Business

RIM’s Long Day of Reckoning Arrives

Research In Motion released quarterly revenue estimates that were below expectations, lowered its earnings forecast, and announced it would be cutting jobs on Thursday, leading to a stock nosedive. The BlackBerry producer’s shares tumbled to below US$28 on Friday — the lowest level in nearly five years.

Some of the company’s major stockholders are jumping ship. One of RIM’s largest investors, Jarislowsky Fraser, cut its stake in half, according to Bloomberg.

RIM stock fell as much as 16 percent in late trading Thursday after it announced that profit for its Q1 quarter ending May 28 would be 75 cents to a dollar a share. Bloomberg analysts had predicted $1.40 a share.

RIM projected revenue to be between $4.2 and $4.8 billion for the three months through August, compared to the average analyst estimate of $5.47 billion.

RIM, which has been losing out to Android-powered phones and Apple’s iPhone, has not had a major handset release since last August.

RIM did not respond to the E-Commerce Times’ request for comments by press time.

Fall From Grace

RIM enjoyed a dominating market position as one of the earliest makers of advanced phones in the pre-iPhone era.

“The story of RIM just seems to be a company that got a bit complacent and didn’t anticipate that the market would change as fast as it did,” Allen Nogee, principal analyst for wireless technology at In-Stat, told the E-Commerce Times.

“Their phones were what I would characterize as ‘near smartphones,'” he said. “Before smartphones existed in any large numbers, BlackBerrys were about the most advanced phones available. They offered better email and a keyboard before most even could envision why you would want one of those in a phone.”

RIM was not able to keep up with the innovations accompanying the debut of the iPhone. The BlackBerry went from being advanced, compared to feature phones, to being outdated, compared to iPhones.

“But the problem was when the smartphone boom occurred — really with the launch of the first iPhone. That was the start of a long fall for RIM,” said Nogee. “They added features to the BlackBerry platform, but that just wasn’t enough.”

The BlackBerry managed to hold onto its business customer base, but its image began to shift. Instead of being viewed as a top-end device, it started looking like a very low-end smartphone.

“People wanted more,” said Nogee. “The final nails in their coffin came when Apple and others started including enterprise security and remote management in their phones.”

As RIM loses its grip on business customers, it will be hard to lure them back.

“Large enterprise customers started adding more choices for employees that were getting a bit tired of BlackBerrys,” Nogee observed. “Once they lost that stronghold, it didn’t look good.The PlayBook was a good attempt at getting the tablet to these customers before Apple could enterprise-harden the iPad, but the enterprise BlackBerry base is slipping away, so it wasn’t all that successful for them.”

Research In Transition

RIM is going through a ton of changes as it readies its new QNX operating system. In the meantime, the existing BlackBerry is out of touch with the market.

“Right now, RIM is caught in a transition period, similar to Nokia’s current transition period,” Chris Hazelton, research director for mobile and wireless at the 451 Group, told the E-Commerce Times.

“As the BlackBerry OS platform is pushed to its limit, they’ve have had to move everything over to the QNX,” he explained. “The QNX is the new operating system RIM acquired about a year and a half ago.”

RIM is in the process moving its messaging tech and developers to QNX, noted Hazelton, but it’s an awkward time for the transition, since the competition is going full steam ahead.

“RIM has been caught flatfooted, but the transition will guarantee the company will be able to compete in the future,” he said.

RIM still has a bright future, in Hazelton’s view, but it’s likely to be a long time coming — at least, in technology time.

“In the short run, they are struggling,” he said. “In six to 12 months, they will be able to compete, but they will have to leapfrog existing technology.”

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

How confident are you in the reliability of AI-powered search results?
Loading ... Loading ...

E-Commerce Times Channels