Research In Motion will shed around 2,000 employees this week, in yet another indicator of the company’s battered state.
“The workforce reduction is believed to be a prudent and necessary step for the long term success of the company,” read RIM’s July 25 statement on the matter, “and it follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone.”
RIM co-CEO Jim Balsillie suggested during RIM’s June earnings call that his company would lay off employees and start a “streamlining of operations” to make the company more efficient. From that point, it became a question of when the axe would fall, and how deeply it would cut. RIM is also engaging in a corporate shuffle, with a handful of executives taking either changed or expanded roles.
For the three-month period between the end of February and the end of May, research firm comScore estimated RIM’s U.S. share as dipping from 28.9 percent to 24.7 percent, even as Google’s Android platform rose from 33 percent to 38.1 percent, and Apple enjoyed a slight uptick from 25.2 percent to 26.6 percent. For the first quarter of fiscal 2012, RIM earned some $4.9 billion in revenue-down 12 percent from the previous quarter, and aggravated by a decline in net income.
With RIM’s smartphone market share plunging, analysts and investors have been questioning-ever more loudly-whether the company’s grand strategy and executive structure can guarantee its survival. Indeed, even RIM’s executives have acknowledged at several points that RIM is undergoing a particularly turbulent period in its long history. At the same time, those execs insist their company will pull through.
RIM’s current challenge is updating its aging BlackBerry portfolio, which faces serious competition from Apple’s iPhone and the ranks of ever-more-advanced Google Android devices. Those rival devices are also enjoying increased adoption by the business community, traditionally RIM’s power base.
To that end, RIM’s plan involves introducing a set of “superphones” based on its QNX operating system, which currently powers the company’s PlayBook tablet. However, those devises aren’t widely expected to reach store shelves before the second half of 2012, requiring RIM to rely on the BlackBerry OS 7 and upcoming hardware such as the BlackBerry Bold 9900 and 9930, which were unveiled during May’s BlackBerry World conference.
Those devices failed to excite analysts and mobile experts who expected the company to attempt something more radical. Ultimately, RIM won’t be saved by “streamlining” alone-if it wants to navigate these rocky straits, it’ll need a device portfolio capable of exciting its customer base. And with precious few details leaking about those “superphones,” whether RIM can achieve such sweeping innovation remains the question of the hour.