RIM, it's time to start weighing your options
For the past 24 hours or so, the Internet has been littered with funny (also sadly true) sleights made towards the very likely demise of the Waterloo-based handset firm, Research In Motion.
Yesterday evening, all eyes were on RIM as it announced its financial results for the first quarter of the 2013 fiscal year. While no one expected a major turnaround for RIM just yet, the results were worse than we imagined, and they came with even more bleak news we didn't see coming.
As our own Alex reported, RIM posted revenues of $2.8 billion this past quarter, down from $4.2 billion the previous quarter. It also revealed a GAAP net loss of $519 million. BlackBerry smartphone shipments were at a respectable 7.8 million and the subscriber base grew in all regions save for North America for Q1.
The horrible news yesterday wasn't exactly the numbers, though. It was RIM's plans for the BlackBerry 10 launch and their plans to cut 5,000 jobs in an effort to save $1 billion in "cost savings."
Originally slated for Q1 2012 under the leadership of Jim Balsillie and Mike Lazaridis, the launch for BlackBerry 10 was pushed back to "late 2012" as Balsillie and Lazaridis were stripped of their roles and replaced with the decorated CEO Thorsten Heins. But in this previous quarter's earnings report, it was revealed that the debut of BlackBerry 10 has been pushed back once again, almost into oblivion. BlackBerry 10 is now expected to launch in Q1 2013.
Now, it's worth noting that "late 2012" to "early 2013" isn't exactly a huge delay in regards to actual time. But it is huge in every other way. For one, as our own Aaron Baker explained, Research In Motion will be missing out on the holiday season with the launch of BlackBerry 10 (for a second year in a row, mind you). That is a huge deal.
But that's not all. While all its competitors will have new hardware and software out in time for the holidays, RIM will not. Android will have Jelly Bean devices, possibly even more Nexus devices and another new operating system, too. Apple will have a new iPhone and iOS 6. Microsoft will have Windows Phone 8 and respective hardware. And Research In Motion will continue to sell BlackBerry 7 devices, along with their expiration dates. What this means is Research In Motion's market share will likely take a major hit in the States (and possibly throughout several regions the world) as we go through the most important few months for retail.
To say that Research In Motion is currently between a rock and a hard place would be putting it lightly. It is quite easily in one of the toughest situations possible, it has no new hardware or software that is ready for market, market share and stock prices are constantly falling (and have been for quite some time) and even some of the most loyal BlackBerry fans are beginning to lose hope.
As much as I have tried to find the silver lining in these announcements, I have yet to find the positive in any of it. At every corner, RIM is stuck in a catch-22. It could rush production of BlackBerry 10, release a line of buggy products (in both hardware and software) and drive the final nail in their own coffin. Or it can push back the expected launch window and lose the interest of the last few folk who actually care.
But a few alternatives for RIM have come to the rescue, at the sacrifice of one of the things RIM prides itself in – its software sector.
Reuters reported late last night that Microsoft's Steve Ballmer approached RIM with an offer similar to the one that was offered to Nokia early last year. In place of BlackBerry 10, Research In Motion would use Windows Phone 8 on its upcoming hardware for a little cash incentive from the deep pockets of Microsoft. Both parties could benefit from such a deal. Microsoft could once again appeal to the enterprise sector and RIM could refocus efforts on one thing its always been spectacular at. Hardware.
But there's another individual who wants a piece of Research In Motion's hardware business for their own, Google's Matias Duarte, the man behind Android user experience and interface design. (He's also renowned for designing the webOS interface.) In an interview with ABC News, Durate said, "If RIM wanted to work on Android devices, I would really welcome that. They clearly make great physical keyboards."
RIM is currently at a big, giant crossroad, whether it knows it or not. And, for its own sake, let's hope Thorsten Heins has enough guts and smarts to swallow his own pride and save the company that put him in charge, to do what he was hired (promoted, really) to do. BlackBerry 10 software simply keeps getting pushed further and further back. Whether it should completely scrap efforts for another mobile operating system is debatable. But RIM needs new hardware, and it needs it quick. Research In Motion's best bet appears to be to take Android under their wing for one simple reason: The Astonishing Tribe.
In December 2010, Research In Motion acquired the interface design company The Astonishing Tribe, also known as TAT. With TAT in their repertoire and some of the best hardware features of any mobile company in the world (their keyboards really are spectacular), RIM could differentiate themselves from the typical Android manufacturer quite a bit.
They could also take the deal with Microsoft and bring home an enormous paycheck. But Windows Phone is the larger gamble here. Even after 18 months on the U.S. market, it has yet to muster more than four percent of the smartphone market share. However, the potential for Windows Phone 8 to bring in some more subscribers is increasingly high.
Either way, RIM, it's time to make a move. Your last hand hasn't been dealt yet, but your stack of chips is fading away and time is running out. BlackBerry 10 alone isn't going to cut it. It's time to cut the dead weight and save what you can.