Wednesday, January 17, 2007

iPhone... Industry Impact

How could I not write something about the iPhone?

Considering my last post directly challenged Palm and Palm CEO's inability to fully appreciate that a company is always capable of surpassing itself; to assume that a competitor will execute in the same way and make the same mistakes years later is a little naive and short sighted.

On another related note the launch of the iPhone marks (almost to the day) the two year anniversary of my death proclamation on RIM. A little more background is clearly needed here. You see, the University of Waterloo has a Co-op program (they pretty much wrote the book on Co-op actually) and RIM hires a LOT of UW students since their campus is right next door; quite literally, I'm not kidding. Probably half the students walk through RIM's campus to make it to class every morning. Anyway, I did two Co-op terms with RIM (January-April and then September-December 2004). I always made jokes with family and friends because shortly after I joined RIM's stock soared and then shortly after I left it tanked: going from roughly $34 to $92 (that's with adjustment for a 2:1 split). Come March 2005 they were down to about $60. Stocks really aren't what I care about because they say very little about a company. Rather they tend to be a completely different game that is played in tandem to a company trying to innovate and deliver products; they are a game to allow others to make money and that might just impair the company's ability to execute and deliver the products they would like to.

To get to the point: mid December 2004 I decided not to go back to RIM for a third Co-op term and try my luck with another company. Try explaining that to parents who are helping your through school and up until that point think RIM is doing fantastic because their stock is still soaring (it was at it's high point then actually and has risen above that since). Basically at that point I had come to the realization that RIM was now surfing a 10 year old wave about to crash on shore; the top brass just kept saying how cool it was that RIM did wireless email. To add a bit to the context Good was just starting to offer some interesting services that included wireless email but also full integration into company intranets. Sybase (more precisely their iAnywhere subsidiary) was releasing a solution to wirelessly connect to their back-end databases; imagine being able to query sales reports and place customer orders all from your handheld (unheard of at the time). Finally, Microsoft was readying a free component that integrated with exchange server to push wireless email ie: the equivalent of RIM's blackberry enterprise server; a crucial part of their financial mix at the time though that has changed somewhat now. RIM in the mean time is busy settling a bogus law suit with NTP that it told its employees that they would never settle and boasting about doing wireless email.

Long story short when people asked me about RIM I told them I had a great time, worked on an awesome team and learned a lot but that if the execs didn't realign their strategy within the next year (possibly two) that within five years RIM would essentially be gone. Clearly it will take longer than five years to completely destroy a company like RIM, heck even Nortel is still kicking around and look at Sun's recovery and SGI now out of bankruptcy. But from a technology and innovation point of view RIM would be insignificant within five years and that's as good as dead.

Sure RIM will keep having corporate contracts for some time to come since they are so well established there. That really doesn't matter; Apple isn't going after the corporate. This might be one of the few times that we get to witness a reversal of the buying power. For the last several years techno-fetishery like the BB was left in the realm of the C level and top execs; and companies could justify the cost for it. Regardless of what people are saying about the price of the iPhone right now people bought an iPod five years ago at similar prices. The iPhone's price will drop with volume and variations on the base model. It will be consumers buying this device; mid level management and the likes buying it for personal use, expensing the carrier service fees and asking their IT departments to make their email work with the device. There are privacy concerns remaining about exposing corporate email to iPhones compared to BlackBerries but there is so little information about how to access email beyond Yahoo!'s free push based email on the iPhone at this point that I won't even bother speculating. For a brief moment (two years or so) we'll be able to see a shift from corporate buying power to consumer buying power shaping the landscape of tech toys.

I have more to say about the iPhone design itself. That will be for another post