RIM: BlackBerry Is Not Out of the Consumer Game

During its recent quarterly report, RIM shared a good deal of information, and not all of it clear. The BlackBerry maker isn't getting out of the consumer space. It's just scaling back.

BlackBerry maker Research In Motion held an information-packed earnings call March 29 that left many unclear about its intentions, especially when it comes to the split between the consumer market and its traditional place in the enterprise.

RIM was an early leader in the mobile email space, widely dubbed the enterprise gold standard, but as the Apple iPhone and Android-running smartphones gained popularity among consumers, and eventually began encroaching on RIM's enterprise territory, the Canadian company followed the example and likewise tried to have a hand in each market.

That, suggested Thorsten Heins, RIM's 10-weeks-on-the-job CEO, was a contributor to its current ails.

RIM needs to focus, Heins said, on its longtime area of expertise€”the enterprise€”and narrow its consumer interests to select areas, which it hopes to do with help from strategic partnerships.

"We believe that BlackBerry cannot succeed if we try to be everybody's darling and all things to all people," Heins said on the call, according to a transcript from SeekingAlpha. €œTherefore, we plan to build on our strengths, to go after targeted consumer segments, and we will seek strong partnerships to deliver those consumer features and content that are not central to the BlackBerry [value] position, for example, media consumption applications."

A particular consumer area where RIM needs to backpedal, said Heins, is its "consumer-oriented, value-added services business," which it has built up over the last two and a half years through a number of acquisitions. Evaluating these during the last 10 weeks, Heins said, it was clear that, given RIM's current market position, it would be "extremely difficult" for RIM to see much success from continuing to develop and invest in this initiative.

"As a result, we will be looking at ways to scale back these activities and refocus resources on developing an integrated services offering that leverages RIM's strengths, such as BBM, security and manageability," added Heins. "The intent would be for these services to add value to our customers and generate service revenue for the company."

Heins admitted that RIM was slow to detect the now widely popular bring-your-own-device (BYOD) trend within enterprises, and RIM's remedying of this speaks to one consumer area that it will continue to focus on: very high-end devices.

Heins said he wants to make BlackBerry handsets an "aspirational, high-end object of desire, with the best functionality for communication purposes and for people who just need to stay ahead of the game that need productivity and that need to achieve."

Another area is lower-end smartphones. The number of Americans with smartphones is rising. According to February data from the Pew Internet & American Life Project, 46 percent of American adults now own smartphones, up from 35 percent a year ago. While 25- to 34-year-olds are the largest demographic of smartphone users, 18- to 24-year olds are the group most quickly transitioning from feature phones to smartphones.

"You don't move from a feature phone to a full-blown smartphone with all bells and whistles that you can think about," Heins said during the call. "There is a learning point that we've successfully covered with the 8520 Curve, and it's still selling really, really well."

Less expensive devices could also help RIM in international markets, where it enjoyed considerable success for years, but lately is again finding Apple and Android invading, and the latter proving a tough competitor on the pricing front. Nokia, too, is focused on bringing inexpensive but savvy handsets to developing markets.

"The simple messages I want you to understand and take home is that we're making the necessary changes at the company," Heins said during his prepared remarks. He went on to explain that these include, one, realigning the business to build on its strengths; two, successfully launching the first BlackBerry 10 smartphone later this year; three, reshaping the organization for better accountability and efficiency; and four, evaluating a variety of options to increase shareholder value.

"We are open to a variety of different avenues to [drive] long-term volume value in the company," Heins continued, "and we intend to be as transparent as we can in communicating our progress with you. I look forward to providing you with an update in the near future."