Business and management
RIM restructures
Boardroom in motion
Jan 23rd 2012, 8:53 by M.G and P.L. | SAN FRANCISCO AND LONDON
“THERE comes a time in the growth of every successful company when the founders recognise the need to pass the baton to new leadership.” So said Mike Lazaridis, the creator of Research in Motion (RIM), in a press release on January 22nd that announced changes at the top of the company that makes the BlackBerry. Among other things, Mr Lazaridis and Jim Balsillie will step down from their positions as co-chief executives of the Canadian firm, handing the reins to Thorsten Heins, one of its co-chief operating officers. Messrs Lazaridis and Balsillie will also relinquish their roles as co-chairmen of RIM’s board. Instead, it will be headed by Barbara Stymiest, a former bigwig in Canadian finance.
Some of RIM's shareholders may wish that the baton had been passed on a long time ago. The firm’s smartphones are still sold in large numbers, but RIM is being battered by competition from Apple's iPhone and devices that use Google’s Android operating system. In the firm’s fiscal third quarter, which finished in November 2011, it made a net profit of $265m compared with $911m in the same period of 2010. The share price has fallen by more than 70% in the past year.
RIM’s difficulties stem in part from the wider range of choice open to corporate road-warriors who need to be in constant touch with customers and the office. The BlackBerry's secure e-mail has long been a prime selling-point for corporate information-technology departments, but more and more are now willing to support other smartphones. Yet many of the company’s wounds are self-inflicted. When its PlayBook tablet appeared last April, it provided e-mail only via a connection to a BlackBerry. Not surprisingly, sales have been disappointing. A new operating system for PlayBooks and BlackBerrys has been delayed. And in October interruptions to services that dragged on for three days had customers hopping mad.
This year will be a critical one for RIM. The PlayBook is due to be revamped and the new operating system is due to be launched. The mobile-phone business can change fast: witness the rise of the iPhone or HTC, or the slide of Nokia and Sony Ericsson as well as RIM. But the company has already lost a lot of ground on its competitors. Too much, perhaps, for Mr Heins to make up.
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A clearly superior NYTimes article on RIM's predicaments with its BlackBerry in comparison with other 'Fallen Giants', from Sony Walkman to Palm's Pilot and all the way to the demise of Polaroid.
It leaves TE contributions miles behind. Wonder if this signals a need by TE to take a critical review of its OS ('operating strategy'), not unlike the Blackberry ?
http://www.nytimes.com/2012/01/29/business/blackberry-aiming-to-avoid-th...
A decline in RIM's popularity since last fall has been directly related to the outage which undermined Blackberry's edge over Apple’s iPhone. Blackberry was seen as offering fast, encrypted, reliable messaging, - a product of choice for business. But the outages made more North American consumers consider buying smartphones based on Android or Apple technologies.
Meanwhile, Apple has been making progress in the business market leading more businesses to question whether Blackberry phones are really significantly more secure than iPhones. RIM needs to prove its case.
RIM has made major progress in developing countries with its free BlackBerry Messenger (BBM) service and with governments like India and the Arab Emirates.The scope of the developing world markets offers tremendous potential and a challenge which RIM must address quickly. That requires bringing in experienced and knowlegeable marketing professionals and setting up regional marketing subsidiaries worldwide.
Why do few people have confidence in the QNX software that is being developed by the RIM subsidiary for the next generation of RIM phones ? It has already made a debut in RIM PlayBook tablet in April last year. An update is due to be released next month. Granted, there has been a delay in software development but then with so much at stake, RIM cannot take any chances.
The QNX, a 30 year-old software developer, has top reputation with its other software systems, like the one designed to power credit cards transactions and others that run computer and entertainment systems in many leading car models.
Surely with so much at stake in financial transactions the banking system would not tolerate even a minute evidence of software malfunctioning.
As an IT telecoms specialist, I have used BB for about 5 yrs and thought it was outstanding. However I am now testing encrypted push mail for other OSes, (eg Android). I always liked the integration and security of BB but the new apps out there are really in contention. Screen resolution, weight, slimness and price of the new devices are superior and the non BB OSs are just more "fun" for users. I think BB need to rethink their approach. Even consider running other OSs on their devices and perhaps BB apps to run email.
BB phones are not great, but with BB roaming is still much cheaper. No idea why the others have not caught on that for companies with a lot of travelling you need affordable roaming - worldwide. Until they do we will continue or hate-love relationship with BB.
Here is something to consider... A few years ago I was contacted by a head hunter for an interview at RIM. It sounded great, so I said yes. But, then I called around and the general feedback on the employer was negative. So, I cancelled the interview.
IT companies are all about people -- good, creative, inventive people. And, IT people are very tribal, and do talk to each other -- a lot.
And, sadly, RIM has a developed a reputation as a "not fun" place to work. (Yes, good IT people actually consider their work fun.) For an IT company, any company really, this is the kiss of death.
This latest move just shows how clueless and out of touch RIM is. They have performed a minor facelift when they need radical surgery.
The previous co-CEOs are still on the board and the COO is the new CEO. Then the new CEO says that no significant changes are needed and all their actions say "business as usual" which signifies they have no plan to address the continuing free fall.
They cannot compete in the handset business, and the enterprise market has now been cracked by the other main players. The new CEO also suggested they will concentrate on the consumer side. Whaaat? That ship has already sailed and their "Playbook" was a disaster.
Their break-up value is much more than their stock price. Sadly the best thing for shareholders would be to look for a buyer or sell their intellectual property/patents.
Wow, they have screwed up big time and STILL don't grasp it...
CAVU wrote: "they have screwed up big time and STILL don't grasp it
Well, then, have you considered an option of offering your services as a new CEO ?
I assume that was a facetious comment... However, since you asked: If I was CEO I would abandon the handset market, as it is a commodity business they cannot compete in. Their strength is the network they have established. I would license that technology to every other smart phone manufacturer. Failing that, it's break-up time and I would get as much as I could for the intellectual property.
For you it's a commodity business, for them its a technology business, one that keeps growing and innovating year after year. You would abandon an existing market of some 14 million sales of phones each quarter with substantial growth potential generating some $2 billion in revenue per year and re-invest it in what...another Tim Horton-like competitor or what ? One of RIM's major handsets markets is India with some 1,200 million people and a rapidly growing economy. Less than 10% of people have any handset at all. And how about others like Indonesia, China, Brazil etc., etc. The race for a global market share has only began but you would abandon it right now.
Hmm, you don't sound like a real CEO material ! :)
The handset market IS a commodity business and there are already too many strong players in that market with Android and iPhone dominating. The market share of blackberry handsets in America and the US is now way down from their previous highs to less than 6%.
RIMs strength is/was encryption and tight integration with IT systems in the enterprise market. However, now there are other solutions, and the strong consumer acceptance of other handsets is causing their markets to erode.
I have no idea why you linked a technology company to a coffee supplier, but if you insist: people are "rolling up the RIM"! It's not that I want RIM to fail, I just wish their management grow some "Timbits" and make some major changes.
Just today I see that RIM made quite a few announcements re upcoming products. I find it very confusing that the new CEO did not allude to these products and milestones right away and generate some positive excitement rather than what he said upon his initial appointment? For someone who stated he intends to concentrate on marketing, I fear he is already falling short.
Much as I hope otherwise, I fear your prognosis is prophetic. RIM has lost too much ground, to be able to come bouncing back, in the immediate future. There's too much worthy competition, in the fray. But perhaps, now that Steve Jobs is no longer around, there's still a glimmer of hope for RIM..
How can you genetically engineer a Blackberry into an Apple? It may be unnatural and impossible.
RIM is centered in keyboard thinking and cannot see the next, voice processing interactions.
And the next, retinal projectors.
Email is a dinosaur in a age of social networking and txting.
RIM will follow HP and Nokia in decline.
Handy paperweights.
"Email is a dinosaur in a age of social networking and texting." - what have you got to say on confidential office mails still preferred and will be opted by millions of company executives ?
RIM is today's Nortel.
Both are Canadian technology firms that have had their stock prices crash. Hmmm, I guess that clinches your argument. Details like profitability, debt, and cash-on-hand are clearly irrelevant under the weight of these similarities. One could also point out that the executive team at Nortel that presided over the downfall are currently in court on fraud and conspiracy charges. These charges arise from ‘irregularities’ in the accounting that, curiously, triggered millions in executive bonuses based on profitability even though the corporation was actually losing money. The Executives remain innocent until proven guilty, but they do not deny the accounting irregularities. Rather they claim that the irregularities were perfectly legal.
So, just how is this relevant to the management change at RIM ?
My comment was in reply to the loose assertion that RIM was similar to Nortel; not a direct comment on the article itself.
Indeed, one had the sense that the founding executive team at RIM had care for the corporation, and although they struggled under strong competition, they definitely were not vultures trying to pick the corporation clean. Vultures, is what the executive team at Nortel appears to have been, regardless of whether they can squeak by on the letter of the law.
Unlike RIM, Nortel had significant financial hurdles to overcome, but even so, perhaps a team more focused, more dedicated to the corporation might have been able to save it. Unfortunately, the group that actually drove Nortel onto the rocks had other concerns on their minds.
RIM has the financial wherewithal to weather this storm and emerge stronger, but it needs an executive team that has the ability and the drive to do it. The new executive team is an unknown, and perhaps they *will* preside over RIM’s demise, but at present the opportunity exists for a dedicated team to re-align RIM and make it stronger. *That* was my point.
Why didn't RIM experiment with Android?
Especially considering it tried to make BB "Cool"?
Why hasn't MS bought RIM yet? Where is my BB/Office/Skype business phone?
Looks like the answer is simple: RIM is not for sale, at least not at the present time. Thorsten Heins, German-born and educated may not be a star salesman, but his primary challenge is operational. With new smart phones in the pipeline and with new version of Playbook coming out next month his primary task is to make 100% sure RIM will regain any lost market share and profit margins. And the new Chairwoman on the Board should make sure there are no slips in long term strategy.
I think the real question from a RIM shareholder point of view is: Why hasn't RIM abandoned the software side of the business, paid $27/handset for Windows Phone 7, and then continued selling BlackBerries with very high profit margins, but with the added benefits of a modern OS and no need for thousands of workers in the OS design area who obviously can't meet deadlines?
It's not in Microsoft's best interest to buy RIM, at least not yet. They already made their huge stake in Nokia, for a decent price. They would pay too much for RIM right now. I agree it makes sense for a partnership between MS and RIM, if only because of the dominance they could achieve in the Enterprise environment (similar to what Windows 95/98/NT did for desktops methinks?), but a buyout would be costly and only benefit RIM stakeholders at the expense of MS ones.
Why no mention at all about the role of Prem Watsa, an Indian born guru of Fairfax Financial Holdings who is joining the RIM Board having indicated that he plans to buy more RIM equity after becoming a significant investor ? Watsa, who is an experienced player in the US financial markets, surely must have good reasons for picking up tens of millions worth of RIM stock.
Neither is there any reference to RIM's ownership of a stack of valuable Nortel patents that could lead to new products. A rather superficially written item, at least by The Economist standards.
Finally someone with a clue.
RIM is the subject of concerted short selling that has forced their price well below a reasonable level.
Millions of dollars have been made feeding on the unwary.
Watsa is interesting because he's a value investor who has a track record in just such a situation. Indeed he has a case pending against four hedge funds.
My guess is that at Watsas direction they'll go private. Rebrand with BB10. And return as the premium manufacturer of cell phones.
Finally RIM might even be worth a bit of speculation.
Perhaps RIM's troubles also show the dangers of focusing on the 'corporate' market. The UK's car makers did the same (for fleet sales) with equally dire results. The problem seems to be that in dealing with corporate departments one is speaking to central buyers and addressing their concerns. But in practice such people are only intermediaries - the real decisions are made by the actual corporate user-people, who have much the same concerns as all other users.
American Express may be on the same downward path.
With regard to tech, first you must have an idea. The problem with finance people is that they don't necessarily have an idea. People with their noses to the grind stone risk being run over by the next bullet train.
With all due respect.
14 million sales of phones per quarter and $2 billion dollars of cash a year, with no debt, is not a bad situation to be in.
Personally I can't live without BBM and I wouldn't thank you for Android or iPhone because I need reliable service and decent battery life.
I'm not typical of course, but there's surely room in the world for a half dozen phone manufacturers.
Fashion changes with technology. Phone with keyboard is a dinosaur. If you have Nokia brand - not cool any more. Similar things have been happening with Blackberry.
That may be your preference, but you alone don't spell fashion. Somehow you forgot there are about six billion people on this planet with less than 10% actual owners or users of any phone. What you call 'fashion' most people see as necessity. This is not to say that products will not change, new functions will evolve and RIM and Apple and Nokia etc will keep offering new products. In a society like India, for example, with its 1,200 million people, a product like BlackBerry has a bright future.
What's not cool about the Nokia Lumia 900?
Apple may have the adoration of a bunch of people with more money than sense ($700 for the lowest model iPad????), but that's only a fraction of global markets - most of which are price sensitive.
"Phone with keyboard is a dinosaur". Are you serious?
I regularly need to type with one hand free. Can you do that with your iPhone?
Why do you insist that everyone like what you like? We're all different, and there's a huge market for phones with keyboards. Including BlackBerry.
Having said that, it's understandable that the gullible are taken in when journalists regurgitate PR without analysis.