It’s been a bumpy week for RIM. On Sunday, the Canadian smartphone maker’s co-CEOs tried their best to quietly resign and hand over the CEO position to their former Chief Operating Officer, Thorsten Heins. For months, investors and journalists have been calling for Research in Motion’s co-CEOs, Jim Balsillie and Mike Lazaridis — who have each taken turns running the company since it was founded in 1991 — to step down. Until Sunday, they showed no signs of doing so.
Worse, though RIM’s smartphone market share has been steadily dropping in the months since the company’s BlackBerry 7 device lineup launched (Sept. 2011), new CEO Thorsten Heins repeatedly asserted in multiple interviews that RIM has no real structural problems, and that he doesn’t plan to shake the company up much aside from hiring a new marketing officer. Tech journalists, analysts, and bloggers have been chattering like crazy, and no one seems fond of the new CEO. From a distance, he appears to be a Yes man, planted at the top to carry out already established plans.
So what’s going on here? Is Thorsten Heins actually in charge of RIM? More importantly, does the company need a huge structural and strategic overhaul, or is it mainly an image problem? Has RIM already made the changes and laid out the plan that it needs to succeed, or is it too little, too late?
Giving up the two-seated throne
Mike Lazaridis founded RIM in 1984 and Jim Balsillie a self-described jock, joined him as co-CEO in 1991. The unique dual-power arrangement had Balsillie tackling the business side of RIM and Lazaridis focusing mostly on the products and technology. For many years, it worked, but since the debut of the iPhone, two CEOs seem to be proving worse than one.
RIM has had a rough few years. The company has gone from being the biggest smartphone maker in the United States (with a massive 80 percent market share on Verizon) to a niche player that seems unable to win over new customers as the market shifts toward touch-based operating systems thanks to the massive success of the iPhone, which debuted in 2007. In 2008, RIM attempted to counter the iPhone with the Storm, its first touch-based BlackBerry, but the device was a failure. After that, the company retreated back to its comfortable, keyboarded lineup of BlackBerry Curves and Pearls. The co-CEOs many times stated that RIM’s focus on QWERTY keyboards was one of its best differentiating features. They’ve introduced more touch-based BlackBerry phones, but none have succeeded in redefining the brand. And so, a couple years ago the CEOs brushed the U.S. under the rug and focused on the international market.
“The dilemma is that the U.S. went down the high-end smartphone market and the international market grew greatly,” Balsillie said in an interview. “So the question is where you put your resources? We couldn’t do both. We were explosive growth internationally. Do we leverage core franchise and go international, or do we move higher end for the U.S. market?”
The company made the wrong choice. By focusing on the international market, it succeeded in boosting short-term profits, but the United States turned out to be a trend setter for the rest of the world, which has now begun following in its footsteps, leaving Nokia-like feature phones and BlackBerry devices for touchscreen phones running Android and iOS. They have become so popular that users began demanding to use them at work, carving into RIM’s strongest asset: businesses.
The year of hell
2011 proved to be a fascinating year for RIM. The company continued to churn out record revenues from overseas, but its position in the US market began fading fast. From October to December alone, RIM’s market share dropped from 7.7 percent to 4.5 percent due to explosive sales of competing devices. The company’s share of the world smartphone market isn’t better, having dropped to 11 percent in the third quarter of 2011 from 19 percent in mid 2010. The Canadian company’s stock has followed the same downward arrow. Between June 2008 (when the iPhone 3G came out) and June 2011, RIM’s shareholders lost nearly $70 billion, or 82 percent of the smartphone maker’s value. That same month, RIM also laid off more than 2,000 employees.
2011 was also home to two failed product launches: BlackBerry 7 and the PlayBook.
PlayBook: In April, the co-CEOs entered the blossoming tablet market with the BlackBerry PlayBook, a 7-inch tablet running a completely new operating system based on QNX, an OS that RIM purchased a couple years earlier. In an interview in Dec. 2010, Lazaridis spilled that the PlayBook was a sign of things to come from RIM and that future phones would be dual-core and run QNX as well. (These new phones later came to be known as BBX, but due to legal issues it will now be called BlackBerry 10.) This sounds grand and good, except that the launch of the PlayBook was a bit of a disaster.
When the PlayBook launched, it was clearly a nice-looking piece of hardware released before it was complete. The PlayBook software had huge bugs that required a number of bi-weekly updates to fix. Both businesses and mainstream consumers were confused about what it brought to the table. Did we mention that it lacking common apps like integrated email and calendar support? It also had next to no viable apps in its app store, and RIM’s included apps for things like podcasting were woefully broken or incomplete. We were very optimistic in our review of the PlayBook, but RIM also beat down our expectations throughout 2011, promising email, calendar, and Android app support by summer and not delivering it until…well…never. At least, not yet. These updates are supposedly coming next month (Feb. 2012).
RIM expected the PlayBook to be such a success that it manufactured 2 million of the tablets. Due to lack of demand, it has still only sold about half of its inventory, even after several price cuts, and had to write off $500 million due to the unsold tablets. Now RIM is distributing PlayBooks to developers who wish to work on the upcoming BlackBerry 10 platform.
BlackBerry 7: The second big failure of 2011 was the launch of the BlackBerry 7 platform and devices. While these devices did not have the problems of the PlayBook, they did not help RIM to recapture any momentum. Following the launch of several new BlackBerry Bold, Curve, and Torch phones, RIM’s market share began to dwindle faster than ever. Several BB 7 devices featured touchscreens, but the phones featured no marked improvement in user interface, features, or processing power. They looked a bit slicker, but RIM seemed to be mostly churning out established designs with little innovation. As a result, the company’s smartphone market share fell dramatically over the holidays as the iPhone and Android both posted record sales in late 2011. RIM became almost a complete non-player in the market, with a market share so low that Windows Phone now has a good shot at becoming the number three smartphone OS in 2012 (though Microsoft definitely has its work cut out).
Give up
That looks like a grave stone. Like REST IN MOTION
Yeah, Greg whipped that image up. It could be RIP if they don’t execute.
Sell to google.
agreed! android could use the backend technology and device security models/software; us in IT would love it!
i still believed RIM should have temp transitioned to a software only company for a year by making a BES client for Android and iOS and then used data from software to create a very solid hardware, android device to brand as a new blackberry. gives them time to rebuild hardware and also research what configurations run the best by having client on current/existing android hardware. also, they should be bundling the playbook w/any new blackberry bold or torch. saturate the market like they did back when they introduced the blackberry curve (they were tops back then by nature that you bought one and got another free).
i say listen to the crackberry fanboys/girls. we’ve been with ya from the start and understand the industry and what you did better than you do. or so we think. ;)
Sell to Apple…
Apple has to want to buy it.
Nothing unique for Apple to buy from what I can tell.
make more phones without keyboards with the best battery life in the industry with other specs that are at least equal rival brands
Sayonora
Take it out back behind the shed and put it out of its misery
put ‘job’ at the end of the name
put sky infront of the name
Liquidate
make notebooks and desktop computers
”At the very core of RIM, at its DNA how I always describe it, is the innovation,” said Heins.
I really have a tough time believing this. I was a die-hard RIM/Blackberry user for the better part of 6 years. I loved my Blackberry Pearl when it came out (believe it or not, it was cutting edge at the time – fast and small) and I have the Bold 9700 which I thought was starting to feel really outdated.
I think RIM needs to stop worrying about playing catch up with the competition and focus on what they do best – catering to businesses. They need to add more security features, more email features or maybe features that sales people, businesses would use. Let’s add an integrated Salesforce feature for sales people, lets add that integrated Peoplesoft app for HR etc. Get the picture?
Then they need to work on a new OS which is nice to look at and easy to use. It needs to actually browse the web (RIM was super late to the game with a good web browser on their phones). They need attractive devices and partners that support them. Executive speaker docks for the office, car manufacturer support etc.
Once they get these things right, they should be on the right track. These aren’t huge changes either. They just need to focus on their core audience.
Agreed. Having been a long time BB user, starting with 7100t, then pearl and then the 8900 for 4 years, I was really torn when i had to pick a new phone. Since I already had a ipod touch and ipad, i knew that on-screen keyboards weren’t my thing. Plus i already have those devises to handle my entertainment needs. I tried to use my girlfriend’s iphone here and there to see if i could adjust to it. I could but everything seemed like a chore. Including the mundane task of backspacing without deleting…. I just couldn’t master the art of touch slide to area needed with any kind of accuracy or speed. Plus countless other nuances that just didn’t feel natural to me made me realize i couldn’t go with it. Tried some andriod phones but none really fit the bill, so i reluctantly got the Bold 9900. And have to say that I’m pretty impressed with it. Yes it has flaws, but with some tweaking (like using opera) I’ve found a work around for most. It looks nice, feels nice and performs very well for my needs. Then I see this this article and it really pi$$es me off. I wanted to see some admission to dropping the ball. Some excitement about getting back in the game. Some commitment to the core user and like Ian said, business users. I wanted to feel like my commitment to stay with them was not in vain. But I don’t see any of that. So now I’ve decided to not expect that this will be my phone for the long term. I’ll use it for now but will be on the lookout for a successor. Which will more than likely be an android. This man is not going to move RIM forward so I at this point I truly agree with the beginning comments…. RIM (at least in the US) is just counting the days before it’s RIP.