RIM backs out of consumer markets to focus on enterprise
The troubled BlackBerry maker falls back in its historical strength, after revenues take a dive
By Galen Gruman | InfoWorld | Published: 10:54, 30 March 2012
Research in Motion's new CEO Thorsten Heins has said that the company will abandon most consumer markets and refocus on its historic area of strength - the business market it has largely tried to escape from through a series of unsuccessful efforts to transform the BlackBerry into a gaming or social device for young adults.
Heins said he will reveal a major reorganisation of RIM this week.
The company has revealed that its revenue dropped 25 percent in the last fiscal quarter in comparison to a year earlier, a decrease of $5.6 billion (£3.5 billion), with the decline in revenues accelerating after it launched its BlackBerry 7 smartphones in autumn 2011 and had to deeply discount the poorly selling PlayBook tablet in the same period.
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RIM has had to discount large numbers of BlackBerry smartphones and PlayBook tablets to clear inventory.
RIM should be licensing BlackBerry technologies
Ovum analyst Jan Dawson is not convinced that abandoning the consumer market is the best way forward for RIM.
"I'm not sure Heins yet understands, or at least isn't able to articulate, that consumer appeal is key to future 'enterprise' success," he said. That across-the-spectrum approach is what Apple used to make iOS the new platform for choice for business and what Android device makers like Samsung and Motorola Mobility are trying to do with Android.
In its presentation today to investors, RIM executives said they were willing to explore other business models, such as licensing all or some BlackBerry technologies to other companies. Some investors have suggested that RIM license or sell access to its secure messaging network or its BlackBerry Messenger instant messaging service.
Whatever it does differently in terms of getting revenues from its BlackBerry technology, the company intends to continue to make and sell BlackBerry devices. "It would be a big mistake for RIM to shut down the devices business, which drives the vast majority of revenues today," Dawson said, supporting RIM's decision to not abandon its device business as some investors have suggested it do.
RIM continues to express confidence that its forthcoming BlackBerry 10 OS - expected to hit the market in the fall - will reinvigorate the company's fortunes. But they warned investors to expect no turnaround before then, and in fact said they would no longer provide investors with guidance on financial performance, a sign of a troubled company.
Selling off unwanted BlackBerrys to developing countries
In the meantime, RIM is trying to sell its unwanted BlackBerry devices in developing countries, in hopes they'll have more appeal and help create a new market for the future. However, Nokia is aggressively targeting those same countries with its Series 40 OS-based Asha devices and already commands the majority of the non-smartphone market in most of them.
Samsung is also increasingly targeting such countries with a mix of Android and Bada smartphones, and Apple is aggressively targeted the growing middle and upper classes in those countries with its iPhone and iPad.
RIM co-founder and former co-CEO Jim Balsillie has also left the board of directors, RIM acknowledged in its earnings statement today. Balsillie and Mike Lazaridis had been co-CEOs until 10 weeks ago, when they were replaced by Heins, the former CFO, but both remained on the board.
Both had been blamed by investors and the press for RIM's clinging to its original messaging-oriented business model. Balsillie's statements in autumn 2010 that mobile apps were a fad were lambasted at the time as a sign RIM's leadership was unable to see the change in the mobile market.