RIM Might Not Be In Motion for Much Longer

Image from blackberryrocks.com

I write this while occasionally glancing at a Blackberry Bold lying on my desk, a loaner that I’m using as my beloved Samsung gets sent off for repair. I’m so used to touchscreens that I sometimes tap the Bold’s small display to no avail. The keys feel too small to type on and the apps and games I’m used to are missing (BrickBreaker doesn’t count). I can recall how Blackberries were coveted in the early years of high school. All the cool kids had one, it seemed. They weren’t businesspeople but they clicked away on their Blackberries as if they were running a small company. Today, I doubt that you can find a teenager interested in purchasing one. Research in Motion, the Canadian company that makes the Blackberry and the software that goes along with it, practically had a monopoly in the business world in the early 2000s. Blackberries were valued by companies and issued to employees for their security features (like blocking websites and remotely erasing data from a lost phone), QWERTY keyboards and email capabilities. But now it’s not only teens that have lost interest in the Blackberry. Chief information officers are realizing that iPhones and Android devices are equally capable of the functions that the Blackberry was touted for.

It’s no wonder that RIM, whose stock has fallen to $7.67 a share, lost $518 million last quarter and had to cut 5,000 jobs. The company still has $2 billion left in cash but CEO Thorsten Heins is struggling to keep RIM afloat. The gravity of the situation was highlighted this week at a RIM shareholder meeting in Waterloo, Ontario, where the company is headquartered. Shareholders were concerned about the delayed new operating system, the lack of experience of RIM’s board members, and the poor performance of RIM’s stock. The company’s domination of the business world ended when it made the mistake of dismissing the iPhone, released in 2007, and later Android devices, as solely consumer products. Neither Apple nor Google actively sought to cater to business users, but the appeal of their devices (robust app stores, large touchscreens and websites that didn’t have to be scaled down) put them in the hands of consumers who could afford them. Many of these consumers were employees of large companies and chief information officers began seeing the savings that could be had if instead of issuing hardware, they simply purchased and distributed software that mimicked RIM’s security features on iPhones and Android devices. Projections show that by 2015, 55% of business devices will be employee purchased.

RIM launched an app store two years later than the other major players in the arena and unsuccessfully challenged Apple’s iPad with its poorly received PlayBook in 2010, but its biggest failure, say many critics, has been its inability to deliver the operating system it promised would be out this year: BlackBerry 10. Pushed to 2013, BlackBerry 10 was to debut on a touchscreen device, which many believed would take the company out of its slump. Now, software developers like Good Technology and MobileIron are filling the niche that RIM created, providing tools for businesses to manage their employees’ mobile devices. The latter company gained 1,400 business customers in the last year alone. RIM does have comparable software called Mobile Fusion, a base of 77 million subscribers worldwide, reliable service and no significant debt. But the BlackBerry may prove to be a liability for software developers, who would rather develop for iPhones, Android and Windows phones. Mobile Fusion will run on iPhones and Android devices, so while RIM would retain its place in the software world, it would lose the hardware side of its business completely. The outlook is a pessimistic one for RIM, as well as Waterloo, a city of 100,000 which the company put on the map. RIM attracted talent to the city and paved the way for other startups, helping to fund Hyperdrive, a startup incubator run by a company called Communitech in the city. With smart asset management (RIM plans to cut $1 billion from its expenditures in 2012) and a little hope, RIM can last long enough to release BlackBerry 10 and resurrect its iconic phone.

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