Will RIM find its rebirth by doing what Apple won't?

By Nathaniel Mott , written on January 21, 2013

From The News Desk

“People who are really serious about software should make their own hardware.”

This quote, attributed to computer scientist Alan Kay and relayed by the late Steve Jobs, summarizes Apple's approach to product development. You won't find a (non-jailbroken) iPhone running Android, and both of the company's operating systems, iOS and OS X, are restricted to hardware with "designed by Apple in California" stamped on the back. Whether you call it devotion to quality, tyranny, or obstinance, Apple's philosophy has allowed it to become one of the most important consumer technology companies around today.

Bill Gates confirmed Apple's strategy when he visited Jobs later in life, saying, "I used to believe that the open, horizontal model would prevail. But you proved that the integrated, vertical model could also be great."

It's natural, then, to think that other companies applying the same philosophy to their own products would allow them to better compete with the giant in Cupertino. But is this really the case? Would Microsoft only allowing Windows or Windows Phone to run on its own hardware really help the company compete? Does RIM's control of BlackBerry help the company, or hinder it?

We have the answer to at least a few of those questions. Microsoft tried to control the entire experience with its Surface tablet, which I described as "the next Xbox," a sleeper hit that would help Microsoft get into the hardware business. Yet it seems that a month doesn't go by without a reminder that Surface, Windows 8, and Windows Phone 8 aren't doing as well as Microsoft hoped.

Microsoft was able to enter the videogame console market by following Apple's lead and controlling every end of its Xbox consoles, so there's some credence to the notion that an integrated approach could work for Microsoft. It's worth remembering, however, that the Xbox entered the videogame market during a tumultuous time -- Nintendo had fallen from its throne, Sega wasn't even in the running anymore, and Sony showed that gamers wanted more powerful devices. The market couldn't have been made more ready for the Xbox.

Surface is different. It's a large tablet that launched just before the smaller, 7- or 8-inch form factor was proven, it ships with Windows 8 RT, an arcane version of the Windows operating system that's gotten a lukewarm reception from critics, and it's competing against Apple, not Nintendo. Could the model work in the future? Maybe. But is it working now? No.

According to an interview with a German newspaper, RIM might be leaving the "we build hardware and software, together" business as well. CEO Thorsten Heins told Die Welt (which is the name of the paper and not an exclamation against some defective skin) that RIM might consider selling its hardware business off after BlackBerry 10's launch and move to a more powerful, software-driven platform company.

That may be what it takes to give BlackBerry -- and RIM -- a second chance. Many have nothing but love for the company's BlackBerry Messenger platform, even if they can't stand the company's hardware. Sure, some might like the signature physical keyboard and shape, but a bit of hardware diversity could do the platform some good.

RIM has left the door open to licensing BlackBerry 10 to other companies for a while. Though Heins has been careful to say that the company prefers the "integrated approach" in the past, Engadget reports that he's purposely been vague in that regard to leave the company's options open. That history, in conjunction with this morning's news, lends itself to the idea that we may see a Samsung or HTC built BlackBerry device in the future. (Yes, I saw Samsung's derisive ad against BlackBerry, but given its promiscuous past, it isn't hard to imagine Samsung jumping at the opportunity to diversify its products even further.)

The split wouldn't be easy. RIM makes some 68 percent of its revenues via its hardware division, according to the company's quarterly reports. That number is an 11 percent decrease from a 2011 report, showing that the company's hardware business is bringing less into the company as the years go by.

Getting into the platform business would come with a risk -- which may be why Heins has said that he wants RIM-built BlackBerry 10 devices to "prove" the market before doing anything. RIM isn't a wet dog shaking the hardware business from its fur; it's a trapped animal considering the gnawing of its own leg in order to survive.

But the possibility remains, so BlackBerry might get out of the end-to-end development game as well. It will hurt the company to sever itself from its hardware business, but the last five years have made it clear that something needs to change.

Both Microsoft and RIM have tried the Apple approach. It worked for a while for RIM  and in gaming for Microsoft, but sticking with (or expanding) that strategy hasn't allowed either company to compete with Apple. Neither company is considered to be one of technology's biggest players anymore, as evidenced by the Economist's recent "Big Four" cover, which honored Apple, Facebook, Amazon, and Google. Mimicking their strategies might allow a former giant, like RIM or Microsoft, to get back into the race themselves.

The truth is that Apple is the only one of the "big four" that tries to control the entire experience. Facebook doesn't develop either hardware or an operating system, no matter how many times it's rumored to be doing so; Amazon builds its own hardware but has based it off of Android, not its own solution; and Google, despite its dabbling with end-to-end products with the Nexus brand and signs that it will finally put Motorola to work, is everywhere. Apple is the only one that doesn't rely on other companies to build products.

RIM, at least, seems to be ready to branch out. Rather than sticking to a failing strategy and hoping for the best, Heins seems to recognize that RIM needs a shake-up. (Finally.) Aping Apple's products didn't work. Maybe doing exactly what Apple would never do will.

Gates later added a caveat to his discussion with Jobs: "The integrated approach works well when Steve is at the helm. But it doesn't mean it will win many rounds in the future." As Google and its "profit everywhere" approach continue to grow more powerful, Gates may well be proven right.

[Image courtesy Hello Turkey Toe]