“Due to the Blackberry outage, millions of users have been forced to check their email on a computer like wild cave savages.”

“Got an iPhone? Turn it into a virtual Blackberry by enabling airplane mode.”

“That’s it, you pushed it too far RIM! I’ll be looking for a new phone tomorrow morning, and that won’t be in the BlackBerry section…”

…

 These tweets are from yesterday morning, and were clearly NOT tweeted from a Blackberry device.

How could a company that was, not so long ago, praised for its cutting edge technology and the quality of its products, be made fun of, and be raged at this way on the web? RIM, the Canadian company that manufactures Blackberry devices, has had 3 days of service failures this week, starting in their growth markets of Europe, the Middle East and Africa, and spreading to Asia and the Americas. Business people got disconnected from their mobile office, IT departments got flooded with technical requests, youngsters were not able to BBM their best friends… Yet, it all seemed like the chronicle of a death foretold.

RIM pioneered the development of the mobile phone industry in 2002 by designing a phone that was smart, long before they were even called smartphones. Blackberries started to penetrate enterprises, devices got better each year, adding color screens, enhanced web browsing, cameras, media… Soon enough, people had forgotten that blackberries were edible! And then, Steve Jobs decided to take a closer look at that growing market. He believed he could revolutionize the phone industry the same way he revolutionized the computer and music industries. And he did. In a big way. RIM should have gotten worried, but they were confident they would maintain their stronghold on the business segment, which was the most profitable one, and started being complacent and slow to get new products to market. Many professionals now prefer the trendier iPhones to the sturdy company-issued blackberries.

The outage episode couldn’t have happened at a worse moment as RIM has had a difficult year in many respects. In the quarter ended in August 2011, sales and profits were down 10% and more than 50%, respectively, vs. 2010. In Q2 2011, RIM’s share of the smartphone market dropped to 12%, vs. 19% in Q2 2010. RIM has also seen a slow start for their Playbooks tablet, forecast to sell at 3 million copies in the first year. That’s how many iPads Apple sold in a little over 2 months!

Perhaps more importantly, it coincided with the passing away of Steve Jobs and the launch of the iPhone 4S and iOS5, which included some very anticipated features:

• iCloud  is Apple’s long awaited cloud computing platform. It allows users to store their documents and media files remotely, and access them from any iPhone, iPad or PC. It is not a revolutionary product per se (companies like Dropbox or Amazon have been offering a similar product for a while), but the fact that Apple is technologically  integrated and controls both the hardware and the software allows for many cool features, like instantaneously updating photo libraries on all your devices if you take a picture with your iPhone or your iPad. This will contribute to strengthen the Apple ecosystem, and drive sales of iPhones and iPads.

•  iMessage is a free service that allows for free instant messaging between iPhones and iPads. The first version, which is included in iOS5, is pretty basic vs. other iPhone applications like WhatsApp Messenger, but it is more stable, and you can count on Apple’s development team to enhance it very shortly. It is Apple’s response to Blackberry Messenger (BBM), which has been one of the strongest contributor to the Blackberry network effect over the past couple of years. This network effect may be on the brink of collapse as users have an additional incentive to migrate to iPhone.

• Finally, with the launch of the iPhone 4S, Apple is making it cheaper than ever for users to switch, with the price of the iPhone 4 brought down to $99, and the 3GS being offered for free.

So, will this outage episode be the death sentence for RIM, or will it be salutary and push it to reinvent itself?

Next week, Sprint becomes the latest carrier in the United States to offer the iPhone, joining Verizon and ATT. As the laggard third place domestic carrier, Sprint desperately fought for rights to sell the phone in hopes that its recent earnings slide may be mitigated. Since the iPhone was released in 2007 on a rival carrier, Sprint’s stock has lost 80% of its value and currently has half the number of subscribers of either ATT or Verizon.

The right to sell this precious device does not come cheap. Literally testing the theory that “you have to spend money to make money”, Sprint is paying an estimated $20B to Apple over the next four years. $20B just to have the right to sell a phone for another company! (In case you are curious as to how many cell phones $20B can buy – it’s 30 million.)

Sprint’s justification is that the lack of an iPhone in their sales portfolio is the number one reason that customers leave the network. And so the logic goes, by offering the device, customers won’t leave. Which is a plausible argument, except that my own anecdotal research suggests there are myriad other reasons for leaving – not the least of which is terrible coverage, pretty much the most important function of a wireless carrier. Plus, to stop the bleeding, Sprint will not only need to work to retain their current customer base, they must attract new customers.

To differentiate themselves from ATT and Verizon, and work to attract new customers, Sprint is taking the unusual route of offering unlimited data plans. The model of unlimited data plans has been phased out by both these competitors, who discovered that while many (estimates of about 90%) of customers use less than 2GB/month, a handful of other users account for vastly larger usage. Sprint’s gamble is that their network upgrades (which also do not come free to the company’s bottom line!) will sustain the increased data usage.

Another concern with Sprint’s strategy is that the four-year deal may be too long of a lock-in window and that perhaps (though yes, as inconceivable as it is for any iPhone toting HBS student to comprehend!) it may commit Sprint to subsidizing the phone past the “coolness” of the device. Were another game changing phone to come out in the next couple years, or perhaps were the Android operating system finally achieve the chic status of the Apple system, Sprint would still be left holding the bag for this deal. (Who can forget the awesome Nokia phones of the late 90s/early 2000s? Who could have ever thought those would lose their trendy status?!)

Despite the concerns presented by Apple’s sheer strength and leverage in its negotiations with Sprint, one potential ray of light for the consumer may be that Apple’s rise to dominance as the gate-keeper of the must have device and operating system represents a fundamental shift in power dynamics within the mobile industry. Although Apple is now able to squeeze maximum value out of carriers, perhaps the consumer is better positioned to “win” as they have more choices and are not as beholden to their carriers as they once were.

Of course, this strategy of “spending money to make money” worked for both ATT and Verizon in the past– both lost money early on in their deals with Apple and have since recouped the costs. Only time will tell if Sprint is positioned to reap the same benefits. For the sake of their shareholders who ultimately foot this bill, one certainly hope it does!

The online world is not so much a world as it is a collection of ecosystems. I think that is the new paradigm that emerging technologies should consider when entering the internet ecosystem. Where do you fit in the internet ecosystem? In essence, we are looking at the growth of 2 sided networks. 2 sided networks means that the sum of any network is greater than the bare number of users – it is the network of users which creates the value-add.

One example of this point is the comparison of Facebook versus MySpace. Facebook is a 2 sided network, where developers can attract users and users in turn attract more users and more developers. However, MySpace was a much more linear website. It essentially was a media launching platform, where users browsed the latest trends / content. There was no sizeable network effect, where the growth of one population would strongly exert a growth pressure on the other population. As a result, where Facebook stands today at 500 million users, MySpace is no longer a viable commodity.

The other space where I see ecosystems playing an important role is the smartphone / portable device world. With the release of iOS5, Apple has essentially removed the requirement of anyone to use a PC or a Mac. Instead with an iPhone and an iPad, the new urban warrior probably has his tools for most of his important tasks. Can Android boast such a comprehensive mobile solution? Unlikely, as I do not believe that Android phones and tablets can talk to each other as seamlessly as the iOS devices. Also bearing in mind the large number of different Android phones, and the range in operating systems due to carrier lag in updating software, I firmly conclude that the Android ecosystem will remain a distant second best to Apple for the foreseeable future.

So who will challenge the Apple ecosystem? Clearly RIM has failed to live upto expectations with poor hardware, even worse software, and the recent crash in blackberry services. I think personally that the news Windows Mobile solutions could be a strong dark horse contender. Not only do they incorporate productivity apps like Office which is used by most folks (and something Apple lacks properly on the iPad), Microsoft have a great opportunity to implement a viable mobile phone and tablet solution using the new Windows interfaces – Windows 8 for tablets and Windows Mobile (Mango) for phones. Combine this potential with Nokia, who despite their many faults are still very good at figuring out hardware, and there is a lot of potential for a new ecosystem to be born. One barrier most people cite is apps for the phone / tablet. And that is true – but only to a certain extent. Although Apple has in excess of 400,000 apps, it can be argued that the long tail of apps are random, low quality and not as incentivizing for a user to choose Apple or a competitor. As long as Microsoft has the top 100-200 applications, I foresee that users would be quite satisfied.

The last thing I want to talk about regarding ecosystems is that it applies beyond the online economy. Look at our homes where are integrating our TV with our entertainment and our homes; or the smart grid phenomenon where we are looking t integrate energy demand management with intelligent supply switching. Ecosystems where devices talk to each other in a seamless manner are the future. And to live in that future, most if not all designers and manufacturers must think in terms of where they fit in this ecosystem. It is not enough to try to exist as a single standalone entity. Just ask HP about their Personal Computing Division.

People who have long been expecting the release of iPhone 5 may be disappointed to hear from today’s “Let’s talk iPhone” event that there won’t be one. Apple is instead releasing the iPhone 4S, which, from physical appearance, is exactly the same as the iPhone 4.

Nevertheless, the iPhone 4S has a few noteworthy features – be it the dual-core A5 chip, which makes the phone run twice as fast, or the 8 megapixel camera that comes with an f/2.4 aperture. This camera improvement is impressive given that most DSLR kit lens don’t even offer the same aperture. The most talked about feature, however, is the “Siri” artificial intelligence voice control, or what Apple describes as your “humble personal assistant”

 Siri will recognize voice commands such as  “what is the weather today?”, “reply to Susan”, “text my wife”, or “set up meeting with John tomorrow evening”. It will then manage these tasks for you without you having to even touch your phone. Sounds pretty cool?

In theory, one can find many uses for Siri. How convenient would it be if you could get directions, make appointments on your calendar, or text someone in just a few seconds? As people are spending more and more time on the road these days, the ability to instruct your phone to do these things without having to even look at it can be very useful. It can also reduce the many accidents that come from texting while driving.

But in practice, we have yet to see whether Siri can really live up to its promise. How effective will it be in recognizing voice commands? Will it work with accents that aren’t American or British? Will it recognize specific pronouns and foreign names? Can it really, as Apple claims, “get better” as it learns your voice?

Another challenge that Apple has to keep in mind is the fact that Siri isn’t all that new. Android’s Vlingo voice recognition app has been around for sometime, and Windows phones also have a similar speech recognition feature. Both of these systems have been praised by many users. This time around, Apple has already disappointed many customers with the lack of an iPhone 5 upgrade. With Siri being the only key innovative feature, Apple’s got a lot to prove that iPhone 4S is worth the upgrade.

Is the iPhone 4S worth buying for you? Guess we’ll find out on October 14^th.