I'm not trying to beat a dead horse, but the lively discussion last week about whether BlackBerry (Nasdaq: RIMM; Toronto: RIM) might be an acquisition target makes it worth our while to take another look at the company's near-term future. (See: RIM's Struggle to Succeed.)
There is no story yet. It's not clear how extensive the conversations were or even how far they went, but speculation says a RIM purchase may require more restructuring effort than any likely buyer would want to take on.
With a dose of 2011 hindsight filtered through the recent headlines, what could 2012 mean for RIM? Here are the potential scenarios that are worth considering:
RIM stubbornly stays its course and continues the downward spiral we saw play out in 2011. Multiple reports have said that executives would prefer to fix the problems on their own. In my opinion, this muddle-through strategy is unlikely to succeed.
Under this scenario, I would expect RIM to dedicate additional resources to revamping its BlackBerry line to make the products more competitive and deliver something global customers want to retain. This may be unlikely, since the company is delaying its 2012 product launch. But executives have said they are analyzing the entire company and will leave no stone unturned. Maybe there's hope still hidden under one of those rocks.
The board steps up, makes some serious leadership changes, and provides clear strategic focus. Some observers have wondered out loud why RIM's board has remained on the sidelines and has not revamped an organizational chart that features two co-CEOs and two chairmen. You would think having your co-CEOs make it on to a list of the worst CEOs of 2011 would provoke at least some change.
RIM breaks up.
The board sells off parts or the whole business to companies looking to expand their smartphone or tablet offerings. Or a private-equity firm offers a buyout and promises a core-rattling turnaround. Again, this would depend largely on knowing what RIM and its portfolio are worth and evaluating how different assets would strengthen a platform, planned or otherwise.
The BlackBerry patent is licensed.
RIM could license its valuable BlackBerry patent (CIOs still value the secured corporate messaging system) and make a profit on its intellectual property. RIM is putting a lot of faith in its QNX/Blackberry 10 OS, but software development glitches have led to product delays. If the software hits the market too late in 2012, it could put RIM at risk of becoming irrelevant in the market.
This company runs the risk of collapsing and fading into high-tech institutional memory. I don't suspect this will happen very soon, or at least not in the next year. Though it's just a glimmer of a sliver lining, the company reportedly has about 75 million subscribers worldwide and earns nearly $1 billion in quarterly services fees. It would take time for those figures to wither to zero.
What other scenarios might play out for RIM in 2012? Tell me in the comment section.
I would have to agree Bolaji, by stepping out of the co-chairmen spots but still being co-CEO's doesn't make me feel confident about big change at RIM. If they are serious about maintaining the company they built, the co-CEO's need to focus on change in their development department, unless the departments ideas are being shot down by the CEO's. If thats the case RIM is destined for failure due to mismanagement at the top.
Stochastic Excursion, I couldn't have put it better. Why did the government get involved and how do they expect to help improve RIM's competitive position? It comes down to the company and its investors, though.
Well, it appears Management Changes may be the option the company is going for first. TechCrunch posted this story yesterday, via the Financial Post, about RIM co-founders Mike Lazaridis and Jim Balsillie may appease shareholders and step out of their co-chairmen positions. Sounds like they will still both remain co-CEO
It could be that RIM will find itself in two or more of the situations in some sequence of events. The optimal scenario I see RIM going through is #1 Nothing Happens, although not innovating in this case would not necessarily be a downward spiral.
RIM didn't become a business phenomenon by way of the "wow" factor, but by staying power, having its act together with the right components in the right places. Of course there's some innovation (#2) involved with this business strategy. RIM is better off diversifying into other product lines.
Not clear why anybody would want to buy RIM. The Canadian goverment's actions against its executives was destructive in no small measure to that company, completely disproportionate to the alleged offenses. Its competitors are better off cherry-picking RIM's employees as the company continues to founder.
Jennifer, RIM's management and shareholders should take a leaf from the experience of Yahoo! and do something urgently. I recall Microsoft offered to buy Yahoo for $45 billion in 2008 (click this link for details of the Microsoft offer) but the company turned down the offer. It has been struggling since and on Tuesday it's market value was $20 billion, less than half what Microsoft offered.
It was Yahoo's founders who scuttled the deal then because they couldn't imagine parting with the company. RIM's co-CEO (itself a ridiculous idea) are presiding over a similar situation and are unwilling to sell or part with the company they also helped establish. What's the likely outcome for RIM? They'll muddle through; if they are lucky RIM will bounce back or as some suspect it will slowly fade away.
I think they have to think about some better technical collaboration or partnership. They have a good name and fame in market, so in order to keep it up either they has to do partnership or some joint venture with technology leaders.
@Anna, i think merging with another technology company can be an alternative in short run but RIM (i think) is not in that desperate position to try out this option. If they can look within and strengthen their existing portfolio then they can survive the hard days. Just like Nokia, they have solid name in developing and developed market. In the meantime RIM should make long term strategy to reinvent or reinnovate.
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