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Research In Motion’s new CEO, Thorsten Heins, has his work cut out for him, and time is of the essence in this fast-paced market.
Screenshot by Jessica Dolcourt/CNET
The company’s stock price has plunged more than 75 percent in the past year as investors have lost confidence in the company. And competitors Apple and Google are dominating a market that RIM once owned.
RIM hasn’t had a hit product in years. Its Playbook tablet, introduced in 2011, was a failure. Its more recent BlackBerry handsets were late to market. And now it says it won’t have next-generation devices, sporting the new BlackBerry 10 software, until the second half of this year.
The company’s co-CEOs have stepped down, leaving Heins as the new solo CEO. Heins, who had been RIM’s chief operating officer, will be tasked with turning around the company. Will he be up to the task? That’s the big question.
In all fairness, the guy has officially only been on the job less than 24 hours. But his initial statements suggest he plans to continue RIM’s current course with an added emphasis on execution, improving communication with shareholders, and increasing marketing. These are all worthy improvements, but are they enough?
Wall Street seemed unimpressed with Heins and his initial thoughts for turning around the company. To help him figure out a game plan for the company on his first day, CNET has come up with this list of 10 things that he might want to think about right away.
1. Get some new blood on the management team.
Suffice it to say that investors aren’t terribly impressed that the new CEO of RIM is a company insider. So if Heins is serious about turning the company around, he needs to take some bold steps. And that includes surrounding himself with some outsiders who can bring some fresh, new ideas to the company. Clearly what RIM has been doing isn’t working.
2. Court developers.
In the smartphone market today, it’s all about apps. And sadly for BlackBerry lovers, those are sorely missing. Google Android and Apple iOS have more than 1 million apps between the two platforms. Developers are working fast to come up with new applications for these devices every day. A recent survey of app developers by Ovum puts Android at the top with Apple’s iOS platform also ranking as very important to developers.
Microsoft recognizes the importance of apps. And in the past year it’s been able to grow its apps marketplace to more than 50,000. But even with an emphasis on apps, Microsoft and its Windows Phone OS are still struggling to gain market share in the ultra-competitive smartphone market. And as RIM tries to reinvent itself with BlackBerry 10, its next-generation OS, the company will be starting from scratch.
3. Speed up BlackBerry 10.
RIM’s biggest problem the past few years has been a lack of exciting new devices. It simply doesn’t have anything that truly competes with Android devices and the Apple iPhone. RIM’s last great hope hangs on products that will use BlackBerry 10. This software is derived from software from RIM’s acquisition of QNX Software Sytems. This software was used to develop the Playbook tablet, which had a bungled release last year.
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While RIM is putting all its hopes at the moment in the success of BlackBerry 10, the reality is the OS is late. And by the time it comes out in products, it may be far too late. Executives said last month that BlackBerry 10 products won’t hit the market until the second half of 2012. The company is waiting for a new dual-core processor chip that supports 4G LTE networks. Clearly, the more advanced technology is a good sign that RIM is looking to stay competitive, but the reality is that Android and Apple won’t stand still. And they’re likely to have advanced products out by that time.
Even Microsoft may be stronger by the time RIM releases its products. Microsoft, Nokia, and AT&T will be making a big push with the Lumia 900 this spring. So RIM needs to get something out the door fast.
4. Dump BlackBerry 10 and adopt Android.
Heins needs to make a decision and he needs to make it fast. BlackBerry 10 is still months away. And even if it was available tomorrow, the platform has little to no support from developers. Much like Nokia’s CEO Stephen Elop did when he took over at Nokia, Heins might want to cut his losses with BlackBerry 10 and build BlackBerry phones using Google Android software.
<>The biggest benefit out of the gate is that BlackBerry users would finally get access to hundreds of thousands of apps. The apps issue shouldn’t be underestimated. Just look at Microsoft’s struggle to make Windows Phone relevant. The software has been out for more than a year, and Windows Phone has made only small gains in market share. By the time, BlackBerry 10 comes out, Apple and Android will have even more momentum. And Microsoft might have some momentum, too. Heins might want to consider cutting his losses to leverage a better established software platform.
5. Streamline the product line.
RIM needs to focus its attention on a single flagship device that will wow consumers. This means that it needs to cut back on the number of devices it plans to introduce, maybe even tabling some tablet development so it can focus on a killer smartphone. Rumors have already floated around that it’s canceling at least two new smartphones to focus on one: the Blackberry 10 device code-named London. This is a good strategy, since RIM really needs to make this device so incredible, it gives Android and iPhone users a reason to go BlackBerry.
6. Kiss carriers’ butts.
Wireless carriers in the U.S. market are key to the success for any smartphone. Since most consumers buy their devices at a subsidized price from a carrier in exchange for signing a service contract, it’s important that RIM convince the big carriers, especially AT&T and Verizon Wireless, that its new phones will be worthy of the shelf space at these carrier stores.
A decade (or so) of BlackBerry smartphones (pictures)
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Even though RIM has had great relationships with these carriers in the past, operators only have so much money to spend on marketing and educating sales staff to sell certain phones. Verizon Wireless is firmly committed to Android and now the iPhone. AT&T, which once was the exclusive U.S. carrier for the iPhone, is also now selling Android. And through a partnership with Nokia and Microsoft, the carrier is also gearing up for a big Windows Phone push this spring.
Meanwhile, Sprint Nextel, the No. 3 U.S. carrier, has bet big on the iPhone and has a strong Android portfolio. T-Mobile USA may still be interested in BlackBerry devices, but T-Mobile alone won’t be enough to get RIM back in the game. Heins need to do some serious butt kissing and find away to get into carriers’ good graces once again.
7. Shop the company around.
No matter how hard Heins tries to turn things around, the reality is that RIM has been a sinking ship for a couple of years now. Android and Apple dominate the market, and there’s no sign that they’re slowing down. So Heins needs to talk to as many potential buyers as possible. It’s been reported that RIM has hired the investment bank Goldman Sachs to help it determine its next steps.
Samsung was rumored to be interested in the company. But recently it denied wanting anything to do with RIM. And HTC has also been named a potential buyer. There could be other possible bidders out there, and Heins needs to start beating the bushes to see who’s interested.
8. License BlackBerry technology to other companies.
RIM executives have already said that if they’re approached about the new BlackBerry 10 software that they would consider licensing it to a third party. But what about the older elements of RIM’s technology? The company could consider licensing its BlackBerry Enterprise server services to other hardware companies. This would allow Android device makers to offer services, such as RIM’s popular BlackBerry Messenger.
The company’s network architecture was criticized recently following a major worldwide outage of its services. But this set-up, which funnels all messaging traffic through RIM’s network operations centers throughout the world, also allowed RIM to build one of the most secure messaging platforms around. And other handset makers could leverage elements of this technology to give their own devices an edge.
While there could be a lot of opportunity here, it’s unclear how RIM plans to leverage its own service business in the future. RIM may be moving away from this centralized architecture with the next version of its software. According to the enthusiast site CrackBerry.com, RIM demonstrated at CES that its Playbook 2.0, which uses the same basic software elements as the upcoming BlackBerry 10 software, will use Microsoft’s ActiveSync for e-mail. This shift means that RIM’s future products may not use its network-based architecture for sending email. RIM gets a few bucks per subscriber for providing this service. But if that goes away, RIM may lose a source of high-margin income, CrackBerry said.
Still, RIM has a treasure trove of patents. And investors have been pushing the company to sell some of these patents. Mobile patents are valuable. Last year, Google agreed to pay $12.5 bilion for Motorola Mobility in a deal that was mostly about acquiring Motorola’s patents. But even if the new CEO isn’t ready to sell off the company’s intellectual property, he could find ways to extract more value from these patents either by licensing technology to other companies or going to court to actively enforce these patents.
9. Go back to your roots and focus on core customers.
Remember those suit-wearing “crackberry” addicts? The company’s rock-solid security and messaging services won the hearts and minds of executives, lawyers, bankers, and Congressional leaders. Even the President of the United States said that the Secret Service would have to pry his BlackBerry from his fingers if they threatened to take it away from him.
Somewhere along the way, RIM got lost. It lost its focus. The company needs to get back on track by once again appealing to these core business customers. But now, the company needs to realize that it’s competitors Apple and Android have redefined the market. And business phones aren’t just for emailing and messaging. People expect a lot more from their smartphones. And many really want to carry one device that can help them manage both their professional and personal lives.
If RIM is serious about a come back, it needs to go back to its roots. This means keeping aspects of its devices that its core audience love: superior QWERTY keypad, security and strong messaging services. At the same time the company needs to add elements it has been missing: a good touch screen, easy-to-use interface, plenty of apps, and a good browser.
10. Pray for a delay in the iPhone or a major hiccup with Android.
The reality of RIM’s situation is that it’s on a downward spiral, while Android and Apple are racking up sales and dominating the market. It’s unlikely that Android’s or Apple’s momentum will tail off anytime soon.
So the best that RIM can do is pray that either Google or Apple, or both, hit some sort of snag in the next 12 months. Perhaps Apple will delay the launch of its next generation 4G LTE iPhone. Or maybe there will be some major issue with Android devices to slow its momentum. It seems unlikely, but Heins might want to keep his fingers crossed just in case.
