While it gears up for the release late this year, barring any more delays, of a new, modern operating system (BlackBerry 10) and at least one new handset capable of running it, Research In Motion (NASDAQ:RIMM) has another problem that may be tougher to address: a lack of apps. A big part of the reason is market fragmentation, something that a new OS and accompanying smartphone are likely to make worse in the short term.
Fragmentation has long been associated with Google‘s (NASDAQ:GOOG) Android platform, where a slew of manufacturers including Samsung (PINK:SSNLF), Motorola (NYSE:MMI), and HTC all design and sell their own smartphones, making fragmentation difficult to avoid.
But RIM manufactures all of its own handsets and those devices run only RIM�s own operating system, so how can the BlackBerry market be fragmented? The problem lies in RIM’s strategy to offer a wide range of handsets aimed at different customer demographics. In the past few years alone, the company has released several BlackBerry models, including the Bold, Curve, Pearl, Storm, Style, Torch, Tour, and 8800 series. Most models have been through multiple iterations, and in a recent Reuters interview, RIM CEO Thorsten Heins revealed that only 20% of existing BlackBerry users are running a recent version of the operating system.
So while core BlackBerry functions (such as email and voice) are supported across the lineup, other functions are not. The differences in the operating systems among the various models leave developers with two options: design apps to fit only the most-basic BlackBerry operating system features so they can be used on most models, or design apps to work with the advanced features of the new operating systems, which means reaching a significantly smaller slice of the BlackBerry market.
No easy fit
As an app developer, how do you develop for a platform whose phones are running an operating system that might be years old? Even worse, among recent BlackBerry smartphones, display resolution varies from 480 x 320 pixels up to 800 x 480 pixels, and some models are touchscreen-capable, while others are not. When you can’t count on any uniformity in display resolution or input method, development is a significant challenge.
To understand a major reason Apple (NASDAQ:AAPL) has managed to draw over half a million apps to its App Store, consider how much easier it is for developers to write software for the entire Apple mobile user base. There are multiple variations of the iOS operating system, but under 10% of iOS devices are running the oldest system software; within weeks of the release of iOS 5 (the latest version), nearly 40% of iPhone users had already upgraded. Even the oldest iOS version is still capable of running a significant percentage of apps in the App Store.
Apple has also been very strategic with hardware development. All app-capable iOS devices, including the least expensive iPod Touch, have touchscreen capability. Early model iPods and iPhones had a 480 x 320 pixel display, with more recent versions boasting a “retina” 960 x 640 upgrade. The numbers are important: the pixel count has increased, but the aspect ratio remains the same. This means old apps can run on new devices with no changes through pixel-doubling (although screen elements would appear less sharp), while upgrading them to take full advantage of higher resolution displays doesn’t mean redesigning the graphics, just scaling up.
Will More BlackBerry apps matter?
There will always be processor-intensive apps that require the latest iPhone in order to run properly (typically games), or apps that require a GPS that an iPod Touch lacks, but these are a small percentage of the total. The net result is that instead of only being able to reach consumers who happen to own the latest and greatest Apple device, developers can count on reaching a high percentage of all iOS devices at minimal additional development cost.
While RIM’s PlayBook tablet offers the ability to support Android apps (should developers choose to port them), if this capability comes to BlackBerry smartphones, developers are going to face the fragmentation challenge again: is it worth the effort to port an Android app, given that only the most current round of BlackBerry hardware will be capable of running it? Is that limited market worth pursuing?
Apps and users are in a bit of a chicken and egg quandary when it comes to smartphones. Do more apps bring more users, or do more users bring more app developers? Unfortunately, RIM finds itself entering 2012 and what it hopes will be a revitalization of its BlackBerry smartphone business, while trailing significantly in both areas.
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