NEWS ANALYSIS Blackberry crumble?
To say new CEO Thorsten Heins faces a challenge in turning around RIM’s fortunes would be an understatement.
to less than half of what it generated in the first quarter, amounting to little over 40 per cent of what it made in the same quarter last year. The most damning assessment of the company’s chances
R
for the year ahead—and there have been a few contenders— was given by one of RIM’s own shareholders, Canadian merchant bank Jaguar Financial. “While its rivals have demonstrated an ability to develop and market products with features that inspire consumer enthusiasm and drive higher adoption rates, RIM has clearly fallen short,” the company said in a statement. “Its failure to offer products with innovative features, combined with its limited selection of applications, has resulted in RIM losing market share to its competitors.” The shareholder called for the company to undertake a
value maximisation process that could involve selling the firm. 2011 was a grim year for a company that was once one of the industry’s most widely hailed success stories. RIM announced its intention to lay off 2,000 staff, more than ten per cent of its workforce, as part of its cost-cutting programme, and its CMO Keith Pardy handed in his resignation just a month before the company launched its first tablet, the PlayBook. To compound the misery, a high profile outage in October saw millions of BlackBerry users around the world experience a service disruption, preventing them from using the browser and the BBM messaging platform for three days.
One advantage that the firm has over some of its competitors is the strong ties it enjoys with the world’s mobile operators.
The outage irked customers who took to social networks
to vent their fury. As some measure of compensation, the firm offered users access to premium apps for free from its App World store, and gave business users one month of free BlackBerry technical support. However, the damage done to the firm’s reputation was severe, which it can ill-afford in such a hotly competitive market. Former co-CEOs Mike Lazaridis and Jim Balsillie, who
resigned in January, remain on RIM’s board and maintain that the appointment of a new CEO was their own decision. “There comes a time in the growth of every successful company when the founders recognise 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.
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esearch In Motion’s share price dropped by around 80 per cent from June 2008 to September 2011 and the firm’s second quarter profits in 2011 slid
Heins has put on a brave face, which arguably, is his only option. He claimed a strong balance sheet with approximately $1.5bn in cash at the end of the last quarter and negligible debt. And he noted that the company reported revenue of $5.2bn in its last quarter, up 24 per cent from the prior quarter, and a 35 per cent year-to-year increase in the BlackBerry subscriber base, which is now over 75 million. “Going forward, we will continue to focus both on short- term and long-term growth, strategic planning, a customer- and market-based product approach, and flawless execution,” he said. “We are in the process of recruiting a new CMO to work closely with our product and sales teams to deliver the most compelling products and services.” One advantage that the firm has over some of its
competitors is the strong ties it enjoys with the world’s mobile operators. It has begun offering services such as carrier billing on its App World store, enabling carriers to let their customers put app purchases on their bills. From its early trials, the firm has seen carriers increase their revenue from applications by 141 per cent. In the year ahead, the company has high hopes for its BlackBerry 7 mobile operating system for smartphones, which supports more HTML5 standards than any other mobile browser, according to Rory O’Neill, VP for marketing, EMEA, at RIM. And devices are also now beginning to support NFC after RIM became the first smartphone vendor to be MasterCard approved and certified. Meanwhile the company has signalled its intent for
2012 by making a host of acquisitions to enhance its cloud offerings. It has bought digital content services provider NewBay, cloud-based video editing services provider JayCut, mobile social gaming firm Scoreloop, cloud-based calendar and scheduling services provider
Tungle.me and contacts management startup Gist, all in the past year. “BlackBerry will build out on its cloud infrastructure and on its core strengths which is a proposition around social, sharing and around building and engaging social communities—that’s the piece we can look to differentiate on.” said O’Neill. However, not everyone shares the enthusiasm voiced by Heins and O’Neill. According to Northstream CEO Bengt Nordstrom, 2012 is going to be very tough for RIM. “They missed the boat on touchscreens and the software
around them—it almost became too late,” he said. “One of their biggest challenges is how to make the BlackBerry app range compelling. In truth, they need to be successful with their efforts to support Android apps.” And Informa analyst Dave McQueen agreed. “Making
Android apps work on RIM’s devices is not a bad idea, but it’s almost worth them starting again and figuring out what they want to achieve—a bit like Motorola did, like Sony are starting to do now and like Nokia did with Microsoft,” he said. “Whether BBX will be the one platform moving forwards
—that’s possible, but they have to back that up with decent devices. n
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