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Is it time RIM exited the consumer mobile phone market?

Mobile News
July 11, 2012

With declining revenues, sales at their lowest since 2003, mass redundancies and damning headlines, RIM is a manufacturer in crisis. Reports it plans to focus on B2B rather than consumer have been dismissed. But can it still survive in both?

It’s been a tough 12 months for BlackBerry manufacturer RIM – the Canadian company that practically invented the term ‘business phone’ has been in freefall.

Its share price dropped below $10 on Nasdaq and its stock is said to be trading at its lowest level since 2003 – the firm admitted in March shipments were down 21 per cent this year.RIM has also announced recently it expects to post a quarterly operating loss.

Mass redundancies are expected in the coming months, in addition to the 2,000 jobs cut in July last year – around 11 per cent of its global team.

According to Informa analyst Malik Saadi, profits from sales of devices have fallen from 71 per cent in 2008 to 44 per cent in 2012.

It doesn’t make good reading for any investor or company CEO.

With strong competition slowly eating away at its market share, thanks largely to Apple and Android providing solid business solution alternatives, its reputation took a severe battering last year.

Negative headlines began last August during the London riots, when it was reported that gangs and looters had used BlackBerry’s instant messaging service, BBM, to carry out detailed strikes across London in which mobile stores were prime targets.

Of course, RIM cannot be blamed for this – after all, the simplicity of the service was perhaps more evident in this case than ever.

However, this proved only a minor sting, compared to what was to occur in October when RIM’s entire service, email, BBM, data – to name but a few – went down because of servers in Slough, affecting millions of customers worldwide.

The crash attracted massive media attention with now departed co-CEO Mike Lazaridis taking to YouTube to  record desperate apologies and updates on how and when the situation would be resolved.

Social media users vented their anger too, berating the manufacturer for interrupting their lives, while large business were also affected. At the time, B2B dealers in the UK – for so long ‘BlackBerrryites’ loyal to the company that had in many ways put the coins into their pockets over the past few years – admitted they would think twice about selling their clients the devices.

RIM took heed of what was going on and replaced Lazaridis and his long-term business partner Jim Balsillie with veteran chief operating officer Thorsten Heins, who took up the reins as RIM CEO and president in January.

Heins was tasked with turning around the fortunes of the manufacturer, stating in his first media address: “As with any company that has grown as fast as we have, there have been inevitable growing pains.

“We have learned from those challenges and, I believe, we have and will become a stronger company as a result.”

It was a strong message of self-evaluation by the company, realising the path it was facing was less than smooth.

But despite the reshu e and the admission that a turnaround was desperately needed, things haven’t got much better for the company.

At the end of March, RIM announced a quarterly loss of £78 million as well as a revenue slide of 25 per cent to £2.6 billion from £3.5 billion in the same period a year ago.

It was a startling set of fi gures. Heins, the man tasked with the turnaround, was in the hot seat that had burned his predecessors and immediately set about explaining what he felt had gone wrong and how he planned to fix it.

Heins talked about plans to “refocus on the enterprise business” and how he felt the company should “build on its strength” instead of trying to be “all things to all people”.

This caused many to interpret this as a withdrawal from the consumer market – which would have been an odd move based on its current predicament.

Such was the negativity, RIM’s then MD of global sales and marketing, Patrick Spence, (who left last month) tweeted: “RIM remains committed to all of our customers (consumer and enterprise) and is enhancing our support/solutions for enterprise.”

The messages are mixed, but with business at RIM’s heart, we asked the industry if moving away from consumer and focusing on a rebuilding strategy to its core would actually be the right move.

Full article in Mobile News issue 517 (July 2, 2012).

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