Research In Motion is in trouble. Whether it can survive depends in large part on its ability to roll out radically evolved products-sooner rather than later.
Is BlackBerry
maker Research In Motion doomed?
It's
definitely a trying time for RIM, which faces problems on a number of fronts: Its
aging smartphone portfolio is losing market-share to Apple's iPhone and Google
Android, quarterly revenue is softening, and there's a rising perception among
analysts that the company's executive structure needs to change in radical and
unprecedented ways.
RIM is betting
that its upcoming product line, which includes seven new BlackBerry
smartphones, will help reverse its market decline and build some positive buzz
about its prospects. "We're going to come out ahead," co-CEO Mike Lazaridis
told investors during a July 12 annual meeting.
The new
smartphones will almost certainly run the BlackBerry 7 OS, which isn't a
radical upgrade from the previous operating-system version-and will need to
compete with Apple's iOS 5, the ever-evolving Google Android, and Microsoft's
Windows Phone, which is due to receive its huge "Mango" update this fall. While
the BlackBerry OS has long attracted praise for its business-centric features,
including messaging, the other platforms are rapidly adding capabilities that
bring them on par with RIM.
RIM will need
to rely on the BlackBerry 7 OS until at least the second half of 2012, when the
company predicts its QNX-powered "superphones" will begin to arrive on store
shelves. RIM's PlayBook tablet uses a QNX operating system, but precious few
details have leaked about the smartphone version. In any case, RIM's rivals
will have done a little evolving of their own by that point, and it's a huge
question mark whether the BlackBerry "superphones" will have the advancements
necessary to give RIM the initiative.
Just to make
things more problematic, RIM's PlayBook hasn't exactly proven to be an iPad
killer. True, the device sold 500,000 units in its first quarter of release-but
a July 13 posting by the blog Boy Genius Report
features an unnamed RIM employee insisting the company didn't sell those at
full margin.
"RIM's thought
process was that they hoped if they put a product in the carrier's hands that
was less than full margin, it would entice the carriers," the blog quotes its
source as saying. "RIM isn't making any money on the PlayBook."
The PlayBook's
lack of native email without an associated BlackBerry device, the source added,
was an off-putting revelation to the carriers. RIM has been pushing through
regular software updates to PlayBook owners, but it remains to be seen whether
the tablet can sustain any sort of momentum in an increasingly crowded
marketplace.
During a June
16 earnings call, co-CEO Jim Balsillie suggested to the gathered analysts and
media that RIM is in a serious period of "transition," but that he and
Lazaridis have a plan to guide the company back to productivity. At the time, RIM
announced that it would begin laying off employees as part of a "streamlining
of operations."
Like Nokia,
another tech company faced with analyst negativity and falling market share,
RIM is betting big that it can bleed now and triumph later. But what will
happen if RIM's QNX-based smartphones don't prove a company-saving hit? According to Peter Misek, an analyst with
Jefferies & Co., QNX's UNIX, POSIX-certified OS has never been deployed on
such a scale-and faces the challenge of integrating with existing technology.
Certainly,
other analysts have taken a dim view of RIM's near-term prospects.
"We believe
RIM has now squandered nearly every opportunity and competitive advantage it
enjoyed through ineffective R&D resource management, delayed product
launches and misreads of the competitive environment," Morgan Stanley analyst
Ehud Gelbum wrote in a recent note to clients, according to a June 16 Reuters report.
Will RIM pull
off the same trick as Apple in the late 1990s, and come roaring back to
prominence? Or is this the beginning of the end?
Follow Nicholas Kolakowski on Twitter
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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