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Thorsten Heins, amid pressure from shareholders, was promoted from chief operating officer to chief executive officer of BlackBerry maker Research In Motion in January, replacing co-founder and CEO Mike Lazaridis and co-CEO Jim Balsillie. The pair had together built a smartphone solution that analysts called the gold standard, with devices so addictive they earned the moniker “CrackBerries.”
In June 2010, RIM’s revenue rose 24 percent to $4.24 billion, it shipped its 100 millionth BlackBerry smartphone and it gained 4.9 million net new subscribers. Its smartphones were the darlings of the enterprise, a sacrosanct territory that the Apple iPhone-amid much controversy-was just beginning to penetrate.
Then, seemingly helpless to stop it, Lazaridis and Balsillie watched their empire take a two-year nosedive.
The economy had weakened, businesses were looking for ways to trim spending, tens of millions of iPhone owners were engaging with their phones to unprecedented degrees, and a wall fell down. CIOs began implementing bring-your-own-device (BYOD) policies to bridge the divide between personal time and work, and high-end Android-running devices followed the iPhones inside.
“When the consumer hit the enterprise with BYOD … there was the thought, ‘They’re going to go back to corporate liable, it’s not secure enough,'” Heins, told eWEEK, offering a take on where RIM went wrong.
In June 2012, the company announced a quarterly loss of $518 million, the imminent departure of 5,000 employees and a second delay, to early 2013, of the launch of BlackBerry 10-a new mobile platform on new smartphones that together are RIM’s big hope for turning the company around. On a Canadian radio program shortly after the announcement, the host described RIM as being in a “death spiral” and told Heins that in six months’ time, “RIM may not even be around.”
RIM Execs Have Done Much Soul-Searching of Late
Heins and his trimmed-down team have done a lot of thinking about who the BlackBerry user is and how they can continue to serve that person. What they’ve determined is that while the brand was built on the delineation of enterprise from consumer, saving it will require nearly the opposite.
“The distinction between a corporate user and a consumer doesn’t give us the right angle in looking at the market. We need to look at the person, we need to look at the people,” Heins told eWEEK.
“I’m sure you’re absolutely aspirational in your business. And I’m sure you also have elements … in your private life that you also need to succeed in, whether it’s running a family or a charity, or being the coach of a female soccer team-whatever it is. You have your corporate definition of success and you have your personal definition of success,” he continued.
“That’s why we don’t distinguish between them. We want you to be successful. We want to be the best tool for you to achieve your success.”
Internally, Heins and his team have come to refer to these users as “The BlackBerry People.”
Heins agrees that BlackBerry 10 has become a finish line of sorts-the energy of the entire company, he said, is focused on the goal of releasing BB10.
BlackBerry10 Is a Finish Line of Sorts
What exactly can we expect when they reach it?
“What you can expect is a whole new BlackBerry experience and user paradigm,” said Heins. He continued:
“There’s a lot of consumer and corporate research on how do people use their devices. … That led to a whole new user design for the flow of the applications. So, right now, if you look at [competitors’] devices, you have the tiled screen or you have the icons. What do you do [if you need information], you call an app. Work within that app, want to do something different? Back, new app. Need to do something else? Back, new app. What BlackBerry 10 will do for you is stop this paradigm of ‘in-out,’ as we call it, and through multi-tasking, real-time capabilities will allow you to flow across those applications.“
Late in their tenures, former RIM CEOs Lazaridis and Balsillie earned reputations for under-delivering on big promises. So it seemed particularly worrisome for RIM when analysts with investment firm Jefferies released an Aug. 7 research note saying they’d tried BlackBerry 10 on the Dev Alpha-a prototype smartphone RIM gave developers at BlackBerry World-and found it to be “certainly an improvement over BB7,” about equal to Android 4.1 and “highly unlikely … to be an improvement over iOS 6.”
Therefore, they added, “we see little chance RIM can take share away from Apple with BB10.”
Heins waved away the idea.
“It doesn’t reflect the experience-it’s not actually BlackBerry 10. It’s a prototype, meant to drive content,” said Heins. When the BlackBerry PlayBook tablet came out, developers asked that next time they be given a device in advance, so that they could prepare apps before the launch, he explained. Thus, the Dev Alpha.
Another area where RIM has under-delivered has been its touch-based interfaces. The QWERTY keyboard-an area where RIM has excelled and still controls the market-is a very enterprise-geared feature. To shake that label, RIM will need to do touch just as well.
“We are going to set the bar for other touch devices,” said Heins. “We’ve spent a lot of innovation on the full-touch virtual keypad,” said Heins. “That was huge. We want the typing experience on the [touch-based BlackBerry] to get at least as close as it can to a physical QWERTY.”
The question, then, becomes whether Heins and RIM can make these changes, and make the world fall in love with them, before the company is forced to sell off its assets piecemeal and meet the fate Heins’ radio interviewer alluded to.
Heins Said Its Prudent to Look at All Options for the Future
The question is haunting RIM this month, following Bloomberg’s Aug. 8 report that IBM is interested in RIM’s enterprise services division. Samsung has also been named as a potential suitor for either the intellectual property or the entire company.
Heins was matter-of-fact about such options, coloring them as business decisions any logical company would consider.
“There’s a small team … working on strategic review with financial advisors, looking at what makes sense, what doesn’t make sense, what would be our options,” he said. “It’s prudent to look at all the options for the future. It’s not depending on each other, but certainly if BlackBerry 10 were out there, being proven by then … it would make things easier. But they’re not in any way dependent on each other.”
This seemed to indicate that it might be easier for RIM to partner with, say, an IBM, than to find a buyer. Heins repeated that all offers will be considered, but used the question to underscore RIM’s value.
“I like that question in that it recognizes that BlackBerry is not just a smartphone company,” said Heins. “We’re a global, secure, reliable data network … we’re within the key systems of the enterprise … Most people look at smartphones, smartphones, smartphones. We have much more to offer than that.”
Indeed, RIM also has a vast intellectual property portfolio and patents it could use to help bring in cash-a business model that Nokia, another once-leader that’s now also struggling, is also pursuing. In a market in need of differentiation-Gartner analyst Carolina Milanesi has attributed Android’s success not to any great love for Android but to a larger desire for an option other than the iPhone-RIM could also license out BB10 once it’s complete.
“The possibility is there,” said Heins. QNX, the company behind the software, is in the licensing business and knows how to make the model successfully work. “Once finished, from a technical perspective, it’s ready to license. Whether we decided to do that, that’s a different question.”
Growing BlackBerrys Worldwide Appeal Is Crucial
RIM has a solid international following, which early on had helped to obscure the fact that its fortunes were turning. Even now, its phones “crush” sales of iPhones and Android phones in places like South Africa and Indonesia, where BlackBerry Messenger is “RIM’s secret weapon,” as a blog post on Seeking Alpha described it Aug. 21.
As tricky as the U.S. market has been, China is another that RIM will need to figure out. It recently became the world’s leading phone market, and Apple and others have emphasized its potential and importance to their businesses, while finding it challenging to navigate. According to Canalys, consumer preferences in China have leaned toward domestic brands such as Lenovo, ZTE and Huawei.
Still, the country presents an enormous opportunity, and Heins, like other tech CEOs, understands its potential as an alternative to relying heavily on North America and Europe.
“Absolutely, for me, China is a key market,” said Heins. “And not that much in the high volume, low end … but really in the aspirational devices, the high-mid tier.” On July 26, RIM launched the Bold 9900 from Beijing.
“We’re investing in China, we have a team there, we’re building software for China,” said Heins. “I absolutely have the aspiration to get BlackBerry [more thoroughly] into China.”
For now, however, the company’s focus remains on getting BlackBerry 10 to market.
Heins loosely segued to a conversation about the Olympics and said that he’d recently watched the rowing competition. He made the analogy about RIM’s employees being in sync and currently pushing with all their might toward the finish line.
“The last 500 meters,” Heins said with emphasis, “are the toughest.”