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Five steps to rescue RIM, the once bright mobile star

by Doug Drinkwater

July 9 2012

Research in Motion is in trouble. Once the golden boy of smartphones in enterprise and touted as a rival to Apple for tablets, the Canadian mobile maker has been hit with poor sales, software delays, staff exits and plummeting stock. So what does RIM have to do to survive?

The past year has been a rocky one for RIM. The company had to delay its PlayBook 2.0 OS, saw the exits of co-founders Jim Balsillie and Mike Lazaridis, been overtaken in the smartphone arena, and battered in the tablet market.

This has led to poor sales, weaker revenues and a stock value that has fallen over ten-fold in the last three years. So with that in mind, TabTimes looks at five steps vital to the firm’s survival.

BlackBerry 10 must spark developer interest

BlackBerry 10 is RIM’s new mobile OS for BlackBerry phones and tablets which is based on QNX, the current software being used for BlackBerry devices. The OS has been hyped-up and rightly so; it will be compatible with the PlayBook, will boast better multi-tasking (via the new Flow view feature) and a keyboard that learns how you type. The OS will even work with select Android apps. 

The trouble is BB10 has been delayed until Q1 of 2013.  That’s a worry, especially as BlackBerry is hardly the developer’s flavour of choice at it stands.

Creative Strategies analyst Ben Bajarin believes that while the PlayBook has only been a ‘stepping stone’ for BB10, the recent software delay could turn developers off what was described by another analyst as a ‘burning platform’.

“Their platform is in decline while others are on the rise”, said Bajarin. “Every month they delay is a month they are farther behind and would-be customers have chosen a different platform. 

“Developers are continuing to invest in other platforms and the market appears to slowly be giving up on them. They will need to release a product that is highly desirable for them to even have a chance at this point”.

Flurry, a mobile apps analytics firm, backed this up with a recent blog post which suggests that developers are now more likely to start a new project on Windows than BlackBerry. A Flurry spokesman poignantly told us that “RIM does not offer developers a viable business opportunity”.

Of course, another route to go down would be for RIM to go for another platform, and while that seems unlikely, Google’s Matias Duarte has already openly welcomed any such move.

New hardware to wrap around BB10

Despite its problems, RIM looks likely to launch new phones and tablets going forward, with various reports claiming the firm will launch two new phones, a 4G PlayBook and perhaps a 10-inch slate in 2013.

But not everyone agrees. One analyst told TabTimes earlier this year that RIM had no more plans to manufacture tablets, at least through Quanta Computer, its existing OEM partner.

Nonetheless, RIM would have to work extraordinarily hard to grab back the attention of consumers. BlackBerry phones have been swept aside by Apple's iPhone and Android-powered smartphones, while RIM's PlayBook tablet has been widely panned for poor usability, a lack of native email and calendar integration (until PlayBook 2.0 arrived) and too few truly useful apps.

Any further tablet attempts would face tough competition in the enterprise space, once again from Apple, but also from Microsoft's incoming Surface Pro.

More cost cutting

With plummeting sales, RIM was forced into making cuts, and new CEO Thorsten Heins addressed this issue in the company’s fourth quarter earnings call by implementing a strategy to save $1 billion.

The company has already embarked on the first step of that plan – cutting 30% of its workforce (5,000 jobs), and there was also the decision to ditch production of the 16GB PlayBook, hardly a big source of revenue for the firm.

"If RIM reaches their goal of saving $1 billion that will certainly buy the company time”, said Andrew Schrage, a former tech fund analyst now heading up Money Crashers, the financial advice service.

“The question is--at what cost? What services will suffer if 3,000 more jobs are cut? Also, while not considered a cost-cutting move, RIM has recently increased its cash level to $2.1 billion, largely done by liquidating current inventory at a loss. Obviously, this is not a long-term viable model for the company's survival”.

Indeed, it is worth noting that a number of analysts we spoke to suggested RIM go down the route of Apple circa 2000, by shifting corporate strategy, cutting jobs and reducing its product portfolio (there are currently over 20 BlackBerry phones on the market).

The key to it all: Sell up

With the investment banks on board, RIM is clearly talking to potential suitors, but who would be open to buyig the firm?  Amazon and Samsung were linked with RIM last year, but most vendors seem deterred by RIM’s current state.

“For a stock that was trading at almost $150 just three years ago, which is currently at around seven bucks, their situation is pretty grim”, said Schrage. “It just doesn’t seem like a strong bet”.

Some, however, believe that the Waterloo firm would make a good deal for Microsoft or SalesForce, including Lawrence Lerner, an enterprise consultant who put together Motorola’s first wireless eCommerce strategy in the 1990s.

“There’s an opportunity there for Salesforce or Microsoft. RIM is still in 50% of businesses, and with that you could use the PlayBook to push out Salesforce data into the enterprise. Microsoft could always jump on it too to dominate the email space or push out Exchange and SharePoint”.

Another option would for RIM to split its business in two, and then sell off the handset business.

“It is becoming clearer than ever that RIM needs to wave goodbye to hardware and focus on delivering services and licensing software”, said Informa analyst Malik Saadi. “This quarter’s results have effectively confirmed RIM can no longer afford to be a wholly vertical company”.

For now, Heins insists RIM is not ‘in a death spiral’, and in an open letter to The Globe and Mail claimed that RIM will continue to 'empower people like never before', statements which led former Apple exec Jean-Louis Gassee to accuse him of 'knowing and wilful misrepresentation'. Only time will tell if Heins was right or a victim of his own reality distortion field. 

Doug Drinkwater is the International Editor of TabTimes and is based in London, England.

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