TechWeb

RIM CEO Pledges Enterprise Focus, But Clock Ticks

Mar 30, 2012 (04:03 AM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=232800013


Research In Motion's fiscal 2012 fourth quarter report shows a company in tatters, a company that is a shadow of what it was just a few years ago, a company desperately in need of salvation. The company saw BlackBerry smartphone sales drop 21% to 11.1 million units and revenue plunge 19% to $4.2 billion. It recorded a loss of $125 million for the quarter, partly due to write-downs of unsold BlackBerry 7 inventory. It still has $2.1 billion in the bank, but RIM projects steep declines in BlackBerry sales for the next two quarters as it prepares to launch BlackBerry 10.

Thorsten Heins read the quarterly report Thursday as if it were a list of the deceased, calling out each bullet point in monotonous fashion. Once analysts were allowed to ask him questions, they beat him over the head quite brutally about RIM's viability moving forward. I was impressed with his answers and his vision for turning things around. For RIM's sake, let's hope its investors believe in Heins, too.

The most important thing Heins revealed is that substantial change is on the way. After spending 10 weeks at the helm, he says he now knows what to do. His plan is fairly simple, but not without risk.

First, RIM is going to focus on winning back the enterprise. Heins said that the company will return to its roots as the go-to smartphone product and service provider for businesses. How will it do this? It will focus on its Mobile Fusion product (device management tools that also control Android smartphones and the iPhone).

The company will abandon the idea of creating one line of devices that spans all use cases. Instead, it will have enterprise handhelds, and smartphones that are more appealing to consumers.

Heins will trim some fat from the executive ranks, it would appear. During the call, Jim Balsillie announced his resignation from RIM's Board of Directors, divorcing himself fully from the company. He called his departure "retirement." Additionally, David Yach will be retiring from his role as CTO Software, and Jim Rowan, COO of Global Operations, has decided to leave RIM to pursue other interests. Heins is actively seeking a new Chief Marketing Officer, and it would appear that he has his eye trained on slashing the company's overly-complicated managerial structure. Heins said he wants to flatten decision-making processes, and give managers more control over--and accountability for--their projects. (This sounds a lot like what Nokia has been going through over the course of the past year.)

Heins said RIM is exploring every possible avenue for turning the business around. That includes potentially licensing out its BlackBerry 10 platform, divesting portions of the business, and possibly selling off some of its patents. Heins wasn't clear about whether RIM would put itself up for sale. At one point during the call, he said that a sale of the company would be the absolute last resort, though later he hinted that the idea had certainly crossed the board's collective mind.

BlackBerry 10

The lynchpin on which all these schemes depend is the success of BlackBerry 10. Heins said that that new platform software is on track for launch before the end of the year, and the prototype devices and software he's seen (and shown to carrier partners) looks encouraging. BlackBerry 10 is the company's next-generation platform that is based in part on portions of BlackBerry 7, PlayBook OS, and the base QNX code. RIM will merge these into a master OS.

There's only one, big problem: time.

RIM's BB10 smartphones won't reach the market until close to the end of 2012. By then, Apple will have fielded the iPhone 5 and Google will have at least unveiled (if not actually released) the next version of Android. Apple and Google are the reason RIM is in its current state. Their touch-screen, media-centric smartphones have won over consumers and business users alike, who've adopted them by the hundreds of millions. The speed at which Apple and Google are innovating and iterating has completely outpaced the rest of the industry--and especially RIM.

Heins said that the company plans to help its carrier partners subsidize the bejesus out of its low-end Curve smartphones for the rest of the year and sell through the stock of BlackBerry 7 devices on which it is currently sitting. RIM believes (nee, hopes) that it can sustain itself long enough on sales of these BlackBerry 7 handsets to get BB10 to market.

Where will it sell these devices? Not in the U.S., where consumers are clearly not interested in BlackBerries. Instead, RIM is going to target emerging markets, where these lower-cost phones will have more appeal to cost-sensitive buyers.

BlackBerry 10, however, needs to be nothing short of spectacular, which places even more pressure on RIM. If BB10 smartphones aren't a raging success around the world, RIM will probably never recover.

While it is good to see that Heins has made a sober appraisal of the situation facing RIM--something former CEOs Lazaridis and Balsillie never seemed to be able to do--the company is swimming against the current with one hand tied behind its back.

It's do or die time, for RIM.

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