4 Partnerships That Could Stitch This Bleeding Phone Maker
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Nokia (NYSE: NOK) is infamous for being ranked as the top-selling phone maker on the planet, raking in sales, and then failing. Miserably.
Nokia’s stock price fell from a high above $42 in late 2007 to below $2 this summer, and the company has been hemorrhaging cash. To turn around the trend, the company unleashed a new array of Lumia phones that are making headlines for their usability and features, like wireless charging.
Also, the company made a strategic partnership with Microsoft to use its Windows 8 operating system, adding credibility to its turnaround. At a time when the cell phone market is becoming cut-throat competitive, Nokia is making partnerships to turn itself around.
With any luck, Research in Motion (NASDAQ: BBRY) will have a similar story. RIM boasts the incredible accomplishment of shedding major market share. Market share fell from more than 50% in 2008 to less than 5% today, spurring visions of an Olympic runner who has fallen from Gold medal contention to last place.
To turn itself around, RIM needs major software changes. Despite adding 2 million users worldwide to bring its total to 80 million, developers find it hard to build apps for RIM’s platform, causing its BlackBerry phones to miss out on key brand names.
If RIM is planning a mobile phone coup, it had better start building partnerships. Here are the four companies where it plans to – and must – start.
1. Facebook (NASDAQ: FB)
Facebook is a mobile powerhouse, meaning that users spend much of their mobile-usage time combing through Facebook’s feeds, status updates, and pictures. Facebook became more prominent by purchasing Instagram, which allows users to edit the pictures they take with their smartphones before they upload them to Facebook.
Currently, there are 60 million Facebook users who access the site from their BlackBerry’s, but RIM is not yet satisfied. BlackBerry’s site gives a good description of Facebook’s app, but the company must continue to update its software for the new BlackBerry 10 to provide a fresh experience. Further, the app can be slow running on RIM’s 3G network.
2. Netflix (NASDAQ: NFLX)
Netflix has not commented on whether or not it will build an app for BlackBerry’s BlackBerry 10 smartphone, which is to be released early next year. But BlackBerry remains hopeful.
A Netflix app would rip down yet another barrier for users comparing different smartphones. Netflix subscribers who own Blackberries could simply open the app to view their paid content, allowing them access to media on-the-go.
In theory, a content app would also be a nice move for Netflix, who could add yet another distribution channel. However, reality is different. Netflix did not develop an app for the BlackBerry Playbook, because Netflix surmised that it already owned many of the Playbook users as customers. The same scenario will likely happen with the BlackBerry 10.
3. LinkedIn (NYSE: LNKD)
Company professionals are beginning to hop on the LinkedIn bandwagon, as LinkedIn adds more than two new users per second. The site boasts more than 175 million professionals across the world.
RIM announced that it has already reached terms with LinkedIn to develop an app for its BlackBerry 10. The move is smart for both parties. If RIM hopes to keep many of its corporate contracts for smartphones, LinkedIn is more than a nice-to-have. It is a necessity. Further, LinkedIn will benefit from the partnership, because it gives the social media giant yet another distribution channel to sign up users and to facilitate searches.
BlackBerry’s monthly active Twitter users have leapt 80% over the past year as the social media service continues to gain traction. Even better, tweets per day have increased 150% on the BlackBerry. Twitter is already developing for BlackBerry, and it plans to develop an app for the BlackBerry 10.
To conduct its strategy, BlackBerry has been working hard to procure developer partners for its phones, and the company has employed marketing campaigns, technical support, and even cash to push potential partners to take the first step.
According to The Wall Street Journal, RIM executives told app development firms “they would foot the bill if needed to get big-name companies to build applications for BlackBerry 10 phones.”
Could RIM pull a Nokia, lining up major partnerships that would turn a failing company back towards consistent profits? Likely not, but it sure will be interesting to watch them try.
Compare and Contrast
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ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook, LinkedIn, and Netflix and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook, LinkedIn, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.