Outsourcing of R&D functions of company is not a new concept. Its history can be traced way back to 1970’s and 1980’s when companies in United States were contracted by the government to carry out R&D activities on behalf of them. During the early 1990’s, concept of outsourcing R&D expanded rapidly. Today many global players in the market outsource at least a small portion of their R&D activities to other countries like India, China and Brazil. Companies like Microsoft, GE, Boeing, Coca-Cola, PepsiCo to name a few have set up their R&D centers in offshore destinations.
So as to match the pace of the market and to keep in pace with the competition, companies are forced to review the whole or part of its spending especially on its R&D activities. To justify the technology needs to cater to the changing market demand, companies in large are opting to outsource their R&D functions.
Research In Motion (RIM) is a global leader in mobile devices and given below is a case on outsourcing of R&D activities by RIM to develop their new OS BlackBerry 10.
Research in Motion is the pioneer in wireless innovation and they revolutionized mobile hand set market with the invention of smartphone BlackBerry in 1999. Their product line includes BlackBerry tablet, BlackBerry smartphone and software for business and services that connect people and content.
BlackBerry who was once the market leader in the smart phone category started bleeding at an alarming rate with dominance of Apple’s iOS and Google’s android devices in the smartphone and tablet market. The market share of BlackBerry in the smartphone market fell to meager 6% for the first quarter of 2012 and this was a major setback for the company which was already reeling under declining revenue and margins.
Decision to outsource Blackberry 10 development
The falling market share and declining sale set a loud alarm for the officials to come up with innovation to stay in the market. The company decided to develop new OS BlackBerry 10 and come up in the market by the end of the year. They had to take on Google’s Android and Apple iOS head on if they want to survive and gain market share in the smartphone and tablet segment.
As other smartphones overtook BlackBerry, company decided to look for help from outside. RIM knew that they don’t have much time and they need act fast. Hence they took the decision to outsource for faster turnaround. They outsourced their R&D functions to number of software and hardware companies to develop the BlackBerry 10 OS and smartphone. However majority of the work is not going outside the RIM family, the key functions are outsourced to firms who were bought by RIM over a period of time.
- The OS will be developed by Ottawa based QNX software Systems Ltd which RIM acquired in 2010.
- The phone’s interface that allows the users to switch between features will be developed by Swedish company, Astonishing Tribe which RIM bought in 2011.
- They licensed U.K based Touch Type Ltd to make touch screen keyboard and Scalado AB of Sweden for camera technology.
- They have also licensed with Dutch company Tom Tom International BV to develop power traffic and map-related app for Blackberry.
- They have also acquired some other small companies to develop video sharing, Web browsing and messaging tools for the new set of OS.
Benefits and Future ahead
The new BlackBerry 10 will be launched only by the end of the year 2012. Hence the real benefits are yet to get confirmed. However, the biggest advantage for RIM seems to be their speed of execution and cost advantage. They were able to leverage the extended talent pool to reduce the cost of development and use the collective wisdom to build up innovation in their new OS and device development. The greatest advantage is however the speed, they are now able to launch this new OS and phone earlier than expected, which would be critical for them to compete in the market.