Research In Motion is in trouble. The company announced on July 25 that it plans to lay off 2,000 people as it tries to find ways to reinvent itself as the mobile marketplace changes around it.
Although those layoffs should indicate to folks that RIM is experiencing some of the worst troubles of its long and storied history, the company has pointed to its revenue, profits and billions in cash on hand to reassure investors that everything is fine. Its executives say that after its layoffs are complete and it can finally get down to a size that’s more manageable, its financial performance will start soaring once again.
But that’s a red herring. RIM’s troubles go far beyond how much the company is spending. BlackBerry smartphones are no longer as appealing to corporate customers as they once were, consumers don’t want anything to do with RIM products, and the PlayBook tablet has been a disappointment.There is a host of issues going on at RIM right now that are killing the company.
Read on to find out what they are:
1. The co-CEO issue
For years, RIM has done well under the leadership of co-CEOs, Jim Balsillie and Mike Lazaridis. But that relationship has broken down, and now, the time has come for RIM to choose a single chief executive to run its firm. When things are going well, it’s easy for two leaders to agree. But when times are tough, a consensus is tougher to reach. It’s why most other companies have only one CEO. And it’s why RIM’s current decision to have two CEOs is a liability.
2. Smartphone design
When one looks around the mobile market, they will find a host of well-designed smartphones. Devices like Apple’s iPhone 4, the Samsung Galaxy S II and many others appeal to customers on a number of levels. But BlackBerry designs do not. For the most part, BlackBerry smartphones have small screens, stick with the outdated physical keyboard and fail to deliver the sleek look of competitors. That has hurt RIM in the consumer space.
3. A victim of its own success
Even though RIM is in trouble, the company has been a huge success over the years due mainly to the enterprise. But now that companies are thinking twice about deploying BlackBerry devices, RIM is trying to make a name for itself in the consumer market. The only issue is that it doesn’t necessarily know what it’s doing in that space. Although RIM has always competed in the consumer space, that market hasn’t really been a priority. Now that it’s trying harder with consumers, RIM is having trouble understanding what it takes to be a success in that space. And unless it can turn things around, it might just be forgotten altogether by consumers.
4. Perception is everything
One major reason for RIM’s troubles in the consumer market is related to customer perception. As noted, RIM has performed most effectively in the enterprise market, and consumers know that. They perceive RIM to be an enterprise smartphone maker, not a consumer handset vendor. So when they set out to buy a new smartphone for personal use, consumers don’t even consider the BlackBerry because of their belief that a respective RIM device is designed for companies and not them. Until RIM can change that, the company is in for trouble.
RIM Faces Threats on Consumer, Enterprise Fronts
5. The PlayBook isn’t helping matters
When RIM announced the BlackBerry PlayBook, it said that the device would be the top tablet for enterprise users. But when it started marketing the device, it seemed to indicate that it would appeal to consumers, as well. After it finally shipped, complete with a small 7-inch display and no 3G (or 4G) connectivity, it fell flat. As RIM itself said last month, the PlayBook’s launch didn’t go so well. Considering Apple is selling millions of iPads a quarter, and RIM has only been able to ship 500,000 in a single quarter,it doesn’t appear that tablets will be its ticket to success. In fact, if it continues to invest in that market, it could derail its operation.
6. Failure to innovate
Innovation has always been important in the mobile market. And over the last several years, RIM has been at a standstill. This is a dramatic shift for the company. Before the touch-screen craze, RIM was atop the market when it came to innovative ideas. But now, Apple is running circles around it, and RIM’s products and ideas seem rather obsolete. RIM needs to start innovating-now.
Apple has proven to be the biggest threat to RIM’s business. The Cupertino, Calif.-based company has delivered some of the most innovative smartphones and tablets on the market. Worse, it has taken all the attention in the mobile space off companies like RIM and put on to its own operation. RIM needs to find a way to get out from under Apple’s shadow. If it doesn’t, it could see its operation fail long before its time.
When Android first launched, there was no indication that it would ever catch on in a big way in the global mobile market. A few years later, it’s clear that Android is a threat to every single mobile OS maker in the market, including Apple and RIM. The trouble for RIM is vendor support. Whereas RIM develops its own hardware and software, Android is being used by a slew of vendors both big and small. So, when consumers head to a carrier store and pick a smartphone, the few BlackBerry devices on store shelves arelost amid the avalanche of Android handsets. That alone has hurt BlackBerry sales.
9. Employees are losing faith
Late last month, an anonymous RIM employee wrote an open letter to the company, expressing displeasure with how it’s being run. The person said, “My passion has been sapped.” Even worse, the person said that they’re one of many people they know with the same problem. That’s bad news for RIM. All successful companies rely at least in part on the passion of its employees. But if employees are losing faith in their employer, how much longer will it be before the more skilled workers go elsewhere, draining RIM of its most talented people? RIM must fix its troubles with its employees before it’s too late.
10. IT is changing its tune
For years, IT decision makers have only invested in BlackBerry devices for mobile employees. But as of late, that’s starting to changeas more iPhones and iPads start making their way into the corporate world. Moreover, Android-based, enterprise-focused products, like the Droid Pro and Cisco Cius, are also trying to take down RIM. With the consumerization of IT more apparent in the corporate world, RIM finds itself getting lost amid a host of more innovative companies and products.