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Doug Michaelides, managing director of the Macadamian’s Ottawa office (Blair Gable For The Globe and Mail)
Doug Michaelides, managing director of the Macadamian’s Ottawa office (Blair Gable For The Globe and Mail)

How RIM is trying to win the app war Add to ...

As Research In Motion Ltd. continued its freefall throughout 2012, something unusual began happening at Macadamian, a 200-person mobile application developer headquartered in Ottawa.

RIM shares were falling. The Waterloo, Ont.-based company’s BlackBerry was losing share in major markets such as the United States. And the ever-shifting launch date for RIM’s upcoming BlackBerry 10 software platform still seemed far away.

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But client requests for mobile apps to run on BlackBerry 10 began to pile up at Macadamian, which works with huge companies such as Microsoft Corp. and Cisco Systems Inc. RIM chief executive officer Thorsten Heins later said the smartphones would launch on Jan. 30, and amid increasing optimism about the new BlackBerrys’ chances, Macadamian saw interest pick up even more. Toronto-based Xtreme Labs Inc., another 200-person app-maker, also said they saw a big uptick in requests for the BlackBerry 10 platform.

“There’s certainly been a steady increase in volume of requests – and urgency of requests,” said Doug Michaelides, managing director of Macadamian’s Ottawa office. “As we approach the launch date, more and more people are seeing the opportunity and are not wanting to be left out.”

For RIM, getting the enthusiasm – and commitment – of app developers such as Macadamian is a startling success for a smartphone maker that once disdained applications, and goes some way toward answering this crucial question: Will there actually be good apps on BlackBerry 10 phones?

As the iPhone became more popular, RIM’s products suffered withering criticism for lacking great apps. And as the BlackBerry’s popularity waned in many developed markets, top-notch app developers abandoned the platform, leaving BlackBerry users without many of the most popular apps available on iPhones and on Android devices. That, in turn, affected sales.

But there is no doubt RIM executives now believe apps are crucial for the success of BlackBerry 10. The company has poured resources into its developer outreach teams over the past two years and has pledged that BlackBerry 10 phones will have about 70,000 apps at launch. But even as developers prepare thousands of apps to bolster the BlackBerry 10 launch, the reality is RIM is starting from scratch with the new platform and may lack the necessary scale to lure big name apps right at launch – despite the 79 million BlackBerry users around the world using the older technology.

Like its clients, Macadamian also wants to make sure it doesn’t get left out as BlackBerry 10 gains momentum. The software firm, which does about $17-million in annual revenues and has offices in Silicon Valley and Eastern Europe, now has 50 mobile app developers working full-time on BlackBerry 10 – programming and designing at least 10 different apps. The firm’s BlackBerry-specific business unit now has a dedicated vice-president, and has shifted into a relatively permanent fixture within Macadamian’s business model.

“We have roughly a quarter of our work force dedicated to BlackBerry 10 application development,” Mr. Michaelides said. “We’re a people business, so that’s a big decision for us to make. And we don’t make it lightly. We see opportunities in the future that justify that level of investment.”

For RIM to have app developers this excited is a remarkable turnaround from even a few years ago, when the company was almost totally focused on e-mail and messaging functions, and obsessed with stopping non-essential software from draining the BlackBerry’s battery life. But there are numerous reasons for the dearth of apps on BlackBerrys. RIM’s executives originally dismissed apps – and Apple Inc.’s iPhone for that matter – as a non-essential frill, rather than a new reality in the mobile space. This was partially because smartphones were still then mainly a tool for bankers and politicians.

But as consumers began buying smartphones by the millions, the variety of BlackBerrys hitting the market began to multiply: Curves, Pearls, Bolds, and the Torch, almost all of them with different screen sizes, keyboard types and processing power. This greatly complicates the life of developers, who want to maximize the reach of each app and work in a booming, competitive, fast-moving industry where every hour of each employee’s day has to be spent carefully. This splintering – especially compared with the uniformity of Apple’s iPhone, iPod Touch and iPad and combined with RIM’s poor developer tool kit – meant BlackBerry users lost out.

Compared with Apple’s iOS and Google Inc.’s Android mobile platform, which both now have over 700,000 apps each, the BlackBerry simply couldn’t keep up. Big-name app developers skipped over RIM’s platform, while the majority of apps in BlackBerry App World either looked old or crashed the phone once they were installed or used. One only has to look to the failure of RIM’s PlayBook tablet to see what happens when a product launches in the post-iPhone era without apps: The lack of great additional software depresses sales, which in turn deprives the platform of the scale necessary to attract new developers – a full circle, self-reinforcing failure.

The BlackBerry’s failure to gain great apps was also a classic innovator’s dilemma: RIM has long used the Java platform for software that needed to keep being supported, whereas Apple and Google launched their own platforms much later. Though it is an open question whether apps will be as important to the next five years of smartphones as they were to the five years since the launch of the iPhone in 2007, it was clear RIM had to do something dramatically different.

Enter Alec Saunders. RIM’s fresh-faced, entrepreneurial vice-president of developer relations, arrived in September, 2011, and immediately set on expanding the company’s efforts to woo app makers over to RIM’s platform. Mr. Saunders’ team targeted 17 countries that represented the bulk of developers around the world. He began hiring developer outreach people in many of these markets, particularly Southeast Asia, Europe and Latin America. He expanded his team from 37 people to about 140 today, and travelled the world holding developer conferences. In early October he had accrued the 100,000 flight miles necessary for Air Canada’s Super Elite status; by the first week of December, he had 170,000 miles.

“It was just insane,” Mr. Saunders recalls.

There has also been another focus: Building up a presence for developers in the U.S., where RIM was once dominant and still garners a big portion of revenues, but where RIM’s reputation sunk along with its market share.

“When I joined the company, there were no RIM developer relations people anywhere in the United States,” Mr. Saunders said, noting they now have people on both coasts, as well as elsewhere in the U.S. “There’s very much a focus on getting our developer relations folk into the local markets, and getting local applications built.”

John Criswick, the CEO and founder of Magmic Games, has seen RIM’s shift firsthand. When he first reached out to work with RIM about six years ago, he found an organization that was indifferent to games and apps, as well as divided in an inefficient organization that mimicked RIM’s co-CEO structure at the time – with technical and product teams reporting to Mike Lazaridis and sales, marketing and finance reporting up to Jim Balsillie.

“Way back in the day they actually refused to work with us because they were so enterprise focused,” says Mr. Criswick, who started Magmic in 2002 after selling his former company, Beduin Communications to Sun Microsystems in 1998. “Definitely under Thorsten, it’s so transformed now. Instead of dealing with two different divisions of RIM, we’re dealing with one entity. Before we would be talking to people under the two different co-CEOs. It was basically like talking with two different groups. Now it’s so much more of an integrated company.”

And despite RIM’s lack of popularity among the lucrative American consumer segment, the BlackBerry’s popularity in many international markets in Southeast Asia, Africa and Latin America – and RIM’s ability to do “carrier billing” allows disparate emerging markets without credit cards (necessary for Apple’s App Store) to spend “in-app” funds and line Magmic’s coffers here at home.

However, Troy Johnson, who heads Magmic’s partnerships with RIM, Apple, Nokia Corp., Samsung Electronics and others, says BlackBerry 10 may lack the sort of scale, at launch, to lure some of the truly big name consumer apps – companies like Netflix or Skype, for whom making an app for a platform is a huge commitment.

“Most would probably wait to see if the market is going to develop first,” Mr. Johnson said. “Bringing any of these tier one apps to a new platform is not ... trivial.”

 
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