Former Research In Motion co-chief executive Jim Balsillie sought a radical shift in strategy before he stepped down, Reuters reported on Friday. Citing two unnamed sources, the publication claims Balsillie wanted to allow wireless companies in North America and Europe to use RIM’s proprietary network for services on non-BlackBerry devices. The plan would help carriers entice customers to upgrade from feature phones to smartphones and allow them to offer inexpensive data plans that were limited to social media and instant messaging via the company’s BlackBerry Messenger service. Despite RIM’s network bringing in nearly $1 billion each quarter, the plan was vetoed, leading to Balsillie’s resignation soon after he stepped down as co-CEO. The Blackberry-maker will instead focus more on its next-generation BlackBerry 10-powered smartphones, and on regaining enterprise momentum.
Research In Motion hasn’t just had a difficult time innovating since the iPhone was first introduced, the company has had trouble innovating ever since its product started to morph into something more than a simple email messaging device. RIM has always been behind the curve with regard to technology in some ways. It was still making devices with black and white displays when other manufacturers were launching devices with vibrant full-color screens. RIM was one of the last manufacturers to launch an EDGE device and it was also one of the last manufacturers to include a camera in its devices. The vendor consistently offered devices without GPS or Wi-Fi, and without a functional web browser. The problem with Research In Motion is not just that the company has failed to adapt or plan for the future, it’s that RIM hasn’t been able to accurately predict not only what the mobile landscape was going to look like down the road, but also what its customers want in a BlackBerry handset. Unfortunately, judging from what I’ve seen so far, I don’t see much changing with new CEO Thorsten Heins.
With BlackBerry 10, RIM finally has a chance to start clean with a brand new mobile operating system that’s powerful, but there are too many obstacles in my mind that will likely prevent BlackBerry 10 from being a success. For starters, RIM still can’t get BlackBerry Messenger working with more than one PIN on BlackBerry 10, and support for BES email will be replaced by ActiveSync going forward. That’s right — your corporate email, calendar and contacts will sync directly from a Microsoft Exchange server to your device. While RIM’s Mobile Fusion solution will offer many features like syncing other data, security and policy management and more, in terms of PIM it will effectively be providing a secure VPN tunnel connection from your device to your Exchange server.
Just take a second to realize what this means… RIM has no competitive product in the smartphone market, and its most widely known asset — the company’s BlackBerry Enterprise Server PIM functions — will be changing into something much less powerful in the near future because the company cannot get traditional BES working with BlackBerry 10 smartphones or tablets.
Now, let’s look at the uphill battle of launching a brand new mobile operating system and ecosystem in this incredible fast-paced and competitive smartphone market. An Android app player alone is hardly enough for RIM to compete. Plainly stated, a company that has historically had the worst developer tools, the worst developer documentation, the worst developer support and arguably the worst apps, now has to actually pull something together that entices people to want to develop for BlackBerry 10. If RIM had tools that were better than Apple’s or Google’s, it would still be nearly impossible to gain traction with developers. If that documentation and those tools are just decent and not better, the possibility becomes even more remote.
What about marketing? RIM has not even once pulled off a good marketing campaign. I have been clamoring for this since early 2004. RIM didn’t care about marketing even when it was launching its first consumer product, the BlackBerry Pearl. While RIM’s new CEO Thorsten Heins said finding a new Chief Marketing Officer and drastically changing its approach to marketing communications is a top priority, this won’t be easy. The company simply does not understand marketing.
And what does it actually understand or do well?
That’s my point here. As much as I love RIM, I just don’t know what it actually does well anymore. It makes great plastic keyboards? That’s obviously an oversimplification, but it’s true. RIM has an operating system that is being delayed (because it doesn’t work properly, not because the company is waiting for a new 4G chipset to launch its smartphones worldwide when most markets don’t even have LTE), the company has failed to attract developers for various reasons, it has failed to create powerful consumer marketing, and it has consistently shown over the last eight years that it does not know where the mobile market is going. RIM has been a reactive company since 2005 in my mind.
RIM’s new CEO lauding the company’s history of being “innovators” and “leading” the wireless industry in many ways is, well, frightening. Contrary to the path Heins laid out today, there are a few possible things I see happening with Research In Motion based upon what I have noticed:
- RIM will sell either a part of its business or the entire company. The fact that there is a new CEO and a new chairperson this late in the game is signaling to me that the company is trying to make itself look more attractive to potential buyers and partners.
- RIM will license its services like BlackBerry Messenger, leverage its NOC and data network for corporate email / encryption, and it will license its patents to other companies and manufacturers. (Look how long it took Nokia to get a phone out when it licensed Microsoft’s software, though. And the first Windows Phone it released was a phone it had already released in terms of hardware. It still took the company over a year to do this.)
- RIM will either strike a deal with Microsoft to bring BlackBerry Messenger and some other Exchange-related services to Windows Phone, or RIM will eventually use Android as its base operating system and fork the OS.
I do not see Research In Motion gaining much traction with BlackBerry 10. I don’t see the competitive advantage. This is a company that fundamentally does not understand why Apple and Google are doing so well in the market. This is a company that has played catch-up for several years in many ways, often unsuccessfully. This is a company that is going to launch its first BlackBerry 10 smartphone right when Apple’s iPhone 5 and iOS 6 are released, and around the same time Android 5.0 and Google’s latest flagship device will be unveiled alongside phones from Samsung, HTC and Motorola, with even more advanced cameras, even higher resolution displays, even more powerful quad-core processors and much more.
I remember the day I stopped carrying a BlackBerry after years of having used a RIM smartphone as my main device. Let’s see if that ever changes in the future.
I think the Globe and Mail was the first to report that RIM’s beleaguered CEOs Jim Balsillie and Mike Lazaridis are out – moved upstairs to the boardroom. The strangest thing about the story, and really the past few years, is the total denial by the leadership that Blackberry is in a death spiral.
Research In Motion Ltd.’s new chief executive officer says the company is doing everything right and does not need a change in strategy, and must instead focus on harnessing its talent to improve the BlackBerry and revive sales.
“It’s a fantastic growth story and it’s not coming to an end,” Mr. Heins said in an interview with The Globe and Mail. “What you will see with me is rigour and flawless execution.”
When asked whether he thought the appointment of Ms. Stymiest as chair and himself as CEO would be enough to satisfy investors, Mr. Heins retorted, “Change to what? Change for what?”
He continued, “I mean, what’s the objective of a change? We’ve made a lot of changes in the past 18 months. Not changes, but also evolution. I changed a lot of my management team, in hardware, software … I’ve trained a lot of other people in the last four years. What do you think I did? … We didn’t stand still in the last 18 months, we did our homework. And I think we will complete our homework soon.”
Even in appointing a current co-COO, who looks even less charismatic than either of the two people he replaces (video below), RIM is hedging its bets on Blackberry 10/QNX, which it won’t release until the end of 2012 on phones —if it bucks recent trends and ships on time. Heins joined RIM just as the iPhone was released in 2007, and he has seen the company’s market share dive.
RIM’s tablet effort, the Playbook, is barely selling and only when priced below cost. It still somehow does not natively do email.
It is hard not to feel bad for the position this once great company is now in.
(Making it easier, RIM has scheduled an 8am ET Monday conference call with the press on the details. Press release follows)
Research In Motion Names Thorsten Heins President and CEO
• Board Acts on Recommendation of Co-CEOs to Implement Succession Plan
• Mike Lazaridis Named Vice Chair of the Board
• Jim Balsillie Remains a Director
• Barbara Stymiest Named Independent Board Chair
• Prem Watsa Named Independent Director
Waterloo, ON – The Board of Directors of BlackBerry® maker Research In Motion (RIM) (NASDAQ: RIMM; TSX: RIM) today announced that, acting on the recommendation of its Co-Chief Executive Officers to implement the succession plan they previously submitted to the Board, it has unanimously named Thorsten Heins as President and Chief Executive Officer. Mr. Heins was also appointed to RIM’s Board. The Board acted after conducting its own due diligence. Both appointments are effective immediately.
Mike Lazaridis, former Co-Chair and Co-CEO, has become Vice Chair of RIM’s Board and Chair of the Board’s new Innovation Committee. As Vice Chair, he will work closely with Mr. Heins to offer strategic counsel, provide a smooth transition and continue to promote the BlackBerry brand worldwide.
Mr. Heins said he looks forward to continuing to work with Mr. Lazaridis, globally recognized as a technology pioneer. He said, “Mike created a whole new way of communicating and I look forward to continuing our close collaboration.”
On the transition to CEO by Mr. Heins, Mr. Lazaridis said, “There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership. Jim and I went to the Board and told them that we thought that time was now. With BlackBerry 7 now out, PlayBook 2.0 shipping in February and BlackBerry 10 expected to ship later this year, the company is entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond. Jim, the Board and I all agreed that leader should be Thorsten Heins.”
Jim Balsillie remains a member of the Board. “I agree this is the right time to pass the baton to new leadership, and I have complete confidence in Thorsten, the management team and the company,” he said. “I remain a significant shareholder and a Director and, of course, they will have my full support.”
Mr. Lazaridis said that he decided to move from Co-Chair to Vice Chair of the Board in order to return the public’s focus to what is most important: “the great company we have built, its iconic products, global brand and its talented employees.”
Mr. Lazaridis added, “Thorsten has demonstrated throughout his tenure at RIM that he has the right mix of leadership, relevant industry experience and skills to take the company forward. We have been impressed with his operational skills at both RIM and Siemens. I am so confident in RIM’s future that I intend to purchase an additional $50 million of the company’s shares, as permitted, in the open market.”
Mr. Heins said he believes that RIM has tremendous potential. He joined RIM from Siemens Communications Group in December 2007 as Senior Vice President for Hardware Engineering and became Chief Operating Officer for Product and Sales in August 2011.
“Mike and Jim took a bold step 18 months ago when RIM purchased QNX to shepherd the transformation of the BlackBerry platform for the next decade,” Mr. Heins said. “We are more confident than ever that was the right path. It is Mike and Jim’s continued unwillingness to sacrifice long-term value for short-term gain which has made RIM the great company that it is today. I share that philosophy and am very excited about the company’s future.”
Mr. Heins said that RIM has a strong foundation on which to build. “We have a strong balance sheet with approximately $1.5 billion in cash at the end of the last quarter and negligible debt. We reported revenue of $5.2 billion in our last quarter, up 24% from the prior quarter, and a 35% year-to-year increase in the BlackBerry subscriber base, which is now over 75 million.”
Mr. Heins said, “BlackBerry 7 has been well received. We are very excited about PlayBook 2.0 and BlackBerry 10. The reception of our products at this year’s Consumer Electronics Show was encouraging.”
He continued, “RIM earned its reputation by focusing relentlessly on the customer and delivering unique mobile communications solutions. We intend to build on this heritage to expand BlackBerry’s leadership position.”
Mr. Heins said that RIM has grown quickly. “As with any company that has grown as fast as we have, there have been inevitable growing pains,” he said. “We have learned from those challenges and, I believe, we have and will become a stronger company as a result.
“Going forward, we will continue to focus both on short-term and long-term growth, strategic planning, a customer- and market-based product approach, and flawless execution. We are in the process of recruiting a new Chief Marketing Officer to work closely with our product and sales teams to deliver the most compelling products and services.”
Barbara Stymiest, who formerly served as a member of Royal Bank of Canada’s Group Executive and has been a member of RIM’s Board since 2007, has been named the independent Board Chair. John Richardson, formerly Lead Director, will remain on the Board. Prem Watsa, Chief Executive Officer of Fairfax Financial Holdings, also was named to the Board, expanding it to 11 members.
Speaking on behalf of the Board, Ms. Stymiest said: “We believe that Thorsten is the right executive to succeed Mike and Jim. He has 27 years of telecommunications experience, including four years at RIM in senior management positions. As a Board, we have been impressed with his outstanding management skills, his leadership and his accomplishments within the company.”
Ms. Stymiest also expressed the Board’s respect and admiration for Messrs. Lazaridis and Balsillie, the company they built, and the steps they have taken to position RIM for the future.
“They created RIM, nurtured it, and in the process not only built an iconic brand, but literally pioneered the smartphone industry,” she said. “It is Canada’s largest tech company and one of the largest in the world.”