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By: Gigaom
February 28, 2012 at 08:34 AM EST
No, BlackBerry, Europe can’t save you
New Research in Motion boss Thorsten Heins says that Europe -- where the BlackBerry's market share remains higher than in the U.S. -- can save it from the brink of disaster. But he's wrong: the reality is that the only thing that can save it is itself.

I’ve been turning over something in my mind since the weekend — the sort of nagging little voice in the back of my head that, whatever you do, you just can’t get rid of. It started from something that new RIM boss Thorsten Heins said a few days ago.

Ahead of Mobile World Congress, Heins sat down with Businessweek and said that despite the company’s troubles, it was looking to foreign markets for a boost.

“In Europe, Asia, the Middle East, Latin America, BlackBerry is a very strong brand, a leading brand — we can really rely on that… That doesn’t mean we don’t have to earn this every day again. We have to do that.’’

To back up that statement, Businessweek turned to Avian Securities analyst Matt Thornton, who confirmed: “The brand is still stronger in Europe than it is here.”

And you can see where they’re coming from.

The growing industry perception of RIM is that it’s dead in the water, a feeling led in no small part by the U.S. media, which seems to believe that there are no worthwhile markets beyond its shores and tends to disregards the possibility that innovation can percolate outside Silicon Valley. Nokia got a beating for years in the U.S. tech press because it never cracked America — and when its products got outflanked by Apple, that negative perception simply accelerated to supersonic speeds.

While BlackBerry’s popularity has declined hugely in America, its share of usage in Europe is higher. In fact, by some measures, it had as much as 23 percent of smartphone usage across the continent by the end of last year. That’s a lot of users.

The myopia of the press upsets a lot of European businesses, and you can imagine that it also irks Heins, a German. His company is having a tough time, but it’s doing better than everyone realizes. Why can’t anyone understand?

The truth is, there are many different reasons the picture is murky.

For a start, the numbers are confused. Every survey or study or analysis of the European market comes up with wildly different numbers. The company claims to have the most popular smartphone in Britain, but Comscore pins BlackBerry OS at around eight to 10 percent of the market in Germany, France, the U.K., Italy and Spain.

Secondly, while perception and reality might not always be in lockstep, they are connected in vital ways. Media perception is a bellwether for consumer perception and, since it is usually based on some underpinning factor like profitability, it can actually have real meaning.

But I think what got me most about Heins’s statement was that it relies on the loyalty of users, as if they are cows who — as long as they are satisfied — are there to be milked. He suggests, essentially, that if RIM keeps doing the job it’s doing outside America, the users will keep coming.

That ignores reality. Loyalty means almost nothing in the mobile industry, where churn rates are high and operators spend vast amounts trying to coax new customers in. It’s not enough to keep existing customers merely satisfied: you have to delight them and intrigue them more than the competition could. Every time that contract comes up for renewal, or a handset upgrade, you have to be the first thought in their mind.

For that reason, more than ever, product is key — and that is where RIM has wasted its opportunities time and time again.

BlackBerry’s most embedded user base, the corporate market, has started to desert it as the consumerization of business technology leans toward more user-friendly devices. For many people, the goodwill was burned up with the horror show that was the BlackBerry Storm.

And even though it is trying to put new products out, RIM has suffered delays, a slowdown in sales and declining margins, all of which mean it has less money to spend. It’s a destructive cycle, and even loyal users only have so much patience.

I don’t think Heins is totally off-base. BlackBerry is a stronger brand outside the United States than inside it, and that counts for something. But without something to back it up, its brand is nothing more than an empty shell. That means it’s not Europe that is going to save the BlackBerry: it needs to do that for itself.

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