By Gadjo Cardenas Sevilla
2011 has been Research In Motion’s annus horribilis. The past 12 months, the BlackBerry maker has often found itself in the news and on the defensive for a long list of truly unfortunate and often embarrassing reasons. But how serious is the situation at RIM?
The company was worth more than $70 billion a few years ago and today has a market value of around $8 billion. In 2004, RIM's stock value was $144 a share, when the markets closed Friday it was $13.44 a share.
The once proud and promising Canadian smartphone superpower closes the year trying to make sense of what happened and find a solution to the downward spiral facing its value and image.
Desperate and devalued
The company has lost 75 per cent of its value in one year, 2,000 RIM employees were let go in mid-year restructuring and they had to resort to a desperate fire sale to move PlayBook inventory which resulted in a $485 million loss. To top it all, things don't look good for 2012.
RIM's shares slumped to their lowest level since 2004 yesterday in premarket trading, after the they revealed that their next generation devices running the BlackBerry 10 operating system, would be delayed until late 2012.
In a report from the Associated Press, "RIM said its net income sank 71 percent as revenue fell and the company took a large accounting charge on the PlayBook, which uses the same operating software that RIM's new phones will use.
Patience and Confidence
"We ask for your patience and confidence," RIM co-CEO Mike Lazaridis said. Lazaridis and co-CEO Jim Ballsilie announced that they will be taking $ 1 salaries.
"To demonstrate our passion, alignment and commitment to RIM's long-term success, both Mike and I have asked the compensation committee to make a change to our cash compensation such that our salaries will be reduced to $1 a year, effective immediately," Balsillie announced in a conference call discussing RIM's quarterly results.
Sadly, this does little to address the real issue that the current leadership structure and direction of the company is simply not working.
The AP report added that, "RIM earned $265 million, or 51 cents per share, for its fiscal third quarter that ended Nov. 26. That compares with $911 million, or $1.74 per share, a year ago. The company said revenue fell 6 percent to $5.2 billion."
Promises Promises
It is a scary situation when a company needs to sell itself on future promises.
Promises that the PlayBook will be far more useful in February when he new OS 2.0 update will introduce mail, calendar, contacts and possibly an emulator that can run apps from the competing and dominant Google Android operating system.
Promises that, when the right dual core, quad core and LTE (Long Term Evolution) capable processors are available, in mid-2012, the next generation BlackBerry 10 smartphones will be as desirable in form and function than the various smartphones already out in the market today.
Here's the problem, without any new devices, developers can't create applications for the BB10 devices and will likely need 4-6 months before some really compelling applications are available, we're looking at 2013 before most of the significant BlackBerry 10 apps are expected to appear.
Heading into the end of the 2011, with CES (Consumer Electronics Show) looming around the corner and an expected deluge of impressive new smartphones from the competition slated for Q1 2012 release, promising new products for 'late 2012' seems light years away.
RIM loyalists may be patient and may wait but investors, RIM's own board and the competition certainly isn't waiting. The clock is ticking loudly.
RIM is already losing its appeal with the corporate set which for so many years has remained their beachhead as enterprise customers are starting to warm to the idea of supporting the phones that employees 'want to have' like the iPhone and Android devices rather than what is standard issue which are BlackBerry devices.
Companies like Motorola are even designing BlackBerry-like devices to entice disgruntled users to adopt the Android platform.
Mockup of the Future: The BlackBerry London is one of the devices slated for late-2012 release. Photo by The Verge
Working with what is available today
How good are the current OS 7 BlackBerry smartphones? I couldn't tell you. Repeated requests for review units to try out the new hardware this year were ignored by RIM’s PR handlers or simply fell through the cracks, so I never got to try and evaluate any of 2011's smartphone hardware, software or apps for any extended time.
The PlayBook tablet, however, impressed me early on mostly because of its excellent build quality, unique operating system and features (still the only tablet with active borders/bezels for swiping) and the promise that it could create its own niche in the market made it compelling.
But developer support for the device has been poor judging from the paltry assortment of applications available many months after its release.
The failure to include an email client, contacts app and a calendar/scheduling app from the outset was a head scratcher and a costly mistake that eventually sealed the PlayBook's fate.
That it required a BlackBerry smartphone (and some specific models at that) to access mail and calendars really diminished its value and kept new customers, even those hungry for a non Apple or Android tablet, clear and away from the functionally crippled device.
Fighting to remain relevant
Still, the PlayBook tablet is out now and people are buying it. The OS 7 smartphones seem to be popular, specially the Bold 9900. RIM should bend over backwards to surprise everyone and add value to the products that are already in people's hands.
For one thing they can release the February PlayBook OS 2.0 update ahead of schedule. Give their customers some good news for a change.
RIM also needs to double its efforts to quickly add value to that and the BlackBerry 7 OS devices out there today.
This means get better applications out for these devices ASAP, revisit the pricing of the smartphones to make them compelling for the holiday buying season and work on incentives and the creation of content and features on your current crop of devices.
Also, RIM shouldn't forget their installed user base of pre BlackBerry 7 users, the same ones that felt screwed over and abandoned when they learned their BlackBerry 6 and older devices could not be upgraded to BlackBerry OS 7.
They need to find ways to make those older devices relevant, offer free apps and services and make people want to keep using them until the next generation of devices is ready.
Other than that, all we can do is brace ourselves and hope that RIM weathers the rough patch it is in right now and somehow proves its detractors wrong. The last thing we need is another Nortel Networks, pillaged and sold for parts and patents. That would be a terrible shame.