Business, Media, Sci-Tech

Research In Mire: BlackBerry finds itself on the ropes

By Richard Poplak 12 July 2011

Readers of The Economist, picking up a copy of the magazine last week, would have noticed a rather aggressive back-page advertisement. There, Apple pimped its range of business apps, specifically for the iPhone and iPad—and specifically not for BlackBerry. Apple knows that RIM is on the ropes. As they go for the TKO, we ask how in the world a tech darling fell so far, so fast? By RICHARD POPLAK.

Like every good North American billionaire, Jim Balsillie, Research in Motion’s co-CEO and co-chairman, wanted himself a major league sports team. These are not easy to acquire and not only because they cost hundreds of millions of dollars. The National Hockey League does not like Jim Balsillie, and they did not want him to own a franchise. So he spent much of 2009 and 2010 trying to wrest the bankrupt Phoenix Coyotes from their cold, dead hands, and he failed. Like a nine-year old kid shooting pucks at a professional goalie, Jim was stonewalled. It was kinda sad to see.

It’s a feeling Balsillie had best get used to. His company—Waterloo, Ontario-based Research in Motion Ltd—was once the darling of the tech world. No longer.

While Jim battled for his trophy team, RIM was experiencing its annus horribilis. There were numerous delays on its PlayBook device, meant to fight for market supremacy with Apple’s iPad, which has yet to encounter a competitor worthy of the name. The BlackBerry’s smartphone line was moth eaten, and the heralded arrival of the Curve made more of a splutter than a splash. Its hoary operating system was caught in a pincer move between Apple and Android. And through all this, RIM faced a war on another front, squabbling with Saudi Arabia, India and other developing world governments over its security features. RIM lost the battle, and the face that went with it.

Back in 2008, the fairytale knew no end. Barack Obama, US presidential hopeful, was often pictured with his BlackBerry, and avowed that he could never run the free world without it. The public service sector in the US, Canada and much of Europe were glued to their devices—remember the term “CrackBerry,” anyone? RIM added millions of subscribers a month. The iPhone, for all its success, was a niche device, used by graphic designers and ad execs and hipsters. While it chipped away at market share, it could not deliver the hammer blow. Apple would never advertise the iPhone in the Economist, and hope for a return on that marketing investment. The thought was laughable.

Those were the days. The big mistake, on RIMs behalf, was tardiness in developing a next generation operating system, and it making its current OS so hostile to outside developers. While the world taught itself to use the iPhone, RIM tinkered with other aspects of its business, and shed too much blood and sweat on the PlayBook. Meanwhile, Apple’s app store on iTunes transformed from a cool way to buy games, into a technologically transformative leap forward. Apps that were genuinely useful, and in some cases life-improving, came to market by the thousands. The iPhone thus became a dynamic piece of technology. BlackBerrys, meanwhile, were inert. While hipsters shot cool images of their brunch and Skyped Berlin, BlackBerry users sat in embarrassed silence, BBMing their Aunt Edna.

According to Apple’s COO Tim Cook, 88% of Fortune 500 companies now use iPhones, and 75% use iPads. BlackBerry’s are no longer handed out in the public sector, along with a lamp and a cubicle. Meanwhile, RIM stock has lost 50% of its value this year, and activist shareholders are barking for a management shake-up that would presumably include a CEO who concentrates on smartphones, rather than hockey players.

It’s not all bad for RIM. They did add over a million subscribers in Europe, the Middle East and Africa in the last three weeks. They sold 500,000 PlayBooks in the first two months following its April release. (To whom? you ask. PlayBook owners are like Navy SEALS.) And they do own a chunk of the $4.5 billion Nortel Networks, purchased as part of a consortium. But most analysts agree that if they don’t roll out a next gen operating system soon, and beef up the aftermarket applications for their smartphones and tablet devices, Steve Jobs is going to have his way with them.

At the looming shareholders meeting, in which RIM may debut a version of their new operating system, called QNX, Jim Balsillie and his co-CEO Mike Laziridis will face the wrath of those who are simply unable to understand the trajectory of this decline. They will urge the top dogs to split the co-CEO and co-chairman roles, and bring in some upper management with turnaround expertise.

But nothing in all this is more heartfelt than a recent open letter, penned anonymously by a senior level RIM employee, addressed to the upper brass. In the hyper-competitive mobile device universe, attracting talent is no less important than it is in a singles bar. “Dear Mike and Jim,” it reads:

“…please take the time to really absorb and digest the content of this letter because it reflects the feeling across a huge percentage of your employee base. You have many smart employees, many that have great ideas for the future, but unfortunately the culture at RIM does not allow us to speak openly without having to worry about the career-limiting effects.

Before I get into the meat of the matter, I will say I am not part of a large group of bitter employees wishing to embarrass us. Rather, I believe these points need to be heard and I desperately want RIM to regain its position as a successful industry leader. Our carriers, distributors, alliance partners, enterprise customers, and our loyal end users all want the same thing…for BlackBerry to once again be leading the pack.”

The letter goes on to point out that RIM needs to give consumers what they want, and reach out to developers. “Our…development platform is like a rundown 1990’s Ford Explorer. Then there’s Apple, which has a shiny new BMW M3…just such a pleasure to drive.” Ouch.

So there it is. A once-proud tech company on the ropes. RIM is a long way from becoming totally irrelevant, but in order to reverse its decline, it needs to make some tough decisions, starting at the top. Its co-CEO may also want to leave his hockey on the television. Perhaps now isn’t the time to purchase his trophy. DM


Read more:

  • “Anonymous letter bemoans RIM management woes” on CNET News.
  • “Apple targets a distracted RIM, steps in to lure users to iPhone” on The Star.

Photo: A woman holds the a RIM PlayBook in Toronto, April 19, 2011. REUTERS/Mark Blinch.

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