News Analysis: Research In Motion is eyeing layoffs as a way to improve profits. But that is just a band-aid cure for the competitive and management challenges that threaten RIM's long-term survival in the mobile market.
Research In Motion is in
trouble. The company announced on July 25 that it plans to lay off 2,000 people
as it tries to find ways to reinvent itself as the mobile marketplace changes
Although those layoffs
should indicate to folks that RIM is experiencing some of the worst troubles of
its long and storied history, the company has pointed to its revenue, profits
and billions in cash on hand to reassure investors that everything is fine. Its
executives say that after its layoffs are complete and it can finally get down
to a size that's more manageable, its financial performance will start soaring
But that's a red herring.
RIM's troubles go far beyond how much the company is spending. BlackBerry
smartphones are no longer as appealing to corporate customers as they once
were, consumers don't want anything to do with RIM products, and the PlayBook
tablet has been a disappointment.
There is a host of issues going on at RIM right now
that are killing the
Read on to find out what
1. The co-CEO issue
For years, RIM has done well
under the leadership of co-CEOs, Jim Balsillie and Mike Lazaridis. But that
relationship has broken down, and now, the time has come for RIM to choose a
single chief executive to run its firm. When things are going well, it's easy
for two leaders to agree. But when times are tough, a consensus is tougher to
reach. It's why most other companies have only one CEO. And it's why RIM's
current decision to have two CEOs is a liability.
2. Smartphone design
When one looks around the
mobile market, they will find a host of well-designed smartphones. Devices like
Apple's iPhone 4, the Samsung Galaxy S II and many others appeal to customers
on a number of levels. But BlackBerry designs do not. For the most part,
BlackBerry smartphones have small screens, stick with the outdated physical
keyboard and fail to deliver the sleek look of competitors. That has hurt RIM
in the consumer space.
3. A victim of its own success
Even though RIM is in
trouble, the company has been a huge success over the years due mainly to the
enterprise. But now that companies are thinking twice about deploying
BlackBerry devices, RIM is trying to make a name for itself in the consumer
market. The only issue is that it doesn't necessarily know what it's doing in
that space. Although RIM has always competed in the consumer space, that market
hasn't really been a priority. Now that it's trying harder with consumers, RIM
is having trouble understanding what it takes to be a success in that space.
And unless it can turn things around, it might just be forgotten altogether by
4. Perception is everything
One major reason for RIM's
troubles in the consumer market is related to customer perception. As noted,
RIM has performed most effectively in the enterprise market, and consumers know
that. They perceive RIM to be an enterprise smartphone maker, not a consumer
handset vendor. So when they set out to buy a new smartphone for personal use,
consumers don't even consider the BlackBerry because of their belief that a
respective RIM device is designed for companies and not them. Until RIM can change
that, the company is in for trouble.