Struggling smartphone company says it will return to focus on business clients and employees who buy phones for work
The BlackBerry maker, Research in Motion, is to pull back from trying to compete with Apple’s iPhone and the Android mobile platform and instead return to its original focus on business users.
The shift in strategy came with a management shakeup that includes longtime executive Jim Balsillie leaving the board and severing ties with a company he helped build.
RIM said it will focus its consumer efforts on targeted offerings that tap the company’s strengths. That included devices that employees would want to buy on their own and bring to the corporate environment. The company was exploring partnerships and other opportunities for consumer products that were not deemed central. Those products could include software and features that were then incorporated into RIM’s own offerings.
“We can’t do everything ourselves but we can do what we’re good at,” said RIM chief executive Thorsten Heins.
RIM has had limited success trying to enter consumer markets in recent years, particularly with high-end devices that have the touchscreens popular with consumers.
Heins said a turnaround required “substantial change”.
“We believe that BlackBerry cannot succeed if we tried to be everybody’s darling and all things to all people,” Heins said. “Therefore we plan to build on our strength.”
Heins, who joined RIM four years ago and was most recently its chief operating officer, replaced co-CEOs Balsillie and Mike Lazaridis in January after the company lost tens of billions in market value. Lazaridis founded the company and Balsillie joined in its early years.
RIM said on Thursday that Balsillie has resigned from its board after 20 years with the company. David Yach, chief technology officer for software, and Jim Rowan, chief operating officer for global operations, are also leaving.
The company said it was undergoing a comprehensive strategic review. Heins said he was open to selling the company, but “it is not the main direction we are pursuing right now”.
The Canadian company has long dominated the corporate smartphone market. Its BlackBerrys are known for their security and reliability as email devices. Barack Obama has been an avid user.
RIM has sought to expand its appeal to consumers but has had trouble because the phones aren’t perceived to be as sexy as its chief competitors’. RIM has been counting on improvements with its forthcoming BlackBerry 10 system but that has faced multiple delays. BlackBerrys also lag iPhones and Android phones when it comes to running third-party applications. Its touchscreen models that lack physical keyboards have largely flopped.
For that reason BlackBerrys are even losing ground in the business world, as employees demand iPhones or Android devices over BlackBerrys.
Apple sold 37m iPhones in the last three months of 2011 – more than what RIM shipped in the past three quarters combined. RIM shipped 11.1m BlackBerrys in the latest quarter, which ended on 3 March.
RIM also bombed in its efforts to produce a tablet computer to compete with Apple’s iPad. Among other things the PlayBook received negative reviews because it launched without an email program and the popular messaging service BlackBerry Messenger. In December the tablets that originally cost $500 were selling at $200, below the cost of making them.
BGC Financial analyst Colin Gillis said of the latest announcement: “They are conceding the high-end consumer market with all these services that are wrapped around the platform. At least there’s some reality here. Are they going to compete against iTunes? No way.”
Peter Misek, an analyst at Jefferies & Co in New York, said RIM should have recognised three years ago it was a niche player and had lost the battle with Apple three years ago. It should have looked at partnering with other companies last year rather than now.
RIM announced the changes as it produced quarterly results that fell short of Wall Street expectations. Net loss was $125m, or 24 cents a share, in the fiscal fourth quarter. This compares with $934m, or $1.78 per share, a year ago.
After excluding one-time items, adjusted income was 80 cents per share, a penny short of expectations from analysts polled by FactSet.
Revenue fell 25% to $4.2bn from $5.6bn. Analysts had expected $4.5bn.
For the full fiscal year RIM earned $1.2bn, or $2.22 a share, on revenue of $18.4bn. That compares with net income of $3.4bn, or $6.34 a share, on revenue of $19.9bn in fiscal 2011.
In extended trading after the results came out, RIM shares fell 33 cents, or 2.4%, to $13.40. During the regular session the stock increased 6 cents to close at $13.73.
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