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Research In Motion is quickly becoming one of the most troubled companies in the mobile technology industry. For years, the company was atop its game, delivering some of the finest products in the business and generating stellar earnings for shareholders.
It’s problems go far beyond the service outage that started Oct. 11 in parts of Europe, the Middle East, Africa and South America and began affecting users in North America on Oct. 12. RIM has sustained major outages in the past and asserted that infrastructure upgrades would ensure they wouldn’t happen again.
However, over the last year or so, RIM market prospects have fallen off a cliff as its sales have dropped, earnings have slid, and stock price has plummeted. Now, some are wondering how much longer RIM will be able to stay profitable before it slips into the red and major trouble ensues.
Unfortunately for RIM co-CEOs Mike Lazaridis and Jim Balsillie, there is no easy solution to RIM’s troubles. The company is currently faced with a host of issues that, combined, could be enough to take the mobile firm down if not resolved soon. Even separately, these troubles could wreak havoc on RIM’s future.
Simply put,RIM is in a tenuous position that could have a profound effect on its business for years to come.
Read on to find out the issues plaguing RIM right now:
1. Look at the financials
One of the biggest issues facing RIM and its prospects for success in the future is its financial performance. Over the last several quarters,RIM’s revenue and profit figures have slipped, causing some to wonder how long it’ll take before it starts losing money. In fact, during its last-reported quarter ended Aug. 27, RIM generated $4.2 billion in revenue and a profit of $329 million. During the same period last year, its revenue was $4.6 billion and profit reached $797 million. In other words, trouble is afoot.
2. It’s no Apple
When it comes to being successful in today’s mobile space, being more like Apple isn’t such a bad thing. After all, that company has been delivering products for years that consumers and enterprise users want. Plus, companies like Google and Samsung have been successful by delivering products that mimic the functionality of Apple’s solutions. RIM, meanwhile, has stuck with its same old strategy. As the last several quarters have shown, that’s not a good idea.
3. The co-CEOs are killing it
Unlike so many other firms in the industry, RIM has two CEOs-Lazaridis and Balsillie. Although the company has said in the past that it believes that’s a good thing, it really isn’t.Neither of the CEOs really knows what to do to be successful today. Worse, they’re stubbornly clinging to the past. That’s not good for RIM or its customers.
4. Investors have no faith
RIM’s troubles have been a major issue for shareholders. Over the last year, RIM’s stock value has declined by more than 50 percent as many shareholders lost all faith in the company’s ability to turn things around. If the decline continues, a significant shakeup in management and market focus could come about. As history has shown, such tumult is rarely good for a company.
The Future Is Spinning Out of RIMs Control
5. Activist investors are moving in
Jaguar Financial and 8 percent of RIM’s fellow shareholders have banded together to call for management changes and a potential sell-off of the company. For RIM’s future, that’s not a good thing. When activist investors have a different idea about a company’s future than management, major changes usually ensue and there are rarely positive outcomes at least for management and employees. It appears that such changes will overtake RIM, whether the company wants them or not.
6. It can’t be sold so easily
Over the last several months, there have been reports that RIM could be sold off to the highest bidder. However, that doesn’t appear to be the case. As several analysts have pointed out, although RIM is much cheaper to acquire today than it was last year, the fundamentals at the company are not good. And even at a market cap of $12 billion, it might be too big of a risk for many companies to take on. There’s a reason Google decided to acquire Motorola Mobility instead of RIM. Investors and customers need to keep that in mind.
7. It fails to see the value of new-age smartphones
One of the most surprising things about RIM has beenits inability to offer a touch screen-based smartphone that can even come close to matching Apple’s iPhone. The company’s first Storm smartphone was a mess that most customers hated and ignored. The Storm2, while better, still falls short. Now, the Torch, with its slide-out keyboard, is too bulky for the average customer. RIM simply doesn’t appear to see the value of new-age smartphones like the iPhone or Samsung Galaxy S II.
8. The enterprise is unsure
The corporate world has long been RIM’s closest ally. But as of late, that relationship has started to erode as IT managers worry about RIM’s true intentions. When the company showed off the BlackBerry PlayBook, it seemed to market it toward consumers even though it was supposed to be an enterprise product. With each new BlackBerry handset iteration, it doesn’t appear that RIM fully understands what enterprise users want, like a better browser and something more than just BlackBerry Enterprise Server to keep them coming back. Simply put, the corporate world is starting to (ever so slightly) turn its back on RIM.
9. It’s against change
RIM is starting to look like it’s simply against change, as evidenced by its half-hearted attempts at making iPhone and iPad competitors.The BlackBerry PlayBook was by no means an “iPad Killer,” and the company’s aforementioned touch screen-equipped smartphones were laughed off by most consumers. What’s more, RIM management has said time and again in the face of poor earnings that it won’t change course. Currently, RIM’s market horizons seem to be shrinking. The company will need to make changes soon to address that. But so far the company is looking stubbornly resistant. That could be its downfall.
10. Its brand reputation
Aside from all the issues it has created for itself, RIM must also contend with its not-so-stellar brand reputation. If one were to poll most consumers, they would say that RIM devices are designed for the enterprise. On the other hand, most enterprise users would likely say that RIM’s devices are boring compared with those they use in the home. Combine that with the fact that the consumerization of IT is becoming a much bigger focus in the corporate world. Furthermore, some corporate IT managers themselves are seeing value in iOS. If RIM doesn’t improve its brand reputation quickly, it might have no way to change its fate.