Research in Motion, the Canadian maker of Blackberry, seems to be dangerously careening towards going bust. Will it follow the way of Eastman Kodak, which only last week, declared bankruptcy?
The possibility definitely exists, notwithstanding the dramatic change of guard at the top.
On Sunday, co-CEOs, Jim Balisillie and Mike Lazaridis, announced they were stepping down from the firm they founded in 1984, in a bid to quieten the clamour by activist shareholders seeking a “transformational leadership” to revitalise the company. Thorsten Heins, a former Siemens executive who joined RIM four years ago, was named the new CEO.
RIM that invented the email smartphone has struggled in the face of stiff competition from Apple and a slew of snazzier devices operating on Google's Android platform. Reuters
It’s a spectacular fall from grace for the iconic company, which just a few years ago was worth $70 billion. Now, it’s worth less than $10 billion and its shares have plunged to eight-year lows.
The company that invented the email smartphone has struggled in the face of stiff competition from Apple and a slew of snazzier devices operating on Google’s Android platform.
There has been intense speculation that the company could be up for sale soon. Late last week, the company’s shares rebounded on market talk that Samsung Electronics was interested in the company, according to a Financial Times report. In the past, Nokia, Microsoft and Amazon have been mentioned as potential buyers.
RIM’s board, however, has denied they are seeking suitors. “There is no intent to put the company up for sale,” a person familiar with the matter told The Wall Street Journal.
Famous last words?
Hopefully not. But there sure is a lot that RIM needs to do if it wants to turn around its fortunes.
Over the past few years, it has been losing the support of leading software application developers, which in this app-crazy world, is a death-knell to the success of any brand.
According to latest data, Research in Motion lags significantly in the apps race as it falls a distant third with about 43,500 apps. In comparison, Apple boasts close to 600,000 apps, while Android has about 320,000 of them, according to this BGR report.
According to latest data, RIM lags significantly in the apps race as it falls a distant third with about 43,500 apps. In comparison, Apple boasts close to 600,000 apps, while Android has about 320,000 of them. Jo Yong-Hak/Reuters
Design wise, it’s also been losing out to more flashier-devices from Apple and Samsung and a host of Android-powered devices. Overall, the Blackberry is just a bit dated, noted this International Business Times report published earlier this year.
“Most Blackberry users can tell of calling so many people they didn’t mean to call from accidental auto dials,” the report noted. “The screen is too small, and the buttons and such aren’t even always in the same place from one model to the next.
“The product served its purpose for a while, but only until the next generation of smartphones — read Apple and Google — came along to deliver one harsh, deadly blow.”
Plus, customers who bought a Blackberry have extremely limited options to extend their brand loyalty. That’s in contrast to Apple, which offers not just an iPhone, but also an iPad and different versions of the Mac computer.
RIM did launch a Playbook tablet last year, but without its trademark email service. Reviews were scathing and RIM had to offer steep discounts to sell the product.
India, the bright spot
At the moment, only one thing is going right for the company: it’s doing pretty well in emerging markets, especially India, where more than a million people use the device. As a recent Reuters report notes, RIM has established a strong, but not dominant, foothold in the price-sensitive market thanks largely to its cheap models.
A large corporate user base that relies on its enterprise email system, the huge popularity of RIM’s BlackBerry Messenger platform among young people and competitive pricing mean it outsells Apple’s iPhone by around five to one in India, the story noted. In fact, estimates suggest that by the end of 2011, Blackberry will have grabbed about 20 percent of the smartphone market, up from 6 percent at the start of 2010, according to this Forbes report.
The question is, in an ever-changing tech world, how long will that popularity last?
In addition, the company plans to focus on securing technology licensing deals with other companies, although many analysts doubt whether rival handset makers would rush to snap up a licensing agreement with RIM given that most are well served by Android. Microsoft has created a viable alternative, and RIM has failed to deliver in the past.
“Ultimately it’s not proven in the market and they’ve got a pretty patchy track record in terms of actually delivering these things on time and then being as good as they say they’re going to be,” one analyst told Reuters.
In the end, what RIM needs is a kickass, blow-iPhone-out-of-the-water device to make a convincing comeback. Without that, there’s little hope.
