Michael Finneran
Michael F. Finneran, is President of dBrn Associates, Inc., a full service advisory firm specializing in wireless and mobility; services...
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Michael Finneran | June 29, 2012 |


RIM: It's All Over Now, Baby Blue

RIM: It's All Over Now, Baby Blue The delay of the first BlackBerry 10 smartphones is the death blow. RIM's product line is simply not competitive.

The delay of the first BlackBerry 10 smartphones is the death blow. RIM's product line is simply not competitive.

Bob Dylan famously sang "It's All Over Now, Baby Blue" at the 1965 Newport Folk Festival after he, the icon of the "folk-and-protest" movement, was unceremoniously booed off the stage after ("gasp") appearing on stage with the Paul Butterfield Blues Band, and performing ("double gasp") with electric instruments at the Newport Folk Festival. Clearly Mr. Dylan's (or more specifically "Mr. Zimmerman's") career wasn't damaged severely. Yesterday afternoon, BlackBerry maker Research In Motion, sang the same song though under vastly different circumstances when it announced the results for the first fiscal quarter for 2013.

While bad news had been universally anticipated, the scale was beyond what most of us foresaw. Along with its second consecutive quarterly loss, RIM reported that delivery of the first BlackBerry 10 smartphones, the company's last hope of regaining any meaningful position in the smartphone business, would be delayed (yet again) to first quarter of 2013. In the next breath, RIM's CEO Thorsten Heins dropped the other shoe--massive layoffs at the Waterloo, ON based company.

The normally low-key Mr. Heins sounded even worse as he ladled out the bad news. For the three months ended June 2, 2012, revenues dropped by a third to $2.8 billion compared with $4.9 billion a year ago, and the company also posted a net loss of $518 million, compared to a profit of $695 million a year ago. Shares fell 15% as the markets opened around the world.

The delay of the first BlackBerry 10 smartphones, however, is the death blow. RIM's product line is simply not competitive. Even at its best, BlackBerry 10 would have challenges, as the initial devices were to be the first RIM smartphones without a keyboard, one of the features that had kept many of the remaining RIM fans loyal. With Apple poised to introduce the iPhone 5 later this year and an ongoing torrent of Android devices pouring onto the market, this is the worst of all failings.

The saddest part is that the company will be cutting 5,000 jobs, roughly a third of the workforce of 16,500 by March of next year. In the press release, Mr. Heins said, "In parallel with the rollout of BlackBerry 10, we are aggressively working with our advisors on a strategic review evaluating ways to better leverage our assets and build on our strengths". Sounds pretty much like "Ready the lifeboats."

Ironically, the last chapter in RIM's long, depressing devolvement came almost five years to the day from Apple's release of the first iPhone on June 29, 2007. When the iPhone hit the stores, RIM was far and away the leading smartphone platform in the US and Nokia's Symbian the leading platform worldwide. Now both are struggling to stay alive.

On the morning of the announcement, The Wall Street Journal ran a front-page story providing an insider's view of the last months of the reign of co-founders/co-CEOs Mike Lazaridis and Jim Balsillie. Unlike the rest of the mobile universe, when the iPhone hit, the co-CEOs failed to realize just how big a game changer this was. On one hand you can see their point. RIM had virtually invented mobile email, and was now riding the crest of the consumer adoption of their groundbreaking technology. However, they were intent on sticking with what had got them there: quality products, hard keyboards, and enterprise-grade security. Unfortunately, by that point 70% of RIM's sales were to consumers for whom those themes didn't resonate.

To be frank, the first generation iPhone was a badly flawed product. The battery life stunk, the audio quality was miserable, and it used AT&T's data service that was maddeningly underpowered. However as Clayton Christensen pointed out in his classic text the Innovator's Dilemma, disruptive technologies are often inferior at the legacy tasks when they are first introduced, but leap ahead based on the other things that they can do. Over time, the disruptive technology improves at those legacy tasks, but by then they have already changed the composition of the market. In the case of the iPhone, that change can be expressed on one word, "apps".

The Wall Street Journal article points out that in the final months of their tenure, Messrs. Lazaridis and Balsillie pursued vastly different strategies to save the company. Lazaridis, the technologist, pressed ahead in getting the BlackBerry 10 operating system, built on the QNX software the company had acquired in 2010, into the market. Balsillie on the other hand was pursuing options to license some of the company's technologies to outsiders. When Mr. Heins took the helm in January of this year, he scotched the licensing idea and went full bore at getting BlackBerry 10 out the door. Now that initiative is also in the crapper.

In any event, the vast majority of my clients have already given up on the BlackBerry platform, and while Mr. Heins did allude to the advance of bring your own device (BYOD) initiatives, no one's bringing their own BlackBerry. There are a few holdouts who prize the sturdiness of the device and the high quality keyboard, and some organizations that are bound to the company by their security requirements, but most of what RIM is good at is simply not what the consumer is looking for.

I do feel sorry for the RIM employees who will be hurt by this (many of whom I count as friends), but I guess the Dylan line Mr. Heins' "advisers" are singing is, "Forget the dead you left, they will not follow you".


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