This question has been circling the internet for months and is still being asked today on numerous blogs and websites. Should RIM have chosen Android and not acquired QNX for their next generation operating system? Why would RIM build from scratch rather than use a proven and popular platform? Did RIM make the wrong decision making it unsuccessful today?
First let me tell you my opinion — RIM made the right decision to not use Android. Now let me tell you why.
The huge success of Android has been driven by two main factors. Low end manufacturers like ZTE / Huawei driving growth in third-world markets and Samsung driving growth in high end markets. I know, you’re gonna tell me but Motorola, LG and HTC sell Android devices too — but take a look at their Android share. Samsung has approx. 40% of all Android shipments with HTC coming in second at 18% (2011 Stats) and dropping with their missed targets.
Android = Software R&D Outsourcing
By utilizing Android, OEMs are making an outsourcing decision — whether they know it or not. What are they outsourcing, you may ask? What they’re outsourcing is Software R&D and Innovation. They’re basically asking Google to do that for them. But as more OEMs take that route, what will differentiate one OEM from another? The answer lies in two places — cost and hardware innovation.
Android Differentiating Strategy #1: Compete On Cost
One way to differentiate as an OEM is to compete on cost. Low hardware manufacturing costs and high volumes will result in success for the OEM with the appropriate setup. This is the approach that ZTE and Huawei are taking. Both deliver decent quality, low cost devices into 3rd world markets.
Android Differentiating Strategy #2: Hardware Innovation
The other way to differentiate as an OEM is to be innovative in hardware design. You typically do that by coming up with high quality and impressive looking hardware, then support the sales of that hardware with a very strong marketing campaign. This is exactly what Samsung is doing.
Hardware Innovation Is Very Risky
However, the cost of Hardware R&D and Innovation is very high, which means you’ll need significant margins and high volumes to be successful. Only companies that have a diversified portfolio of successful products can afford to do so. Why do you think the most beautiful product designs are coming from Samsung and Apple? They’re the only two that can afford the risk due to their other profitable product lines. Companies like HTC found themselves in no-mans land with sub-quality hardware with higher costs than ZTE / Huawei — and they’re suffering for it. Motorola was the same — but now that Google acquired them, we’ll see what happens.
My point is, unless you’re a very large OEM with other revenue streams, you cannot afford to risk your success on Hardware R&D, Hardware-only innovation and Marketing power. It’s just too costly and risky. As such, you need to be able to innovate on the software front, which is typically a more cost effective innovation option. And if you want do that, you cannot outsource your Software R&D to Google by utilizing Android.
Integration Only Viable Strategy
That is the main reason why RIM was absolutely correct in not utilizing Android as it’s next generation operating system. If RIM wanted the chance to succeed, they needed to build it all in-house, with a fully integrated product. And that is what they’re doing. It is the only strategy where RIM has a chance to succeed. One that comes with many risks, but at least they’re risks manageable by an OEM of RIM’s size.
I’ll leave my thoughts as to why I think RIM is where it is for another day. Comments are welcome as usual.