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There’s still hope for BlackBerry, but don’t thank RIM’s new CEO

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Time for a “new” CEO!


Photo by Geoff Robins, Reuters, Financial Post

So, that’s where RIM is at today. For the last year, shareholders and analysts have been calling for the resignation of Jim Balsillie and Mike Lazaridis, but neither of the co-CEOs showed any signs of stepping down. In fact, the duo wanted to retain their positions so badly that in December they offered to accept a cash salary of only $1 per year until they are able to turn the company around.

“We are more committed than ever to addressing the issues at hand,” Balsillie told analysts on a Dec. 15 conference call.

However, at that same earnings call, the duo was forced to announce the delay of BlackBerry 10, its supposed revolutionary new platform that will take its smartphones to a new level. BlackBerry 10 phones won’t hit the market until late 2012 now. Previously, it was slated for early 2012 (and that wasn’t the first delay). 

Either by design or a decision by the board, Lazaridis and Balsillie stepped down on Jan. 22, handing the reins over to a single CEO named Thorsten Heins. Heins joined RIM in 2007 working as the VP of its handheld business unit, and was promoted to chief operating officer in mid 2011 in a management shakeup. 

“There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership. Jim and I went to the board and told them that we thought that time was now,” said Lazaridis. “With BlackBerry 7 now out, PlayBook 2.0 shipping in February and BlackBerry 10 expected to ship later this year, the company is entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond.  Jim, the Board and I all agreed that leader should be Thorsten Heins.”

Both Lazaridis and Balsillie will retain positions inside the company and on the board.

Thorsten Heins: The great RIM Defender

The startling thing about newly minted CEO Thorsten Heins was just how unprepared he was to deal with the battering of interviews he got on Monday, Jan. 23. He came across as qualified and knowledgeable, but with an attitude quite similar to his predecessors, arguing that RIM is doing quite well, for the most part, and he won’t be making any major changes. 

The interview below, which was published on the official BlackBerry YouTube page, Heins introduces himself and seems overly excited about his job (as Alexis Madrigal of The Atlantic also notes), saying that RIM was more like a startup company when he joined in 2007 (more than 22 years after the company was founded), but has always remained ahead of the curve. 

 “At the very core of RIM, at its DNA how I always describe it, is the innovation,” said Heins. “We always think ahead. We always think forward. We sometimes think the unthinkable. And that is fantastic. That is the core of every high-technology company.”

In a teleconference call on the same day and throughout numerous interviews, he maintained that RIM is not in need of any major restructuring changes: “I don’t think there is some drastic change needed,” Heins said. “We are evolving. We’re evolving our strategy, we’re evolving our tactics, our processes.” 

Though journalists have harped on the comment, Heins actually seems to be arguing a different point. He isn’t saying that RIM needs no change. He’s actually arguing that all of the appropriate changes have already been set into place. In effect, he’s arguing that Balsillie and Lazaridis have done most of the hard work for him. The BlackBerry 2.0 software (impressions) and BlackBerry 10 are on track to come out this year. In a sense, Heins has merely been placed at the front door to greet the guests who no longer wish to hang out with Balsillie and Lazaridis. His video interview with CNBC affirms this viewpoint. 

“Mike and Jim took a bold step 18 months ago when RIM purchased QNX to shepherd the transformation of the BlackBerry platform for the next decade,” said Heins. “We are more confident than ever that was the right path. It is Mike and Jim’s continued unwillingness to sacrifice long-term value for short-term gain which has made RIM the great company that it is today. I share that philosophy and am very excited about the company’s future.”

In multiple interviews, he also defended RIM, saying how great the company’s BlackBerry 7 devices are and how well off RIM is financially: “We have a strong balance sheet with approximately $1.5 billion in cash at the end of the last quarter and negligible debt. We reported revenue of $5.2 billion in our last quarter, up 24 percent from the prior quarter, and a 35 percent year-to-year increase in the BlackBerry subscriber base, which is now over 75 million.”

Heins also says that much of RIM’s problem in the US isn’t its devices, but how it markets them. His big plan: to hire a new head of marketing.

BlackBerry 10 and PlayBook 2.0, RIM’s last big chance?

According to his own interviews, Thorsten Heins has no big plans to shake up RIM or reset its course. This is a marked difference from Nokia, which found itself in a similar position last year. Nokia chose to hire an outsider as its CEO, going with Stephen Elop, who quickly made huge structural changes to the Finnish manufacturer. Heins is from RIM and seems to share the same exact vision as his predecessors, Balsillie and Lazaridis. He has repeatedly said that all of the necessary changes have been already made, nearly admitting that his appointment was done almost exclusively to put a new face on RIM.

If RIM has already overhauled its business, it has not been nearly as vocal about the process as Nokia was when it restructured and chose to align itself with the Windows Phone platform. There have been layoffs and the BlackBerry PlayBook 2.0 shown at CES was impressive, but it may be too little, too late for the Canadian company. Or perhaps, maybe not. 

BlackBerry PlayBook 2.0 software

The real question is whether RIM can deliver a unique “must-have” phone experience with BlackBerry 10. After using the PlayBook 2.0, I have to say that the operating system is perhaps the smoothest tablet OS on the market and RIM’s software design seems not only more complete than it was a year ago, but far better looking as well. RIM executives at CES credited the improved look of the PlayBook software to its acquisition of Tat, an interface and design company. It’s hard to imagine the PlayBook gaining much traction without a new hardware model, but RIM seems determined to revive it using software alone. Somehow, it needs to actually accomplish this. Giving the PlayBook momentum seems key to building developer and consumer interest in BlackBerry 10 (learn more about the upcoming OS here). 

HP Veer white front screenBut for the new platform to succeed, RIM is going to have to translate its webOS-like OS to smartphones in a far better way than HP or Palm ever did. The PlayBook has a large screen, but if RIM is to succeed in smartphones, it has to take that OS and shrink it down to a multitude of screen sizes. It will also likely have to better standardize its screen resolutions and greatly improve the power of its phones by using dual-core or quad-core processors. They will all have to be touch-based, and if RIM decides to keep pushing keyboards on a majority of handsets, its image will suffer. As great as the keyboard is, it is also a symbol of RIM’s lack of innovation in recent years. These new phones need to look and feel much different from BlackBerry 7 devices. They also need to be compatible with the PlayBook’s growing app library of more than 50,000 apps (according to representatives at CES). 

Finally, RIM needs to figure out what kind of company it wants to be. The company has been straddling a thin line between being a business-only brand and a consumer brand in recent years. If it wants to win customers on either side, it needs to demonstrate clear advantages for end users over Android or iOS. It needs to be more fun to use a BlackBerry, easier, a more seamless experience, and different. That last bit remains key. It needs to be different from what it is today, and different from the competition. With the collapse of webOS and the continued struggle of Windows Phone, there is still a chance for RIM, but if it doesn’t deliver in 2012, things are going to plummet , and fast.

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