New RIM CEO Begins Painful Restructuring
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Research In Motion's new CEO, appointed to the post two months ago, is beginning what promises to be a painful restructuring of the struggling BlackBerry maker that he says does not hold any guarantees, and will probably be followed by even more changes.
On a conference call March 29 with analysts and journalists, CEO Thorsten Heins outlined an initial shake-up in RIM's management structure--including the resignation from the board of directors of one of the CEOs he replaced, Jim Balsillie--and essentially said the company would end its flirtation with the consumer market. RIM instead will focus on enterprises and emerging markets as it prepares for the crucial launch this fall of mobile devices running on the company's upcoming BlackBerry 10 software platform.
Heins outlined the challenges RIM is facing in the highly competitive smartphone market from Apple and the various device makers who run on Google's Android operating system, and also pointed to internal failures over the past couple of years, such as RIM's misreading of the booming bring-your-own-device (BYOD) trend, with employees pushing to use their personal mobile devices--particularly smartphones and tablets--in the work environment, an area once dominated by RIM and its BlackBerry devices.
"The competitive environment has become increasingly challenging," he said, adding that its plans are not without risks and challenges, and there is no guarantee of success.
It's already been a tough couple of years, and the last financial quarter was no different. During the fourth quarter of RIM's fiscal 2012, the company generated $4.2 billion in revenue--a 25 percent drop from the same period in 2011--and lost $125 million. During the quarter, RIM shipped 11.1 million BlackBerry smartphones and more than 500,000 BlackBerry PlayBook tablets. The company has about $2 billion in cash on hand.
RIM has a steep slope to climb to get back to competing against the likes of Apple and Google. According to a Nielsen report released March 29, almost half of U.S. mobile device owners have smartphones--a 38 percent jump over a similar study in February 2011--with Android leading the smartphone market with 48 percent share. Another 32.1 percent of smartphone owners have an Apple iPhone, with 11.6 percent owning a BlackBerry.
However, of the new owners over the last three months of the survey, 48 percent chose an Android device and another 43 percent an iPhone. Only 5 percent chose a BlackBerry.