireless groupware/productivity. This fits RIM’s strong market perception of being a “no nonsense business tool” and there is a gap in the consumer market for the functionality of live wireless integration of calendar and contacts and wireless groupware/productivity (much more of a gap there than in phones that allow you to message your “homies”). Take a page from the Google playbook and get some de facto standards going that solve “coordination problems” in the sphere of calendar, contacts and groupware.

RIM could maybe pull together some 18 month projects that do something, or shake up some aspect or another of the market.  But anything they do at this juncture will be, on the whole, insufficient to change the outcome. At this point it is a struggle of civilizations—and for so many years now Google has been eating something different, breathing something different and organizing their efforts differently that all equivalency or common currency with RIM has disappeared.  Google is operating on a plane that is beyond RIM’s ken. There is a fundamental “incommensurability” between the set of opportunities and risks faced by RIM and those faced by Google.

We’ve entered the era of the rise of the Andorid Empire, I guess.