I have been writing about RIM fairly extensively for at least 10 years. I can only think of two or three occasions over that time when I have not directly covered the company’s results announcement, meaning that (conservatively) I’ve covered around 35 conference calls.
But its most recent was different. Not only because of a different voice on the line – it marked the first call hosted by Thorsten Heins as CEO – but also because of the level of realism exhibited. Faced with tough competition and weak customer demand, the company has now ended its practice of giving guidance for the coming months, and has signalled a broad strategic re-evaluation.
When appointed, there was some concern that, as a RIM insider, Heins may be an advocate of “more of the same.” That thought has now been dispelled. After a 10-week “reality check” as CEO, Heins has now signalled that it is “very clear to me that substantial change is what RIM needs.” Indeed, it is easy to criticise RIM, and to argue that the company has taken its eye off the ball in recent years. Certainly, as Heins has identified, some of its efforts have been misguided – for example, its attempts to build up a value-added services business, and its failure to see increased competition which was largely well signposted.
But what is more concerning is the admission that “we have to realise that some of BlackBerry’s traditional strength in security, efficiency and push are not as highly valued by some of our customers.” And this is what the company was built upon.
It will be important for RIM to identify where it can sit in today’s mobile industry, with its consumer activities heavily pressured, and its core enterprise market also shifting toward other platforms driven by the growth of “bring your own device.” The operating system RIM is building in BB10 – as previewed by the BlackBerry Tablet OS used in the PlayBook – certainly looks impressive, but an operating system alone will not do the trick.
The saddest part of this tale is the fact that Heins has been forced into a strategic review that could lead to “partnerships and joint ventures, licensing, and other ways to leverage RIM’s assets” when the company is at its lowest ebb. Its share price has plummeted in recent months, and the company was in the red in Q4, all because it is following a path defined some time ago.
But then, only twelve months ago RIM was announcing “record shipments and financial performance” for 2010, with its profits and revenue both on-the-up. In this situation, it may be forgivable that the company failed to notice the iceberg was so close.
It is the speed of RIM’s fall-from-grace which has surprised most.
So both the management and the staff of RIM now face uncertain times. Numerous options have been suggested by observers, ranging from licencing the BB10 operating system and/or BlackBerry Messenger service to splitting the company and selling to the highest bidder. These types of decisions take time, but at the moment the company’s value is only heading in one direction, making maximising shareholder value a challenge.
And with core BlackBerry values undermined, it is difficult to see where the company’s USP as a standalone business lies. Certainly the BlackBerry brand has some cachet left, the company has an unparalleled knowledge of working with enterprises, and its intellectual property holdings also have value.
The issue is how to make the most of these, in a market that is much changed compared to when RIM was first on the up.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members