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?