RIM facing layoffs, expects lower profits as it sets to realign

By Gadjo Cardenas Sevilla

Research in Motion is going to need to innovate its way out of the corner. The BlackBerry maker held an earnings call today and said it expects lower profits and is looking at reducing headcount. During the same conference call, RIM confirmed it had shipped 500,000 units of its PlayBook tablet since the device launched in April, although it was not specified how many of these were actually sold to customers.

The challenge has been getting new product out in the market and offering compelling alternatives to the soaring Google Android powered smartphones as well as Apple's one-year old iPhone 4 which continues to sell well.

RIM is scheduled to launch the BlackBerry Bold Touch 9900/9930, a brand new smartphone that revives the keyboard and styling of its most popular handset, the 9000 BlackBerry Bold but adds a touchscreen as well as an updated operating system and functionality.

RIM is also experiencing challenges in the overseas market where it is traditionally very strong as Google and Apple continue to challenge it in the consumer as well as the enterprise market.

RIM co-CEO Jim Balsillie explained, "RIM’s business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012."

The BlackBerry PlayBook, RIM's tablet aimed to take market share from Apple's iPad, is a thoughtful and well built product with a good set of specs and physical features but seems lacking in the range and scope of onboard software. Notably missing are an email app, a calendar/Outlook client and RIM's extremely successful BlackBerry Messaging which are considered the strongest suits of BlackBerry's platform.

 

Apple recently announced that it would launch iMessage this Fall, a free service for all users of its iOS devices that facilitates real-time messaging similar to what BBM is famous for which will work on over 200 million phones, media players and tablets.

The company also announced that it will begin a program to streamline operations across the organization, which will include a headcount reduction.

This realignment will be focused on taking out redundancies and a reallocation of resources to allow us to focus on the areas that offer the highest growth opportunities and align with RIM strategic objectives, such as accelerating new product introductions. 

RIM can weather this difficult time by focusing on products that are great, not just good. Making sure their upcoming releases are competetive in specs and functionality. The BlackBerry Bold Touch sports a 1.2Ghz processor, 8GB of memory and 768 MB of RAM which are premium specs by today's standards.

Expanding the feature set of the BlackBerry PlayBook so it is less reliant on having a BlackBerry smartphone is a quick and efficient way of cruising the wave generated by that device. 

Native email, BBM messaging and additional functionality might sustain interest in the product until the new smartphones come out.