RIM's (Latest) Critical Mistake
Imagine if Steve Jobs had told the consumers in 1997 that "I'm going to launch a revolutionary new device. It's called the iMac or the iPod. If you buy it, you have to sign a two-year contract with a carrier for $90 or whatever per month."
Had Steve Jobs done that, Apple probably would never have lived to see the iPhone, let alone the iPad, because nobody would have bought the iPod or the iMac, and Apple would have gone bankrupt in 2001 or 2002.
Companies such as Apple, Google and Microsoft can get away with forcing consumers into buying SIM-locked devices now because they have staying power. People know that those three companies will be around forever, pumping billions of dollars into further development. RIM doesn't have that luxury right now.
RIM will be asking consumers in the first quarter of 2013 to place a bet on a whole new operating system. Given where RIM finds itself in the market right now, it can't do that while relying on carrier distribution exclusively. RIM needs to sell devices directly to the consumer.
Consumer ExperienceI know many people who are very curious about BlackBerry 10 and would like to give it a shot. Hardly any of them, however, would do so if it entailed buying a BlackBerry 10 on a carrier contract. How do many potential BlackBerry 10 users want to buy their devices come early 2013? The same way you buy a carrier-neutral Android Nexus smartphone directly from Google today, that's how. You buy a GSM unlocked, carrier-neutral, no-contract Android Nexus by going to google.com/nexus and pay $349. Then you either trek over to Wal-Mart (WMT) or StraightTalk directly and pick up a $45 all-you-can-eat SIM card that runs on AT&T. Alternatively, you get a $30 SIM card for unlimited data on the T-Mobile network. The points here are twofold: 1. If you don't like the experience, all you've lost is $349 plus either $45 or $30. Not two years of pain. 2. If you love the experience, you're a) saving at least $45 over a carrier contract and b) able to replace the hardware if it's lost/stolen/destroyed for $349 without having to sign a new contract. What is the bottom line here? If RIM is to be successful in luring over users to BlackBerry 10, they have to copy Google's approach in terms of selling their signature smartphone directly to the consumer in a SIM-unlocked, contract-free, carrier-neutral manner. Not on two-year contracts. At the time of publication, the author was long GOOG, AAPL, RIMM and short MSFT. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV