The humbling of RIM

It's amazing what you can do when you rule the smartphone heap. You can dictate terms to operators, lock popular services and applications down to your proprietary OS, and rule over your developer program with an iron fist. That sums up Apple (NASDAQ:AAPL), iTunes, the App Store and the iPhone’s exclusive distribution deals, but I could just as easily be talking about Research in Motion (NASDAQ:RIMM) four years ago.

Before the advent of the iPhone and Android, the BlackBerry was the only game in town when it came to enterprise email. Operators lined up to offer the iconic black messaging nuggets and the smartphones that followed, lured by the lucrative data plans the BlackBerry brought. RIM, however, maintained tight control of the customer relationship, sending every email through its data centers and controlling directly or indirectly the licensing of BlackBerry Enterprise Server (BES) which all of its business synchronization services sprang from.

Like Apple, RIM kept its core services close to its vest. Except with a brief flirtation with BlackBerry Connect--which went nowhere--RIM’s core push e-mail and enterprise services have remained locked to its devices. Just as Apple states in its commercials: “If you don’t have an iPhone, you don’t have an iPod in your phone,” RIM previously could have claimed “if you don’t have a BlackBerry than you don’t have truly enterprise-class e-mail in your phone.”

RIM never took Apple’s micromanaging approach to app development and distribution (at least not until the launch of the PlayBook), but then again its developer resources were always limited, offering up Java as a development platform, while the core applications of BlackBerry remained in house. Apart from the suite of powerful enterprise apps it and its partners developed, BlackBerry apps were nothing to get excited about regardless of whether they came from BlackBerry App World or some other source.

Now everything that made BlackBerry BlackBerry is changing.

Among the stream of new products and announcements at BlackBerry World this week, RIM executives revealed they would open up BES, extending BlackBerry’s core device management, provisioning and push synchronization technology to iPhones, iPads, and Android phones and tablets. That tidbit got a bit lost among the swirl of BlackBerry OS 7 and new device news at BlackBerry World, but its impact could be huge. RIM is moving away from being solely a device company to one that focuses on stand-alone services. Think of how many enterprises that already have huge investments sunk in BES, yet have to figure out a way to bring non-BlackBerry phones and tablets into the fold. Today they must support another enterprise platform right alongside BES. RIM has realized it can’t force its customers to remain all BlackBerry device shops, but it can keep them all BlackBerry Enterprise server shops.

But RIM’s opening up in other ways, too. The PlayBook won’t just be another isolated BlackBerry product. Instead RIM is either now or plans to support reams of different development platforms, programs and options (CP: RIM: PlayBook strategy may seem schizophrenic, but there’s a bigger plan at work). It may not be able to build a native developer community as big as Google’s (NASDAQ:GOOG), but it can poach applications from the Android community by supporting a runtime. Apple may not work with Adobe, but the PlayBook will feature Adobe’s AIR front and center. RIM may come third or fourth in the pecking order when it comes to choose a developer program, but with porting solutions like the Unity Game Engine and the IdeaWorks Labs’ AirPlay, developers can develop for Android, Apple and RIM simultaneously.

In some ways, RIM is following a similar strategy to Google. Google wants Android to succeed because it provides a friendly home for Google mobile services, but it’s certainly not limiting G-mail, Google Talk, search, Maps and the like to Android phones only. It’s signing up distribution deals and loading those apps into stores. Google is a services company that became an OS—and less successfully, a device—vendor to ensure it could never be locked out of the mobile market. RIM now appears to be taking the opposite approach. It’s a device company becoming a services company to ensure that its BlackBerry devices never lose their elevated position in the enterprise market.

RIM’s Tablet OS—and eventually smartphone OS—strategy represent the same thinking. Give developers so many options, they can’t help but provide apps for the BlackBerry platform. The more apps, the more useful the devices become and the more appeal they have, which should eventually drive native development efforts, which in turn will produce more and better apps, and so on. The only counterproductive thing to that strategy is RIM’s decision to lock down app distribution to BlackBerry App World—at least for the PlayBook. RIM probably wants to exert some control, but like Apple it probably wants to make some money off of apps, too. That might work if you’re sitting pretty at the top of the smartphone development heap like Apple, but RIM probably needs to be opening up new distribution channels, not shutting them down.

Years from now Apple may be forced to make a similar choice. It’s hard to imagine the iPhone’s momentum faltering, but it’s happened to Apple’s computing products before. As long as it’s the smartphone king, it can continue dictating terms just as RIM did in the past. But if Android continues to grow at its current pace and if Microsoft’s (NASDAQ:MSFT) Windows Phone 7 or even the new BlackBerry were to challenge Apple further, Apple might decouple its services from its devices, just as it did with iTunes for the PC.

Meanwhile RIM plans to use its ace in the hole, enterprise email, to claw its way back into the market through services, hoping that BlackBerry devices can keep up. Even if devices don’t fully recover, enterprise services is not a bad business to be in, especially one as lucrative as BES.

Interestingly enough, the big surprise at BlackBerry World was the surprise appearance of Microsoft CEO Steve Ballmer to announce that Bing would become the default search engine on future BlackBerrys. Microsoft and RIM are heading on the same trajectory. They’re competitors in the enterprise space, but they’re both underdogs in mobile now, and they’re willing to use one another to reverse their fortunes. RIM sells a lot more BlackBerrys than Microsoft does Windows devices, so Microsoft is the immediate beneficiary. How does Microsoft pay RIM back? Maybe by supporting BES services on WP7 phones, right alongside Microsoft’s competitive Activesync.