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6 Strategic Options for RIM

I'm not trying to beat a dead horse, but the lively discussion last week about whether {complink 4644|Research In Motion Ltd. (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.)

In case you missed the newsfeed or some of the comments in our recent post, RIM has attracted a few big-name suitors. {complink 11480|Amazon.com Inc.}, which is selling its Kindle Fire tablet and Kindle e-readers in several parts of the globe, reportedly has been sniffing around. {complink 3426|Microsoft Corp.} and {complink 3847|Nokia Corp.} also flirted with the idea of buying RIM, according to the Wall Street Journal. And there have been reports that RIM executives approached other smartphone makers, including {complink 2387|High Tech Computer Corp. (HTC)} and {complink 4751|Samsung Electronics Co. Ltd.}, about licensing its operating system.

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:

  1. Nothing happens.
  2. 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.

  3. RIM innovates.
  4. 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.

  5. Management changes.
  6. 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.

  7. RIM breaks up.
  8. 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.

  9. The BlackBerry patent is licensed.
  10. 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.

  11. Bye-bye, RIM.
  12. 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.

40 comments on “6 Strategic Options for RIM

  1. prabhakar_deosthali
    December 28, 2011

    Jenifer,

     

    I see strong possibility of Scenario 2 happening. RIM will definitely innovate its product line to be competitive with Apple and Samsung and the likes and to achieve that they would not hesitate to make Management chnage .

  2. Daniel
    December 28, 2011

    Jennifer, I believe that RIM needs an external support either in form of technology or financial. As we know after the releasing of playbook, RIM’s financial growth is in downward direction and so far company had not taken any corrective steps. In between company is also facing lots of restrictions for their Blackberry services in different countries (Saudi, India etc) due to monitoring and analyzing of calls and data.

  3. Jennifer Baljko
    December 29, 2011

    Prabhakar – What kind of innovations do you see? Innovating on product features or on the device? I suppose exiting the tablet market and focusing only on smartphones would be wise at this point; too much diversification appears to have a distracting effect.

  4. Jennifer Baljko
    December 29, 2011

    Jacob – your point about the restrictions in several markets is well noted. Given how important the emerging market sector is for RIM, those challenges are worth factoring in, too. Any additional thought on what kind of financial or technology support is needed? Do you see this as private equity buyout scenario, or some sort of technology partnership with other device makers?

  5. Wale Bakare
    December 29, 2011

    I think,  further innovation RIM could make, simply to Blackberry integrate to evolving technologies. Blackberry for me at the moment pulls considerable smartphone market potion ahead of Nokia, particular in developing markets.

  6. Nemos
    December 29, 2011

    I think you have covered all the possible scenarios that could happen during the 2012. Maybe two or more scenarios could happen at the same time and I hope that we will have RIM in the market. It will be very pity if we loose RIM from the Market.

  7. Jennifer Baljko
    December 29, 2011

    Wale – integrating technologies sounds like a good option. which ones do you have in mind – more software-related options, or hardware/device improvements?

  8. Jennifer Baljko
    December 29, 2011

    Nemos – You're probably right – at least a couple of these will likely play out over a few quarters. There seems to be a logical link between, say, change management, license technology, and innovate on product offerings. But, like you said, who knows.

  9. _hm
    December 29, 2011

    RIM have few good products. They should take aggressive marketing approach with ultra low margins like new entrant. Perhaps this may give them longevity and keep their market share. In this time they can restructure, reduce expenses to minimum and innovate and get novel product. This is possible.

     

  10. FLYINGSCOT
    December 29, 2011

    RIM could partner with someone to make 3 out of 1 + 1.  RIM could also delist and then rebuild around its core strengths without having to feed the Wall St beast every quarter.

  11. Taimoor Zubar
    December 29, 2011

    I don't think marketing can do the trick here for RIM. In the smartphone market, you don't see giants like Apple pursuing aggressive marketing. I think RIM certainly has to innovate and redefine it's product portfolio if it wants to be successful now.

  12. Himanshugupta
    December 29, 2011

    One option could be to start (partially) RIM mobiles based on Android systems. Android is gaining market traction just because of its support system. RIM's BB OS may become its biggest liability in the future just like Nokia's. The risk may is RIM's advantage of secured corporate messaging system. 

  13. Himanshugupta
    December 29, 2011

    Marketing can be an option for RIM. I do not see much marketing from RIM in India while Nokia, Samsung, HTC are aggressively fighting for the market share through digital and print media. Each company is trying to differentiate its product from others. In my opinion, till now Samsung seems to win as they have a clear distinction of their smartphone from others.

  14. Kunmi
    December 30, 2011

    Himanshugupta : I think Samsung is having edge over Nokia, HTC. But I agree with the fact that the best option for RIM is marketing. RIM does not have such a great product but if they solidly embrace Quality and with very strong marketing strategic approach perhaps it may happen for the company

  15. jbond
    December 30, 2011

    As a current Blackberry user and having owned various models over the years, I hate to see this company fail, but without serious changes they are most likely doomed. After reading many articles involving Blackberry management, I don't see some of your scenarios taking place due to RIM's arrogance. My best hope is that they license the Blackberry name, or merge with a company to help liven up the Blackberry line.

  16. Jennifer Baljko
    December 30, 2011

    jbond – thanks for sharing for 1st-hand experience. I remember reading some of the issues you've had recently, and it made me cringe. Seems like the basics of keeping users happy may be another strategic focus to consider.

  17. Jennifer Baljko
    December 30, 2011

    Himanshugupta – not sure if marketing will be enough to save RIM, but certainly strengthening its position itself as a leader in emerging markets couldn't hurt.

    I tend to agree with some of the others – a focus on innovation, quality and a way to stop feeding the Wall Street profit expectations may help get them back on a forward-moving track.

  18. AnalyzeThis
    December 30, 2011

    I think #1 is the most likely. RIM has proven to be very stubborn and I don't see them selling/merging at this point either. I really hope that if that does happen, however, that Amazon doesn't buy them up… I don't think that's a very good match at all.

    Anyhow, RIM will essentially keep on doing what they're doing and pursuing a strategy which has no hope of long-term success. It will probably take a few years, but eventually RIM will have no choice but to be absorbed by one of their far superior competitors. I think the BlackBerry brand will probably live on for many years, but RIM is nearing the end of its life.

  19. Anna Young
    December 30, 2011

    @TaimoorZ, I agree, marketing it's not an option for RIM. The name it self sells. All it needs is to revamp and come up with a distinctive ground breaking product. Sad to say however, I really don't see this happening. Do you you?

  20. Anna Young
    December 30, 2011

    @DennisQ I concur. Exactly my thoughts. RIM is running out of steam. I foresee a takeover option in another one or two years time if the situation does not improve. I will like to see RIM pursue option 2, to innovate if possible.

  21. Himanshugupta
    December 31, 2011

    @Anna, its interesting to read what people think RIM will/shall do. In my opinion, innovation takes some time to get to the market and is something which is for the long term. RIM still need a short term strategy to keep afloat. 

  22. JADEN
    December 31, 2011

    There is an opportunity for RIM to change its perception in the marketplace with a new design.  They thought they could define the consumer experience just like they defined the enterprise experience, but the strategy failed them because of Apple's and Google's ability to take consumers' experience to a different level.

  23. Anne
    December 31, 2011

    I'm hopeful RIM has learned from some of their mistakes, the market is still growing hand-over-fist.  It's a matter of can they do it right in 2012 or at least get closer to stabilize their handset sales.  If they can stablize the situation, the generally sour opinion of the company's prospects could change.

  24. Anne
    December 31, 2011

    I think if RIM can release a truly revolutionary phone with improved software in 2012, this could be a chance for the company's survival.

  25. Anna Young
    December 31, 2011

    @Humanshugupta, you're right innovation requires  strategic planning and capital resources. Hence, it takes time. In the absence of this what would your short term strategy entail? I think merging with similar technology company wouldn't be a bad idea. What do you think?

  26. mario8a
    December 31, 2011

    I hope RIM choose option #2 This article answer my question anout what would expect for next year Maybe RIM staff has more options in their portfolio

  27. dblaza
    January 1, 2012

    How the Waterloo crew missed the iPhone is one of the great mysteries of this century (is there an Apple store in Toronto?) but the only way forward is innovation, its what made RIM in the past and that doesn't change.  So many people in the world want a usable smartphone that cannot possibly afford an iPhone so whats stopping them?  Is this the NorTel disease?

  28. Wale Bakare
    January 2, 2012

    Am very sure RIM understands vividly well tasks ahead – surviving the competitive smartphone market and quick turnround to keep BB in the market race. Meanwhile, merging may not be the best option. I think,  RIM should act fast  to tap from the plethora of unknown ideas lock around in the world of technology – automobile, home automations and security. 

  29. Wale Bakare
    January 2, 2012

    Dont you think RIM getting right innovation more appealing and eye catching to consumers like BB Messenger also pertinent to RIM's strategy?

  30. Eldredge
    January 2, 2012

    I didn't realize RIM had such a management structure, but it doesn't seem like a good way to do business in a tough environment. Decsion-making by committee (even a small committee) can be very cumbersome and ineffective.

  31. Himanshugupta
    January 3, 2012

    @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. 

  32. Daniel
    January 3, 2012

    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.

  33. Barbara Jorgensen
    January 3, 2012

    I'm voting for the third option: the company has to make management changes before they try selling. The downside is, they may lose more ground in the meantime.

  34. bolaji ojo
    January 3, 2012

    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.

  35. itguyphil
    January 3, 2012

    “If they can stablize the situation, the generally sour opinion of the company's prospects could change”

    Anne,

    That's their problem now. I don't think they know what to do to stabilize the situation. Otherwise, they probably would've done it by now.

  36. stochastic excursion
    January 3, 2012

    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.

     

  37. Jennifer Baljko
    January 4, 2012

    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

     

  38. bolaji ojo
    January 4, 2012

    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. 

  39. bolaji ojo
    January 4, 2012

    Jennifer, Is giving up the role of co-chairmen really a significant change? I would classify that with one of the options you mentioned — the one about muddling through.

  40. jbond
    January 4, 2012

    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.

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