Just like physical objects, corporate fortunes are governed by inertia. A rising company seems to be propelled by momentum ever upward, but once reversed, it seems the decline is just as unstoppable. Just ask BlackBerry maker Research in Motion (RIM).
The problem with RIM has been that it has been one step behind its competitors, and now, its competitors seem to be pulling away as RIM stumbles.
RIM has had a strategy to turn around its fortunes, promising a radical new operating system, but so far, it has simply failed to execute it. By the time it releases its next-generation ‘superphone’, it might not seem so super.
The real question is whether the resignation of its co-CEOs can stop the decline and return RIM back to the top-tier of smartphone makers.
The fall of the Blackberry
Activist investors have been calling for a change of leadership at RIM for a while, and it really became a matter of timing — of when, not if — RIM co-CEOs Mike Lazaridis and Jim Balsillie would step down.
As Ben Rooney, the technology editor of the Wall Street Journal said on Twitter:
“Deck-chair rearrangement at RIM must be least surprising corporate news ever?”
Lazaridis and Balsillie have had a good run with two decades at the top, but RIM has been losing ground in its core North American market since the iPhone was introduced in 2007 and Google launched its Android mobile operating system a year later.
RIM and Nokia pioneered the concept of the smartphone, but both pioneers have lost heir lead in the market they helped create. However, just like Nokia, RIM’s decline in North America and Europe has been offset by gains in emerging markets. RIM grew by 59% in the Asia-Pacific region and 56% in Europe, the Middle East and Africa. RIM also has been boosted by the popularity of BBM – Blackberry messenger – among youth.
Apart from those two bright spots, RIM’s decline has been fast and furious. The US is where RIM has seen its greatest decline as shipments declined by 58% from 2010, according to Canalys. RIM’s US market share fell from 24% in the third quarter of 2010 to 9% a year later.
How far the mighty have fallen from the days when the BlackBerry was referred to as the Crackberry in the US because it was so addictive.
Waiting for a turnaround
RIM has been promising to shake up the mobile world with its next generation operating system, QNX, now known as BlackBerry 10. RIM has promised to unleash super phones on the world, but so far, most of those promises have been broken.
The rollout Blackberry 10 has been beset by delays, and the only device that uses the next-gen OS is RIM’s Playbook tablet, which hasn’t set the world on fire.
Worse than that, the first handsets to run the new OS have seem to always be a few months away. A single, new superphone, named the BlackBerry London, is expected to make an appearance at Mobile World Congress in February, but now, most industry watchers don’t expect a BlackBerry 10 handset to come to consumers until the end of 2012.
Last year, RIM’s global growth, from 50m to 70m subscribers, gave it a bit of breathing room. However, the mobile industry is moving so quickly that what RIM could reasonably have called a superphone last year, will now seem rather ordinary.
Worse for RIM, just as they roll out superphones, inexpensive Android handsets from Chinese makers Huawei and ZTE are flooding the market in Europe, according to Tero Kuittinen in Forbes.
The Huawei Blaze sells for £60 without a contract in the UK, while an off contract, pay-as-you-go BlackBerry Curve 9300 is more than twice that, at £145. This will dent or decimate one source of growth for RIM — European teens who found the BlackBerry an affordable alternative to the iPhone and high-end Android handsets.
In an attempt to reverse its decline, RIM has always seemed one step behind events. As new executives take over at RIM, the next threat is already clear. The company has squandered valuable time to reverse their decline with distractions like the Playbook. The new executives have precious little time, months not years, to stop the rot.