Fallen giant RIM takes “last kick at the can” with January’s BlackBerry 10 release
by David Friend, THE CANADIAN PRESS
On Jan. 30, the company will unveil a new line of smartphones running its latest operating system as it enters the most important months of its history
TORONTO—After a year of persistent struggles, BlackBerry-maker Research In Motion hopes to launch a comeback in 2013 as it works to convince customers its latest smartphones are a worthy alternative to the growing list of competitors.
It’s a battle that won’t be won overnight, and depending on who you ask, might not be won at all.
In 2012, RIM tried to recover from its mistakes with a major overhaul of its leadership and a revamped operating system called BlackBerry 10. On Jan. 30, the company will unveil a new line of smartphones running its latest operating system as it enters the most important months of its history, ones that will likely determine whether RIM survives in its existing form.
“They can’t afford to have another failed launch,” said Richard Tse, an analyst at Cormark Securities Inc. “This is really their last kick at the can.”
Once the most valuable company in Canada, RIM has endured a meteoric fall from grace over the past several years. Even loyal BlackBerry users scrapped their old phones to join the growing number of touchscreen alternatives that have hit the market, in particular Apple’s iPhone and the Samsung Galaxy S3.
But it was this past year in which RIM was forced to face what its executives had long denied: the company was losing market share to its competitors at an incredibly fast rate.
But investors remained unimpressed with RIM’s slipping hold of the U.S. market and within weeks co-CEOs Jim Balsillie and Mike Lazaridis bowed to pressure, receiving a combined $12 million to step down from their roles atop the company.
The two men were shuffled to director roles, replaced by Thorsten Heins, the former chief operating officer. Balsillie left the company entirely two months later.
With Heins in the top position, RIM began a major overhaul of its middle management. New executives stepped into key positions like chief marketing officer and chief operating officer, while Heins promised in May that RIM would tighten its focus and remove a “little fat on the hips.”
But with all of the changes, Heins couldn’t overcome the fact that development of the BlackBerry 10 operating system was woefully behind schedule. Already delayed from a launch in 2011, the CEO was forced in June to further push the debut into 2013, missing crucial sales periods like the back-to-school and holiday shopping seasons.
Analysts cringed at the decision, saying it could prove to be the unravelling of the company if executives were forced to dip into its $2 billion cash reserve in order to stay afloat over the six-to-eight months before it launched its new devices.
Heins had a somewhat different idea for how to keep the company operating in the short term and help tide the company over in the short term.
First, Heins launched a plan to save $1 billion across RIM’s operations by February 2013. The company closed some of its manufacturing facilities and announced plans to lay off about 5,000 workers.
Then, the company began to refocus its sales efforts on developing countries like Indonesia and Nigeria, where consumers were hungry for low-cost smartphones and the BlackBerry was still considered a status symbol.
Selling older phones to smaller markets has proven to be a temporary fix for RIM. In recent quarters, the company has managed to keep its overall subscriber base growing, even though it has booked quarterly losses. RIM is scheduled to report its third-quarter results on Thursday.
With the company heading into uncertain territory in the new year, RIM’s stock price has traded erratically. Since falling to its lowest level in about a decade in September, the company’s shares have surged about 125 per cent, helped by a number of analyst upgrades.
Kris Thompson of National Bank said the company still has a shot at regaining some of their former fame, but he noted that it doesn’t necessarily mean they need to knock Apple or Android out of their top spots.
“If RIM can get five per cent (of the market) they’ve got a good business model, if they can get 10 per cent, then fantastic.”
But even if RIM proves naysayers wrong and delivers a top-selling device, the company will still have an uphill battle as it races against some highly aggressive competitors.