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RIM’s Struggle to Succeed

Sometimes, I find it hard to watch a big company tumble. I can't help but wince when organizations that had a huge presence in the tech scene begin to crumble.

Other times, I just throw my hands up in frustration and want to shake some sense into the executives. More frequently, I want companies that can't keep pace to step aside and let an innovative newcomer with fresh ideas take the reins.

These last few quarters, I've been watching Research In Motion Ltd. (RIM), and honestly, I really don't know which bucket to throw it in anymore. Recently, I've grimaced at its downfall, chatted about next steps, and watched polls about its makeover potential. (See: RIM: Is the Party Over? and Can RIM Reboot?)

Now, I think it's starting to look like a comedy of errors, especially with yet another quarter of obvious missteps. I'm beginning to believe that “Stubborn gets what stubborn deserves” — meaning if company executives can't figure out how to dig themselves out of a mess and insist on spinning out useless babble, then I guess they'll have to figure out how to withstand whatever comes next.

Third-quarter results for the period ended Nov. 26 looked like this:

Revenue for the third quarter of fiscal 2012 was $5.2 billion, up 24% from $4.2 billion in the previous quarter and down 6% from $5.5 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 79% for hardware, 19% for service, and 2% for software and other revenue. During the quarter, RIM shipped approximately 14.1 million BlackBerry smartphones and approximately 150,000 BlackBerry PlayBook tablets.

And there was this piece of news: a $360 million after-tax writedown related to its inventory valuation of BlackBerry PlayBook tablets. So not only did RIM not leverage its ecosystem and sell as many tablets as it could have in a potentially big market during a busy time of year, it now has to take a writedown for what it did produce. Yikes!

In a statement, RIM's co-CEOs were jointly quoted as saying, “RIM continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalize on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance.”

From where I'm sitting, that statement means very little, and once again does little to instill near-term confidence. Pray tell, which RIM strengths are you specifically talking about? What is RIM delivering to its customer base? And what are executives actually doing to address the execution challenges you mentioned? We're all waiting, and patience is growing thin.

In the absence of clear, definitive, strategic goals, Web watchers have had a ball these last few days speculating on what's next for the Canadian company.

A Reuters wire story that was picked up and cited in other places points out that some key investors believe the company should go beyond ditching its PlayBook tablet strategy (something that has come up in the past few months on EBN and elsewhere) and consider getting out of the BlackBerry handset and hardware business all together.

And, as a post on Asymco notes, RIM officials said they don’t expect new BlackBerry 10 devices until late next year, which continues to feed a notion that the company has no credible plan for sustaining itself.

So, back to my original thought process. Watching big guys fall may be hard at first, and then it becomes maddening, and then it slips into absurdity. While RIM's recent execution strategy isn't really a joke, it should serve as an example to others who prefer to stick their heads in the sand instead of dealing with problems head-on.

38 comments on “RIM’s Struggle to Succeed

  1. Houngbo_Hospice
    December 19, 2011

    RIM is rather trying to survice. Wth its share dropping for more than 70% of its value in one year, I think that there is much to fear about the viability of the company. One question we may ask: will RIM still be here in a year from now?

  2. mario8a
    December 20, 2011

    Is HP still around? I beleive with the right financial decisions and just one champion product RIM will survive for many years Pray tell, which RIM strengths are you specifically talking about? What is RIM delivering to its customer base? And what are executives actually doing to address the execution challenges you mentioned? We're all waiting, and patience is growing thin.

  3. SunitaT
    December 20, 2011

    some key investors believe the company should go beyond ditching its PlayBook tablet strategy and consider getting out of the BlackBerry handset and hardware business all together.

    @Jennifer, what will RIM do if it totally gets out of BlackBerry handset and hardware business which is the core business of the company ? 

  4. Daniel
    December 20, 2011

    Jennifer, I think after the flop of playbook, RIM's financial strength and turnover also falls drastically. In Smartphone arena they had faced some operational issues for the smartphones (down time) and this made customer dissatisfaction also. So in total the customer satisfaction level with RIM products gone down and this made the product a bad remark. Hope they are able to overcome such things in future.

  5. Anna Young
    December 20, 2011

     In a statement, RIM's co-CEOs were jointly quoted as saying, “RIM continues to have strong technology, unique service capabilities and a large installed base of customers, and we are more determined than ever to capitalize on our strengths to overcome the recent execution challenges surrounding product launches and the resulting financial performance.”

    It has been a challenging and miserable time for RIM. It is a shame to note despite optimism, the past three months has been indeed a tumbling times for RIM.

    Tough talks from the CEO. No doubt the company does provide a unique service and possess the capability of a strong technology. However, with recent decline in sales and service outage related issue, can the management be trusted to lead the company out of the mire?

  6. Jennifer Baljko
    December 20, 2011

    Hospice – good question. Guessing they'll bumpalong for a while. They still have a solid BlackBerry user base. But I guess we'll see what 2012 brings.

  7. Jennifer Baljko
    December 20, 2011

    Trilapur – Exactly, what happens without BlackBerry hardware? I suppose the notion involves getting out of the hardware business and focusing on strengthening the customer service and software development, but can't say for sure. it seems vague to me.

  8. Jennifer Baljko
    December 20, 2011

    Anna – You're right is asking about the leadership vision and whether they will restore any confidence.  I suppose executives at RIM have to say something, but I don't think they're saying enough to convey clear, innovative next steps. Customer loyalty for a brand, product or service will only go so far; leadership is what takes the idea even further.

  9. FLYINGSCOT
    December 20, 2011

    Revenues still look decent considering market conditions.  If they got out of the Blackberry handset business I wonder what is left?

  10. prabhakar_deosthali
    December 20, 2011

    RIM story seems to be similar to that of HP, where the top managment has failed to give the right direction to its business re-orientaion in light of the changing market scenario. For both of these companies their golden days seem to be over and it will be a hard up-hill climb back for them.

  11. Houngbo_Hospice
    December 20, 2011

    “the top managment has failed”

    It is more than a problem with the top management. The engineering teams should also be blamed because they have not been able to design and put on the market devices that could compete with their competitors'. The answer to the Apple products came too late. 

  12. Barbara Jorgensen
    December 20, 2011

    I took a second look at the most recetn results and it's true their revenue gorwth was impressive. Sometimes it amazes me how compnaies can succeed in spite of themselves. There are a lot of embedded Blackberry users out there, but you can only ride your installed base for so long.

  13. JADEN
    December 20, 2011

    Unlike many firms in the mobile industry, RIM's has two CEOs, this is not a good thing. Neither of the CEOs really knows what to do to be successful.  Worse they're are sturbbonly clinging to the past idea. That's not not good for RIM at all.

  14. Anne
    December 20, 2011

    One of the most suprising things about RIM has been its inability to offerr a touch screen-based smartphone that can close to matching apple's iphone.  The company's first storm smartphone was a mess, the storm 2 while better, still fall short.  Now the Torch, with its slideout keyboard, it is so bulky to hold. RIM simply doesn't appear to see the value of new age smartphones like the iPhone or Samsung Galaxy S II.

  15. mario8a
    December 20, 2011

    One thing might improve RIM's future is if they can launch a better product than iPHONE, however onething RIM has is very good distribution channels.

  16. JADEN
    December 20, 2011

    RIM is starting to look like it's simply against change, as evidenced by its half hearted attempts at making iPhone and IPad competitors.  The blackberry PlayBook was by no means an IPad killer, and the company's touch screen smartphones were laughed off.  I read sometime when the company's management said it won't change course (sturbborn management), the market horizons is shrinking.  I think they need to make a turn to address that, otherwise that could be its total downfall

  17. AnalyzeThis
    December 20, 2011

    @Hospice_Houngbo, I don't know if you can blame engineering too much… for all we know, they HAVE designed better products, but for whatever reason they haven't made it to market.

    And also top management is responsible for hiring the people the people who hire these engineers… so ultimately it's still their fault if they failed to produce an organization that was capable of building solid teams of engineers.

    Anyhow, it's sad to see RIM continue to struggle and slowly lose what was once a complete stranglehold over the enterprise market.

  18. Wale Bakare
    December 21, 2011

    Yes FLYINGSCOT, still doing OK anyway. How do we compare RIM and Nokia at this difficult period? Meanwhile, i dont think RIM can for go Blackberry – the only business portfolio performing well, even despite behind iPhone and Samsung.

     

     

  19. jbond
    December 21, 2011

    As a current user of a Blackberry Torch, I can say RIM really needs to quit being stubborn and make some serious changes. I was so fed up with issues RIM was having, and constantly having to send my phone in for warranty replacements, I wanted to ditch Blackberry for good. I was set to buy the Samsung Galaxy Note when it is released. The only problem I found out was Android's email system is horrible and has many flaws. Using this phone for business and having 8 different emails setup, I would never be able to use the current Android system without problems. I've always been a fan of Blackberry, but the last 1.5 years has really pushed me. If RIM doesn't quit being stubborn and make needed changes, I will somehow find an alternative.

  20. Ariella
    December 21, 2011

    Your experience is very interesting, Jbond. Though you find much to be desired in Blackberry, for now it still seems to be the best choice for your needs.  Some organizations manage to stick around for years on that basis alone — everything else is even worse by some yardstick.

  21. Ariella
    December 21, 2011

    RIM was just in the news for rejecting Amazon's offerResearch In Motion Ltd. (RIM-T12.90 -0.47 -3.52% )  has turned down takeover overtures from  Amazon.com Inc. (AMZN-Q182.52 3.19 1.78% ) and other potential buyers because the BlackBerry maker prefers to fix its problems on its own, according to people with knowledge of the situation.


  22. Wale Bakare
    December 21, 2011

    Waoo!!! Thanks Ariella. So, are we expecting more merger and acquisitions in high -tech sector in the coming years?

    Nonetheless, RIM's current market struggling state can only be attributed to wider imbalance in strategic level compare to operational. If an offer had turned, that means a very needed strategic decision should follow suite, i think.

     

  23. Jennifer Baljko
    December 22, 2011

    Prabhakar – Yeah, you're right. Amazing isn't it, how a misreading the market and making a few bad decisions so quickly can turn fortunes around.

     

  24. Jennifer Baljko
    December 22, 2011

    mario8a – a product better than iPhone – that's RIM's best option at this point. Leverage their distribution and customer channel strength with a far superior product. Problem is they should have started designing that 18-24-36 months ago. Hard for them to catch up now that Apple has set the standard.

  25. Jennifer Baljko
    December 22, 2011

    Thx Ariella for that piece of news…Amazon buying RIM – now that's an M&A that could shake things up on lots of different fronts. Guess it's a mute point –for now, at least — if RIM insists that it can best solve its self-created issues.

  26. Himanshugupta
    December 22, 2011

    @Wale, BB used to be most sought after gadget for business savy ppl but smartphones are doing much better now. I remember somtimeback the Indian government warned RIM to bug fix its BB related security problem. RIM got pretty bad PR. The problem with RIM is that it has only one business still running the show but what will happen when they start to loose the market just like Nokia. So, maybe they need not to let go the BB business but they need some serious strategic brainstorming sessions.

  27. Himanshugupta
    December 22, 2011

    @jbond, so you experienced the hardware problem firsthand. I am not a blackberry user but my friends have BB. One of my friend got quite frustrated with some hardware problem that he just gave up on the ever getting his phone fixed permanently. Usually the BBs are compact and convienient for mails and sms but unfortunatly that's the only advantage they have over other phones.

  28. t.alex
    December 22, 2011

    Anyone tried Nokia E6? Not bad compared to BlackBerry.

  29. Anand
    December 23, 2011

    Anyone tried Nokia E6? Not bad compared to BlackBerry.

    @t.alix I have used E6 but I haven't used Blackberry so cant really compare the two. I also have samsung galaxy which is android mobile. I can confidently say Nokia has better battery life than Android.

  30. Anand
    December 23, 2011

    Amazon buying RIM – now that's an M&A that could shake things up on lots of different fronts.

    @Jennifer, Amazon.com's primary motivation for buying Research In Motion Ltd. is to build its patent portfolio to defend the Kindle Fire from lawsuits that have plagued other Android devices manufacturers such as HTC and Samsung.

  31. jbond
    December 25, 2011

    You are completely correct. I am usually getting a replacement phone sent to me every couple of months, a giant hassle. Thankfully AT&T's warranty department is very good about this. You are also correct about the mail and sms, if another company could match Blackberry in those services, they would lose me as a customer in a heartbeat. I have the feeling another company will step up and match those services before Blackberry actually makes the much needed advancements that are costing them customers and large amounts of money.

  32. Wale Bakare
    December 25, 2011

    anandvy,  i agree with that – Nokia's distinguished its phones with longer battery life than other rivals,  as well are more ruggedised. Meanwhile,  i think Amazon made a  boldly decision in making such approach for RIM – M&A. But how would RIM's shareholders react to such move? I believe, lots are on the table to trash out in the boardroom. And what messages has this sent out?

  33. Taimoor Zubar
    December 26, 2011

    I think RIM's performance is going as it was predicted by the analysts. However, I do remember reading about the claims made by RIM's CEO at the start of the fiscal year. All of them seem to be going doing the drain. Someone needs to dig them up and confront RIM's management over them.

  34. Anne
    December 27, 2011

    RIM's performance in the market has been disastrous to the company.  The two CEOs claimed they have a strategy to get RIM out of its current quagmire but it's been disastrous.  It's time for leadership change at RIM.

  35. itguyphil
    December 27, 2011

    Is HP still around?

    mario8a,

    They're around. They're just waffling with alot of indecision. I think they should stick their bread and butter…. servicing enterprise customers. And doing it well.

  36. t.alex
    December 28, 2011

    Yes Nokia seems to have the best power management.

  37. Anna Young
    December 30, 2011

    @Anne, I think RIM's leadership have lost their sense of direction. With two CEOs and yet no clear outcome? If the managements can't get it right now, will they ever come up with an innovative idea? It makes me wonder. Do you think all hopes is lost for RIM?

  38. Kunmi
    December 31, 2011

    I agree with you, t. Alex

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