Understanding New Product Innovation:
Research In Motion's
®
BlackBerry








Swastik Nigam
rd
3 December, 2007Table of Contents

Table of Contents.......................................................................................................................................... 2
Introduction .................................................................................................................................................. 3
Company History ......................................................................................................................................... 3
Uncovering the Business Model................................................................................................................... 4
Breaking open the BlackBerry .................................................................................................................... 6
Understanding the BlackBerry innovation................................................................................................6
Value-Added Time in the context of the BlackBerry..................................................................................7
Unpacking RIM's Corporate Innovativeness ............................................................................................ 8
Strategy......................................................................................................................................................9
Shared Values & Staff..............................................................................................................................13
Skills & Teamwork...................................................................................................................................14
Systems....................................................................................................................................................16
Sources....................................................................................................................................................16
Conclusion................................................................................................................................................... 18
References ................................................................................................................................................... 18Introduction
Research in Motion (RIM) is a leading designer, manufacturer and marketer of
innovative wireless solutions for the worldwide mobile communications market. Through
the development of integrated hardware, software and services that support multiple
wireless network standards, RIM provides platforms and solutions for seamless access to
time-sensitive information including email, phone, short messaging service (SMS),
Internet and intranet-based applications. RIM's products, services and embedded
technologies are used by thousands of organizations around the world and include the
BlackBerry® wireless platform, software development tools, and other hardware and
software.

The BlackBerry revolutionized the way e-mail was accessed. It converted the otherwise
pull-technology access into a push-technology access. This has been led to a great change
in the behaviour of the customers and even though it may not be considered many to be a
revolutionary technological innovation, it has radically changed the way a large no. of
people live.

Company History
Research in Motion was founded in Ontario, Canada in 1984 by Mike Lazaridis and
Douglas Fregin (Innovation in Canada, 2003). While Lazaridis was still attending the
University of Waterloo, he and Fregin founded Research In Motion as
an electronics and computer science consulting business. If there was
ever a company name that reflected the philosophy of continuous
innovation, this had to be it. Within four years, RIM became active in
the transmission of wireless data and setting up wireless point-of-sale
customer terminals using radio waves. They evolved their company
from wireless point-of-sale integration into paging and then the
wireless data industry. RIM launched its IPO in 1997 on the Tokyo
Stock Exchange and began trading on the Nasdaq Stock Exchange in
1999. RIM 850 and RIM 950, pager sized handhelds were introduced in 1998.In 2000 RIM launched BlackBerry, which has been its most successful brand. In 2002, it
launched TSupport, a suite of technical support and software maintenance programs. In
2004, the company launched the 7510 version of Blackberry, at the same time launching
the BlackBerry in a number of new markets in alliance with various carriers including the
Cayman Islands, Barbados, India, Malaysia, South Africa, Germany, France and Belgium
amongst others. RIM introduced their launching program allowing other device
manufacturers to incorporate BlackBerry software in 2004. SureType a combination of
the phone keyboard with the QWERTY keyboard was introduced in the BlackBerry 7100
series in the same year. Yahoo! And RIM expanded their strategic alliance to bring ahoo
services to BlackBerry users including Yahoo Fo for Mobile, Yahoo Search, Yahoo Mail
and Messenger in April 2006. Recently, RIM decided to go directly to the consumer
market through the launch of the BlackBerry Pearl series which consists of a large no. of
common applications as well as an MP3 player and a built-in camera amongst others.
Uncovering the Business Model
RIM's primary revenue stream is its BlackBerry wireless platform, which includes sales
of wireless devices, software and services (Research In Motion Annual Report, 2007)

RIM generates hardware revenues from sales, primarily to carriers, of BlackBerry
wireless devices, which provide users with the ability to send
and receive wireless messages and data. This accounts for
approximately 70% of the revenues.

RIM generates service revenues from billings to its BlackBerry
subscriber account base primarily from a monthly infrastructure
access fee to a carrier/distributor where a carrier or other
distributor bills the BlackBerry subscriber. The BlackBerry
subscriber account base is the total of all subscriber accounts that
have an active status at the end of a reporting period. Each carrier instructs RIM to create
subscriber accounts and determines whether the subscriber account should have an active
status. That carrier is charged a service fee for each subscriber account each monthregardless of the amount of data traffic the subscriber passes over the BlackBerry
architecture. This accounts for approximately 18% of the revenues

An important part of RIM's BlackBerry wireless platform is the software that is installed
on corporate servers. Software revenues include fees from (i) licensing RIM's
BlackBerry Enterprise Server™ ("BES") software; (ii) client access licenses ("CALs"),
which are charged for each subscriber using the BlackBerry service via a BES; (iii)
maintenance and upgrades to software; and (iv) technical support. The software revenues
account for approximately 6% of the total revenues.

The Business Model of the Blackberry is rather unique. It works with clients to
understand the market needs as well as the client-specific needs. It uses
the information to develop the hardware products which are also sold
to other customers and form a bulk of the revenues. For the clients it
creates specific BlackBerry service solutions which are bundled with
the handheld devices. The software is an additional component which
is licensed by the carriers to provide BlackBerry enabled services to
their customers.

Thus the BlackBerry Business Model can be illustrated as below:

LiLicceensnseess DeviDevice Mfce Mfrsrs
(e(e.g. Noki.g. Nokia)a)
BBuussiinenessss n needeedss

CliClieentnt PrProodducucttss CustomeCustomerrss
(e.(e.gg.. mobi mobillee carrcarriieers,rs,RIRIMM ((OtOthheerr En Enterpterpriserisess,,
SMESMEss))
InIndivdiviidualsduals))

BuBusisinneess sss soolutilutioonnss InputsInputs

DeDevviicecess
SoftSoftwwaarere
MaManufnufaactctuurriinng,g, R&D R&D
IntegrIntegraatteedd
SoSoluluttiioonnssBreaking open the BlackBerry
In understanding the innovations behind the BlackBerry, it is of credit to understand the
usage of the device as detailed below:

Question Answer
What? The BlackBerry - a handheld communications device which has
redefined e-mail usage.
Where? Anywhere. It carries the advantage of mobility and connectivity 24/7
Why? Provides enterprises connectivity between its employees. Useful in
aggressive corporate cultures, for emergencies and for swift decision
making.
How is it Carried in the pocket. Used through the carrier networks through push-
used? button technology.
Understanding the BlackBerry innovation
It maybe debated whether the BlackBerry is a radical innovation or is a step-change
innovation. Even though e-mail as a form existed and is still pre-dominantly sent through
computers, it is significant to note that the BlackBerry has taken the form of
communication and empowered people to use it one the move. Its size of impact on a
section of e-mail users has thus been very significant though not on all e-mail users.
Hence it can be considered to be a radical innovation for those corporate executives,
government officials and emergency driven professionals for whom doing business has
changed.

Jim Balsillie, Co-CEO makes an observation about the importance of timing. If the
BlackBerry had come out a couple of years earlier, it may not have been very interesting
because e-mail wasn't as popular yet. "It was the right time for us to do that because the
offering and the market opportunity and the value proposition and the uniqueness stood
on its own merit. We did it at that time and we certainly have no regrets. It appears, in
hindsight, to have been a very wise strategy," he says.Value Curve for the BlackBerry

Value Curve for the BlackBerry
Relative Level
.
.. g ty e
ity se ity ty
bil u icab dlin tiv bili uri ag
o of n n c lia c im
M y u ha ne e Se d
t m
ili a on R te
ib m at ca
x o C ti
le C D is
F nt ph Laptop
ta o
s S
In BlackBerry
Key elements of the products Cell Phone


We can uncover the benefits provided by the BlackBerry as against the Laptop and the
Mobile phone through using the above Value curve. It is visible that the majority of the
characteristics of the Blackberry lie between the laptop and the mobile phone, however
the security of data being directly erasable if the BlackBerry is lost and the sophisticated
image that the BlackBerry can command are more than for the laptop and the mobile
phone. The value offering of the BlackBerry bridges the gap between the two devices,
providing a bundle of benefits which is a compromise between the two.
Value-Added Time in the context of the BlackBerry
It maybe argued that the BlackBerry has through the enabling of push-technology
increased the value-added time for organizations to complete transactions. If the response
to an email can be considered to be a 'transaction' between the two parties, then the
BlackBerry allows the 'transaction turnover' to increase between the two parties -i.e. the
total value added in time being increased. This is because the parties do not have to wait
for the other to convenience itself to download its emails when it reaches its office.Unpacking RIM's Corporate Innovativeness
In uncovering aspects of RIM's innovativeness from the context of the BlackBerry, it is
of interest to unbundle the various aspects which make RIM's innovations standout.
StrategyStrategy SoSoururcecess SySysstteemmss
ObObjejectivctiveess
CaCapapabibilliittiieess InInteterrnnaall NPNPD PrD Proocceessss
ScScalalee or or
oror
CuCussttoommererss ExtExteerrnnalal MaMarkrketetiinngg
CoCompmpeettiittorsors
ShSharearedd Valu Valueses
OrOrganganizatizatiioonnaal l
CuCullttururee
SSttafaff & Skf & Skillsills
TeTeamsams

To analyze RIM's success, we shall use the above 5-S Model for Corporate
innovativenessStrategy
The strategy of RIM is visible in the way the organization has evolved. It was quick to
innovate and move across different products till it launched the ground-breaking
BlackBerry. In the current day, RIM's Strategic Fit can be considered based on the
following Model:
Objectives Market
•Deliver additional high quality •Increasing Competition (e.g. iPhone
smartphones, software and services to etc.)
address multiple market segments
•Dependence on carriers to provide
•Expand customer base outside the services.
enterprise Segment •Short product life cycles
•Expand product portfolio to include
emerging network technologies •Growing Replacement market
•Growing Asia Pacific mobile phone
market
Internal Fit External Fit •Trend to form alliances
Capabilities Customers
•Excellent R&D team
•Primarily Business enterprises, but
•Strong patent protection increasingly individuals as well
•First Mover advantage •Seek simplicity, reliability and mobility.
•Brand recognition •Seek flexibility and connectivity

Internal Fit
Objective
RIM has predominantly been a B2B corporation. With the
introduction of the BlackBerry Pearl in 2007, it is aiming at tapping
the consumer market directly, thus incorporating a B2C aspect to its
offerings. It aims at increasing the services provided to multiple
market segments, and provide the latest network technologies in it
offerings.

Capabilities
With a strong R&D team which comprises 35% of the RIM's total workforce (2100 of
the 6000 employees) is an indication of the strong emphasis on R&D. Thus it is strongly
enabled to provide cutting-edge technology solutions and bring out products which arebetter than that of its competitors. However, with respect to the emphasis on expanding
the customer base to include those beyond the enterprises, it may seem that RIM will
need to rapidly increase its Sales and Marketing force. This may not seem necessary as a
large portion of the handheld devices are sold to the end-customers through the carrier
networks. There are approximately 100,000 points of sale for the customers. i.e. 1 point
of sale per 80 customers. This shows a very high concentration of BlackBerry access for
its potential customers. This is also a form of innovation where RIM has been able to
utilize the resources of its carrier partners to sell its products. It is a win-win scenario for
both as consumers seek a service which is only provided through a BlackBerry platform
and the carrier makes revenues through consumer subscription. It is also a virtuous cycle
for RIM, as being the sole player; it is purchased by a consumer, who uses it. If satisfied,
he speaks of its benefits to others, increasing brand awareness, Due to the absence of
competition another BlackBerry is purchased, probably through the same carrier. This is
thus a virtuous cycle for both, but far more for RIM than for the carrier. However, with
the presence of players which have licensed BlackBerry platforms to other devices (e.g.
Nokia handsets), competition does appear as other companies are also able to provide the
same services. Thus with the objective of entering the B2C space, it will
need to build a sales force - to counter competition, to drive volumes
and having a different skill-set from those in the B2B sales force.

Verdict on Internal Fit: Moderate-high

External Fit
Market
The Market has become more competitive over the years. With the licensing out of RIM's
terminal software on to other handheld devices as well as of certain features like the
keyboard features has lead to other players entering the market. RIM's chief Mike
Lazaridis states that this is because the demand is so high that RIM alone will not be able
to fill it, thus RIM has licensed it out to other players to get a cash stream without
committing any resources. However, this may also result in the cannibalization of certain
sales. However, as RIM does not license the server software, which synchronizes databetween handhelds and corporate and wireless networks, it is still a money-spinner for
RIM. Also, BlackBerry terminal software on millions of Nokia handhelds should create
demand for RIM's middleware and increase the subscription revenues. In the early years
of any technology innovation, due to the absence of alternatives, the product life cycles
are longer. As the competition increases, the product life cycles decrease. This is because
with incremental changes in the devices, the PLC of each product decreases. Thus for the
BlackBerry, the PLC has been steadily decreasing. This is evidenced by observing the
numbers of models that RIM has been manufacturing every year over the last few years.

There is a growing replacement market for the BlackBerrys. This can be supported by the
fact that in the last quarter RIM added more than 1 million subscribers, greater than those
in all the first five years combined. This is due to both - the increasing replacement
market as well as an increasingly expressed need of businesses to stay connected.
(Datamonitor, 2007)

A larger no. of alliances to provide a more integrated solution is the flavor of the
BlackBerrys. Amongst others, Yahoo! and RIM have expanded their strategic global
alliance to bring Yahoo! Go to the BlackBerry users.

There is an expanding Asia Pacific mobile phone market which accounted for 42% of
global sales. RIM has opportunity to capitalize on this exploding mobile phone market in
the near future as a large no. of users are first time buyers.

Customers
The customers of RIM have been predominantly
business enterprises. With the launch of the
BlackBerry Pearl in 2007, it has also started PerPerssonaonal l WoWork rk
SpacSpacee SpSpaceace
targeting the end consumer market. The
benefits that the BlackBerry provides to its
users are simplicity, reliability, flexibility and
connectivity amongst others. It is of interest to BlackBlackBBerrerryyss decrdecreaseasiningg dis disttincincttiioonnunderstand who the various types of customers and what their behaviors are.

The BlackBerry is a device which blurs the work-personal space continuum, making the
boundary between the two more indistinct. This is shown in the figure alongside:
Even though a majority of employees would prefer to have a situation where the two
spheres are moving away from each other, the introduction of 'anytime, anywhere'
connectivity devices endangers their personal space and may take on the role of
'everytime, everywhere' devices.
MacCormick and Dery (2007) in their study have specified three types of BlackBerry
users:
Type of User Characteristics
Maximisers Maximise working hours Æ maximize personal rewards
Observe stress if NOT connected
Move seamlessly between personal and work spheres
Enhancers Create technological borders to allow restricted access to others
'engaged specific properties of the BlackBerry to enact a set of rules and
resources which increased their work productivity
Conflictors Expressed a love/hate relationship
Agreed on the effectiveness, found that it added to their conflict.
Strongly resented constant connectivity

By identifying the distinctions between the Enhancers and the Conflictors, we can gain
insights as to how RIM can communicate to its customers about crossing the bridge from
the Conflictors to the Enhancers.

The Business Customer
The Business customer is usually a customer which tends to be a Progressive Buyer.
Traditionally these have been Corporate Executives, government and military officers
and the financial and legal communities (BlackBerry reaps the Fruits of innovation,
2007). However, there is another segment which includes manufacturing and healthcare
which remain relatively untapped but can provide a great opportunity for RIM.Market Opportunity thus is very high with a new set of potential customers, the
burgeoning of the replacement market and the emergence of new markets like Asia
Pacific.

Verdict on External-Fit: High

Thus considering the Strategic Fit Analysis, there is a strong external as well as internal
fit for RIM to achieve its goals for its BlackBerry devices.

Shared Values & Staff
The Corporate Culture is considered to be of the following type (Koplyay, 2002):
" Internet Company-type
" Young
" Fast-paced Development Environment
" Casual
" Informal
" Product-functional teams
" Centralized Decision-making

As it is a relatively small company compared to its peers, it relies strongly
on centralized decision-making procedures.

The incentive program is available to all permanent employees and is based on
parameters relating to performance, which includes amongst others - the innovation and
creativity brought forth. RIM provides an environment that supports employees in their
efforts to live and maintain a healthy lifestyle, through the Healthy@RIM program.

Research in Motion has been upheld as having an admirable Corporate Culture. It was
included in Waterstone Human Capital's study (2006) on the Canada's most Admired
Corporate Culture 2006. It had the highest revenue growth (191.2%) against an average
of 38.88% for the over the last three years of the different companies which were listed.This represents the fact that RIM has been able to deliver very aggressively while
maintaining an extremely strong and admired corporate culture.

Skills & Teamwork
Research in Motion has a very strong R&D team but a large part of its revenue comes
through cross-functional, cross-organizational teams. It works with its partners to create
such teams which together take a product out to market. For e.g. Facebook and RIM
teamed to create a Facebook application for BlackBerrys (Facebook, RIM team for
BlackBerry social networking app, 2007), Alcatel-Lucent and RIM partnered to distribute
BlackBerrys in China (Alcatel-Lucent and RIM Team Up, 2007). As explained earlier
such a team is a win-win situation for all. The partners are either to leverage each other's
strengths as in the Facebook-RIM partnership where the benefits of social networking
and mobility get bundled, or in the case of the latter, where the telecommunication
network of one can be leveraged with the mobility provided by RIM in a fast growing
emerging market. Such business-teams contribute extensively to the RIM's topline and
help provide sustainable revenues through long-term
partnerships which are both strategic and financial.
Another aspect of Teamwork is brought forth through strategic
partnerships with competitors. Palm and RIM teamed up in
2005 for bringing the BlackBerry Connect licensing scheme to
the former's Treo (Palm, RIM Team Up for BlackBerry on
Treo, 2005) which would give it secure push-based wireless
email through the BlackBerry Enterprise Server. Thus Palm was successfully able to
provide greater choice to its consumers and BlackBerry was able to enhance its
reputation as its products were being endorsed by its competitors, while at the same time
deriving licensing fees for the same. From the framework of understanding teams, these
can be considered to be Project teams as each of the collaborations are a step-change in
form of an innovation and the team comprises of members from both outside as well as
inside RIM.RadicRadicaall

SteStepp-- ProjeProjecctt
ChanChangege TeamTeamss

Type of InnovationType of Innovation
IInncrcrementementaall

OOuuttssideide IInsidenside
LocatLocatiioonn of of T Teeamam
On considering the Staff and the Team-work aspects together, it can be understood how
well the staff is able to work with members from different organizations to produce
astounding growth figures for RIM and form strategic partnerships with such speed and
skill.Systems
Each year RIM introduces a large no. of new
handheld devices. In Fiscal 2007, it released a large
no. of products including the BlackBerry 7130e,
BlackBerry 7130c, BlackBerry 8703e, BlackBerry
8707, BlackBerry Pearl, BlackBerry 8800,
BlackBerry 8830 and BlackBerry Curve
smartphones. There is an intense focus on quality
and this quality is endorsed by a large no. of testimonials of consumers as well as through
a large no. of innovation awards that RIM has won over the years, including BlackBerry
Pearl which was awarded as one of the top 20 most innovative products in 2006 and the
BlackBerry® Pearl™ 8100 smartphone was chosen by Small Business Computing
readers as the Best Product of the Year for Mobile Devices in 2007.

Though information is not available about the steps of screening practiced at RIM, it is
evident that such a process exists as the structures that have been introduced in RIM for
new product introduction cycles have obtained ISO 9001 certification. As ISO 9001 is an
international quality standard used to assess the ability of a business to meet customer
and applicable regulatory requirements and thereby address customer satisfaction, this
indicates that RIM does perform very well in addressing customer satisfaction through
the structures that it has in place.

Sources
RIM has over the years shifted business depending on market opportunities that it noticed
which were linked to the business they were in. RIM was in wireless point-of-sale
integration with another company's radios. Mike Lazaridis realized that they could do a
better job in making radios than the company itself. Thus the source of the innovation
was an insight brought about by their clients. However, the motivation of the innovation
wasn't based on a need, but based on a market opportunity that their client was notfulfilling. This was when RIM shifted to understanding the paging network. After a little
research, Laziridis discovered a way to convert the one-way channel into both ways. This
was the seed of the BlackBerry. Thus it maybe considered that the source of innovation in
the initial years was based on opportunity as a result of questions asked by the founders.
A very large percentage of its workforce (35%) are involved in R&D. RIM forms a large
no. of alliances with competitors, software companies and carriers to integrate
applications and to launch products . RIM has been able to access a large amount of user
feedback through the formation of internet forums, which it supports. However, a large
no. of sponsors are developers of applications for the BlackBerry. Thus, RIM is also able
to get transparent access to users views on these applications. Due to the cult like
following this product has
PaPartrtnenersrs
attracted, these are very
popular with internet users.
On its own website it has a InInteterrnnaall R& R&DD InnoInnovvaatiotionn
ProductsProducts
forum for Java Developers
(Discussion forum for Java
Developers, 2007). Thus it is
able to radically decrease the UsUsererss
feedback time as well as through the support that users are able to provide each other,
RIM and the carrier are both able to decrease their support services. Thus RIM thus can
be believed to have an Open Innovation Model. It is however doubtful however, about
the extent to which these innovations are integrated into the products. As it maybe
believed that the larger no. of participants on these internet forums are the product
enthusiasts and not the pragmatists themselves which form the bulk of the market. To
diffuse pragmatists backwards BlackBerry has been able to flood the market with
simultaneous launches of different models. Thus the choice changes for the user from :
Either a BlackBerry or NOT TO
Either BlackBerry A or BlackBerry B
This can also be evidence by the fact that in the last fiscal year, RIM launched an
astounding 8 models of the BlackBerry in a year and added 1.45 million users in the yearwith more than a million in the last quarter - larger than all the users they added in the
first 5 years.

Conclusion
Research In Motion, as the name suggests has been a very successful innovator and its
BlackBerry has redefined the way businesses operate. We observe from the application of
the corporate innovativeness model that RIM has a very strong strategic fit with its goals.
It has a very progressive outlook at innovation as all branches of the 5-S model display a
convergence and alignment to Innovation. The Processes and the Corporate Culture
complement each other. The skills of the teams are well-exploited particularly through
cross-organizational teams to develop products and new markets for the BlackBerry. RIM
has a very proactive and economical approach in gaining insights on innovations. They
leverage the internet, their partners and their internal R&D team to enhance their products.
RIM's model of business innovation is thus unique and sustainable, commanding respect
from its partners, competitors and users.

References
Alcatel-Lucent and RIM Team Up to distribute BlackBerry Smartphones in China,
th
(2007), retrieved online on November 27 , 2007 from
http://www.tmcnet.com/planetpdamag/articles/13543-alcatel-lucent-rim-team-up-
distribute-blackberry-smartphones.htm

th
BlackBerry reaps the Fruits of innovation (2007) retrieved online on November 27 ,
2007 from http://electronicdesign.com/Articles/Index.cfm?AD=1&ArticleID=7701

th
Datamonitor: Research in Motion, 2007, retrieved online on November 30 , 2007 from
www.datamonitor.com

Dery K. and MacCormick J. (2007), A study of the impact of BlackBerrys, Working Paperth
Discussion forum for Java Developers (2007) retrieved online on November 30 , 2007
from http://www.blackberry.com/developers/forum/forum.jsp?forum=1

Facebook, RIM team for BlackBerry social networking app (2007), retrieved online on
th
November 30 , 2007 from http://www.fiercewireless.com/ctialive/story/facebook-rim-
team-blackberry-social-networking-app/2007-10-24

Innovation in Canada Case 7: Research in Motion, (2003), retrieved online on November
th
30 , 2007 from
http://www.innovationstrategy.gc.ca/gol/innovation/site.nsf/en/in04212.html

Koplyay T. (2002), Hi-Tech Strategy Formulation - RIM, presented at the Universoty of
th th
Quebec on December 17 , 2002. retrieved online on November 30 , 2007 from
http://www.cata.ca/files/PDF/Resource_Centres/hightech/reports/studies/quebec-RIM.pdf

th
Palm, RIM Team Up for BlackBerry on Treo (2005), retrieved online on November 30 ,
2007 from
www.businessreviewonline.com/blog/archives/2005/10/palm_rim_team_u.html

Research In Motion Annual Report, 2007 (2007)

Waterstone Human Capital, (2006), The 2006 Canadian Corporate Culture Study, 2006
retrieved online on December 2, 2007 from
http://www.waterstonehc.com/resources/Culture2006.pdf