Is RIM beyond hope?

It's been a while since I had written a post on RIM and thought that it is about time, given that I have some sort of fixation on them having to use them in my daily life. Anyone who has been watching the news recently knows that the company's stock has slid 5% down to $13.65 yesterday, now 75% lower than just 12 months ago, so things aren't going well and like me, everyone is sitting around waiting for RIM's last hurrah when the Blackberry OS10 devices come out.

RIM is in a terrible position right now and I don't at all envy Thorsten Hein's position having all the pressure to do something to try and salvage what is left of RIMs business. The only good news that we are seeing is that he and perhaps the board are starting to see the big picture and do something about it, only that it may be too late.

I think they have done good by:

• Removing Jim Ballsillie: This might be more symbolic than anything. But since he had been put into the role of CEO and both Mike Lazaridis and Jim Ballsillie landed softly into board rolls Thorsten has never been able to shake the stigma that he is just the puppet of the two former co-CEOs. Initially that's all that it looked like, he came in trumpetting their approach acting like there is nothing wrong, but by getting rid of Ballsillie (not sure about Mr. Lazaridis), they are giving us a sign that he can no longer contribute to the direction of the company and that he really does want things to change.
• Removing top exectutives: David Yach and chief operating officer Jim Rowan were let go as well as other high level staff. THE PROBLEM IS: While you are getting rid of the 'old' mentality you are going to have to replace them with new bodies. It may prove to be difficult to fill all these high level positions in a short time considering their big turnaround HAS to happen this year.
• Admitting the difficulties that RIM is facing: It is about time that someone flat out said what was going on with the company. Jim & Mike were always trying to put a spin on the reasons that RIM was faltering and trying to evangelize their plans for a turn around even though it would never materialize. This will give investors and your average person more confidence in a CEO that admits there is a problem rather than living in a time bubble back when everything was still good. 
• Developing mobile fusion: I was skeptical of this from the start because I thought this would almost definitely cannibalize the sale of their blackberry devices. But since most people are now opting for Android and iOS devices nowadays, I am fairly confident that at some point in the future there will be no blackberry hardware. Mobile Fusion is putting the focus on their back end infrastructure and what is rapidly becoming their most important asset. 
• Putting a sale of the company or its assets on the table: Old co-CEOs would have only mentioned that they were open to licensing the blackberry OS, as if anyone would want anything to do with what is behind the demise of the company. Putting all the options on the table is good news because it leaves the possibility of a sale out there that could help with investment and also confidence that no option is off the table. THE PROBLEM IS: RIM might be too far gone to be sold, given that it has lost nearly all of it's value. The only thing left that I believe could be purchased is their patents and their back end infrastructure.

What I don't think they have done well:

• Communicate their direction & message well: Thorsten doesn't seem to be able to communicate direction or if they really pulling out of the consumer market. I have always thought that if they were having issues that they should focus on their core business and try and fix that the consumer part of their business seems to have made them scatterbrained so that they lose focus and what they should prioritize (Playbook, Storm, Torch). THE PROBLEM IS: The consumerization of IT is already in full swing, no one wants to carry 2 devices anymore and want their 1 perfectly capable phone to do everything. They do sort of have their bases covered with Mobile Fusion, but their hardware business is pretty much finished in my opinion.
• What about the blackberry ecosystem? We don't know what is going happen to BBM or the integration they were speaking of when making deals with the recording industry for Blackberry music. What will happen to all the money invested in music deals for the blackberry music?  
• Bad publicity: On top of the drunken executives that forced an emergency landing, there was a stabbing at a promotional concert for BBM which seems to have overshadowed the event itself, just like the drunken executives did.
• Provide message of hope to developers: I am not sure that I have seen any indication in news or otherwise that developing for Blackberry is going to be worth your while. I am seeing that developers will get a free BB10 device, but I don't see them providing any guarantees that they will be handsomely rewarded for developing on a platform that has every indication of failing at some point in time. They should be offering nearly 100% profit for the apps and other incentives to catch developer interest, everyone knows that if you want to make money you develop for iOS and Android, but they need a really good reason to develop for blackberry now.
• Trying to market an old OS: When they knew they would not be able to ship the BB10 devices on time they decided to drop some money on advertising BB7.  Anyone who has seen any of the ads can only see improvements in providing: Mobile Hotspot (which will be promptly shutoff by most IT policies in addition to WiFi), NFC (no one uses this for payment yet, for now is just a buzz word), WiFi Calling (this is just software, most likely it is provided by carriers, but other apps like Nimbuzz had it since at least 2009), FM Radio (nice to have, but virtually no one uses it), AutoSuggest (Not that I have seen it, but it is most likely tied into google somehow). There really is nothing compelling me to buy a BB7 device, especially since there is no guarantee that my BB7 device can run BB10 when it eventually comes out. You do have to sell the devices, that is a given, but I don't think anyone is naive enough to think that BB7 is a major revolution in the OS... since in my opinion we haven't seen that yet at all (BB2 - BB7, the only things I have seen as improvements are music, camera, expandable memory and some apps. The OS is fundamentally the same... the only real big change I remember is going from a C based OS to a Java based OS). 

I honestly think that for the most part, RIM is beyond salvaging in it's current form as it is too late to catch up with other hardware makers. No one will honestly want to purchase a BB10 version 1.0 phone with no applications when you can get a fully featured Android or iOS device, you would deliberately be committing  yourself to issues similar to those that occurred with the Playbook and OS updates/fixes. So that being said, this is how I see the future of RIM:

•  RIM gets purchased outright: I can see either Amazon (because Jeff Bezos seems to love RIM) or Microsoft purchasing RIM. Amazon has the kindle, kindle fire to tie into their ecosystem, but they do not have a phone. They could use RIM to break into the enterprise and also to manufacture Android phones to fit the hardware that they are missing when compared to Apple/Google. Microsoft could purchase them just to deepen their foothold in the enterprise and lock down Windows Phone 7 as the only enterprise capable phone (probably getting rid of Mobile Fusion save for Windows Phones). Windows Phone 7 definitely needs some sort of edge in hopes of catching up to Android and iOS, so anything could help.
• RIM leaves the hardward business and focuses entirely on enterprise software: They are already well positioned to do this with Blackberry Mobile Fusion, so they could pool there resources around owning Enterprise Device Management and E-Mail. To this day there is still no device that does e-mail better, so if they can enable this on Android & iOS phones (like they did with the PalmTreo650) then they would own that space. Good technologies is attempting to take ownership of this space, so they would be their biggest competitor. RIM could then live off the licensing fees of Mobile Fusion and look for other areas where they could add value.
• RIM switches to Android: I am not entirely sure on this, but it is possible that if BB10 is a complete flop, that it would be far less expensive for them to become an Android handset maker in addition to being an enterprise device management leader. So if you can't get the developers to come to you, you can go to Android where the developers are and continue to make money on handsets as well as licensing. Mobile fusion would then theoretically allow them to do this almost seamlessly as they are trying to address the BYOD movement with the software already. 

I don't really see too many options beyond these, and time is of the essence for the sale of the company as it has lost so much of it's value it may not be worth selling. I do think they can succeed as an enterprise software provider and I fully expect them to do something like this if BB10 turns out to be a complete flop.

I wish them the best, I really do. I don't hate them, I just hate the OS and it's lack of functionality. I will be watching their developer conference with interest (to get an idea of what BB10 is like and its functionality). Come November, if we are not blown away by the new devices and software I can see one of the above scenarios playing itself out.

RIM shakeup

The news seems to have hit the internet like a whirlwind, late Sunday night the world found out that not only were the co-CEOs Jim Ballsillie and Mike Lazaridis stepping down as CEOs (which apparently some employees were content with), they are also stepping down as chairs of the board leaving Thorsten Heins, an individual that they have been grooming for 5 years, formerly of Seimens to take the helm of their troubled company. News seems to have been taken well, their stock has been up in early trading, but don't expect that to last.

In the end, as many have already said I believe that the clock was ticking and they were running out of time. They had a report to deliver to their board showing just where they were going and why they should continue running the company in it's current form with the co-CEO structure. Their resignations to me are a signal of both defeat and an admission that they still don't have much to offer in the way of re-capturing or slowing the market share that they have lost to Android and iOS.

Much like Apple without Steve Jobs, I am sure that RIM has a lot of projects already in the pipeline so you won't see anything ground breaking from it's new CEO. In fact, he has said as much in the first hours of being CEO, the bulk of the articles interviewing him have him stating that they are going to be forging ahead with their current plans.  So, what's the difference? It almost seems to me that the loss of Jim & Mike is only a sacrifice to appease the gods of the board and that the new CEO is just a new face to place the fault of any upcoming failures upon.

To me the whole thing just looks like another big distraction, I really can't see the new CEO doing anything else but perhaps executing plans a bit differently and communicating a bit better than the previous CEOs. I really can't see a new CEO making a huge difference in the direction that RIM takes or digging the company out of the hole it currently sits. But the man has not been on the job too long, so we could be surprised.

So far this is all that I have heard of as being on tap for the company:

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Playbook 2.0:

So what? These are all the features that the tablet should have launched with.  Now we are supposed to be excited that it now has native e-mail (not sure how an e-mail company like RIM could have missed that in the first place) and the fact that we can remotely control the Playbook with your blackberry... which can easily be done in software by any other tablet. There is nothing exciting about this announcement.... it is just going to give back functionality they should have had in the first place.

Blackberry OS 10:

I like the idea of a different UNIX based OS coming out to compete with the other 2 (Android, iOS), but I feel that it is too little too late. Not only are they going to have problems getting developers to want to develop for the platform, it is very immature and people are not going to have the patience to wait around for bug fixes when they can have a better device from Google or Apple especially given how long it took to push out Playbook 2.0.

And this absurdity about licensing Blackberry 10? At best you would get a licensee because a company wants to differentiate their product... that's it. No one is going to license it because it will be an immature product with little to nothing to entice users into buying a phone with this OS. What's worse though would be the fact that RIM could no longer control the hardware and would now have to make Blackberry 10 work for all their licensees... would would no doubt create delays and make the whole development process more complex. They should not license the OS until it is mature and they have the ability to support other hardware... they can barely get it out of the door at this point.

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If this is what RIM going to continue to focus on as a company, according to the new CEO, then you can't really expect much to change. The only thing that I would expect to shake things up a little, or at the very least make the company answer to investors is the introduction of the newest board member Prem Watsa.

It is being said that he is the 'Carl Icaan' of Canada and has a thing for troubled companies. He did after all take Fairfax financial from a $5 publicly traded company to a $415 one. If he is the one driving the change and he is ready to put up a lot of his own money for RIM stock, then this would be the only reason I would believe in change for RIM.