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RIM: A Pioneer About to Be Cannibalized?

Investors once again turned up the heat on BlackBerry maker {complink 4644|Research In Motion Ltd. (RIM)}, last week demanding that some tough strategic alternatives be considered. This week, we'll see if and how company officials respond to these requests or, more likely, how they talk around what's becoming a headline news grabber: RIM's viability.

A few days ago, Canadian investment firm Jaguar Financial Corp. called for RIM's board to take several steps to recoup share losses and take the company in a new innovative direction. The widely reported suggestions included selling off the company, spinning off patents, and creating a committee to investigate the options. Recently, too, there has been criticism about the QNX platform rollout (unofficially known as BlackBerry Colt) with some analysts reportedly saying the company was rushing the rollout and not providing adequate support.

On Thursday, after the market closes, RIM will announce its second fiscal quarter earning results, and executives will have to come up with ways to explain their strategy and provide a clearer idea of where the company's weathervane is pointing. During the previous quarter's call, executives told analysts that they expected second-quarter revenue to come in between $4.2 billion and $4.8 billion, and earnings per share to be $0.75 and $1.05, diluted and excluding any one-time charges, respectively. We'll see how close they come to hitting their numbers.

As EBN has reported, the Canadian company's latest smartphone strategy has left much to be desired. Although the company is holding its own in year-over-year sales, RIM's biggest headaches correlate directly to a loss of market share stemming from its inability to deliver competitive products to the rapidly evolving smartphone segment. (See: Reverse in Motion and RIM: Is the Party Over?)

So, sure, these particular rumblings could very well be the case of jittery investors who have been watching Apple's fly-away iPhone success and have little patience to wait around and see if RIM's proposed product plans come with a big payout. Investors have a right to complain about that; making money is their prerogative.

On one hand, I don't believe investors should dictate corporate strategies or substantially influence how and when operational and product plans should be implemented. Equally, I don't think companies that use band-aids to solve significant internal issues deserve a great deal of sympathy either.

I get it that keeping up with the substantial change underway in the mobile industry is not an easy task. But, someone at RIM has to be smart enough to develop an action plan that achieves three not-so-simple things: Keep the company healthy; keep turning profits for those that support the organization; and keep customers loyal to the brand. These last few quarters, there hasn't seemed to be much of any of those things going on at RIM.

Perhaps this week, executives will say something different or lay out a logical, step-by-step plan to reclaim RIM's former glory and reinstill excitement. I, for one, won't be holding my breath.

13 comments on “RIM: A Pioneer About to Be Cannibalized?

  1. FLYINGSCOT
    September 13, 2011

    When I look around supermarkets, malls and phone shops it certainly appears that Blackberry phones are being left in the dust of Apple, Samsung and HTC when it comes to smart phones.  It also looks like more and more people want smart phones in the developed countries.  I also notice an increasing number of cheaper Blackberry phones being offered for sale these days.  Is this a strategic move by RIM to address the higher volume segments or an act of desperation?

  2. Jay_Bond
    September 13, 2011

    RIM has been a leader of smartphones in the business world for a long time. The company had many innovations that make today’s smartphones possible. The problem RIM is facing is the demand for Iphone style products instead of business based products that made RIM the company they are today. RIM failed to create viable competitors for the Iphone and other Android phones like it. When they did come to the table late, they failed to capture people’s attention. Another problem is the Playbook, they are marketing a smaller tablet that doesn't function as well as the Ipad for the same amount of money and in some cases more money.

    Unless RIM comes up with a solution fast, they are going to continue to fall down the market share ladder.

  3. AnalyzeThis
    September 13, 2011

    @Jay_Bond, there are other issues with the PlayBook: obviously it launched too early and was missing a lot of features, and yes it is smaller and rather expensive… but in addition, they marketed it very poorly: for some reason, they decided to go head-on with Apple and focus on consumers, but you can't out-“cool” Apple. I don't even know why they took this approach.

    In theory, PlayBook should have been the enterprise/business tablet of choice. In practice, it is “adequate” for that application, at best.

    RIM is in trouble. There is no strong leadership. Consumers no longer think their phones are appealing. Business is starting to see the writing on the wall for RIM's future and investigating alternatives. To be honest, I just don't see a scenario where RIM could rebound. At this point, it's too late, I'm near certain they are doomed.

  4. Jay_Bond
    September 13, 2011

    @DennisQ, I agree completely that the Playbook should have been catered to the business sector instead of trying to go against Apple head on. I also agree that RIM is in serious trouble and might not survive without drastic measures. As for appeal and usability of their current phones, to put it lightly they stink. My wife and I both have the Torch 9800 and I'm switching to a new phone in a few weeks and she will switch next year. One year with my Torch was enough.

  5. _hm
    September 13, 2011

    RIM should associate with much prominent vendor like Google or Amazon. That may secure it for few years. Else RIM may have difficult time.

     

  6. t.alex
    September 14, 2011

    RIM is planning to release the Android player which supposedly is able to run all android apps. This is promising as it convinces to get a BlackBerry soon. I prefer to use it for the convenient qwerty keyboard.

  7. JADEN
    September 14, 2011

    RIM is now a low end player in smartphone market that is becoming more sophisticated.  If the company can make changes to its software, hardware and platform products, I hope they can bounce back, there software is a garbage when compare with Apple or Android, the web browser is a toy compare to the advance browsers that ship on better platforms.

  8. Anne
    September 14, 2011

    The recent performance of RIM is terrible, their products are losing market share.  The playbook not selling in the market, that does not look good for the tablet RIM has invested a lot to bring to the market. Hope blackberry playbook won't go the same way as the HP Touchpad.

  9. Jennifer Baljko
    September 15, 2011

    @Jay_Bond… I'm curious – what's the replacement phone for the Torch 9800, and what features/lack of features has made it “stink”?

    Repeating what's been said: A lack of innovation, a weak marketing campaign, and slow-to-adapt leadership model has put RIM in a tough spot.  Wondering what their quarterly earnings will show after the market closes this afternoon and what kind of guidance they give for rescuing themselves.

     

  10. Clairvoyant
    September 15, 2011

    It will be interesting to see today what the company has to say, and what their possible future may be!

  11. Jay_Bond
    September 15, 2011

    @Jennifer, RIM's direct replacement is the 9810, more or less the same phone just OS7 running the phone. I used to have an Iphone and changed to the Blackberry for a different feel. The Torch had just come out and had the touch screen and keyboard. Overall I don't think the phone is that bad, just not in the class of the Iphone and new Android phones. I will be upgrading to one of the new Samsung's that AT&T is offering.

    We still don't know what my wife will change to come summer, but she is turned off by Blackberry anymore. She needs it for business and has 7 different emails set up through it. The problem is every update Blackberry sends screws the phone up, and she has been through multiple ones, all due to software issues by Blackberry. I think she has finally had it and isn't totally keen on a touch screen only phone, but might have to go that route to get all the business features she needs.

  12. SunitaT
    September 19, 2011

    I think its too early to say if RIM will sell off its business unit. The fact that RIM was a part of a consortium that nabbed a portfolio of patents from bankrupt Nortel Networks increases the valuation of the RIM tremendously.

  13. Mr. Roques
    September 19, 2011

    Well, I truly don't have a clue on what RIM can do. Similar to Nokia, they just stayed too quiet, too long. While Apple and Android Phones took over.

    The results from the second quarter aren't as devastating as I thought but just look at the YTD stock prices and you'll see where they are going.

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