Mixing the Berry

Dividing RIM ignores the most compelling argument for an integrated hardware+software solution: Apple

“However beautiful the strategy, you should occasionally look at the results.” – Winston Churchill
Early Research in Motion (RIM) insiders used to describe the company as “lightning in a bottle,” and credited the leadership team of Jim Balsillie and Mike Lazaridis as largely responsible for the company’s phenomenal success. At the time, the U.S. government was the company’s biggest customer, and legal firms and banks were quickly adopting the BlackBerry to securely and seamlessly tether their employees to their desks and launch the 24-hour work day.(Kodak cx7300 Battery )
Companies loved the productivity. Networks loved the higher fees. Business users loved the access to information. And RIM shareholders loved the growth. Then, on June 27, 2007, everything changed. The release of Apple’s iPhone disrupted dozens of competing products in the maturing smartphone market, offering an incredibly stable and high-performance mobile ecosystem with all the bells and whistles consumers wanted, like a camera, multimedia playback, and an intuitive web-browsing experience.
RIM’s response – strategically speaking – was painfully short-sighted.(Nikon En-el4 Battery)
“There will never be a BlackBerry with an MP3 player or camera,” Lazaridis would say in meetings. “People won’t buy an iPhone because it doesn’t have a battery as good as a BlackBerry.” Despite the company’s phenomenal early growth and substantial market share (one out of every five smartphones sold in 2006 was a BlackBerry), insiders reported that RIM lacked a grand strategy or a robust product roadmap, focusing instead on a portfolio of pet projects like designing the world’s greatest mobile speakerphone. In the face of an existential threat, the company has been reactive in the worst possible way.(SAMSUNG i85 Digital Battery )
With tech titans Apple, Google, and even Microsoft grabbing ever-larger slices of the expanding smartphone pie, RIM seems unable to muster anything more than a cosmetic upgrade of its original keyboard + encryption + battery-life formula. Perhaps more troublesome is the fact that the company’s co-CEOs don’t seem to care, and that their ambivalence has put considerable downward pressure on RIM’s share price over the last two years.
RBC’s Mike Abramsky highlighted RIM’s structural troubles in a recent report, which has sparked a public debate about the future of the company, and, perhaps more profoundly, about Canada’s ability to foster technology giants that don’t eventually self-destruct.(FUJITSU 530T Adapter)
Abramsky’s key recommendation is to “Split the Berry” into independent hardware and software units, which he suggests might compete more effectively as separate entities than as part of a united RIM. In a thoughtful exploration of the potential value that could be unlocked, his analysis suggests that if “BlackBerry” and “RIM Smart Devices” were floated separately, the companies would be worth roughly twice what RIM trades at today ($30 billion versus $15 billion).(CREATIVE BA20203R79902 battery)
Set aside, for a moment, the fact that “sell-side” equity research is exclusively interested in maximizing short-term shareholder value, and that analyst forecasts are notoriously optimistic (95 per cent of the companies that RBC Capital Markets covers are rated either a “buy” or a “hold”). The core of Abramsky’s thesis is that the sum of the parts is greater than the whole. The only problem with his premise is that RIM’s most successful competitor is taking exactly the opposite approach. Apple’s proprietary software is designed exclusively for its top-of-the-line hardware. (ACER Aspire 5600 Adapter)Paired with a robust developer community that has created over 425,000 apps (compared with 250,000 for Android and only 38,000 for BlackBerry OS), the company has kept both end users and shareholders extremely happy.
In contrast, Abramsky suggests that maximum value can be extracted from the company’s shares by decoupling BlackBerry OS from RIM hardware, and then marketing popular services like BlackBerry Messenger to hundreds of millions of owners of non-RIM handsets around the planet, or pushing more RIM hardware into SMS-centric developing markets. That strategy makes decent sense, except that these initiatives wouldn’t require splitting up the company at all. Applications for cross-platform video chat (Skype) and mobile messaging (WhatsApp) are already free and readily available, leaving little room for unlocking the billions of enterprise value that RBC suggests it could (in the absence of another tech bubble). (Acer Aspire 6920g Battery)This strategy also doesn’t address the rising threat of international competition, as an army of lower-cost Android-based hardware has already made Google the platform of choice in Asia’s fastest-growing markets.
Cloud services might also seem like a potential driver of future profit growth, but both Apple and Microsoft now offer mobile iCloud and Skydrive syncing for free, rendering any fee-based BlackBerry service instantly less competitive. Even the company’s new QNX operating system – acquired in early 2010 and currently running its PlayBook tablet – is still years from its first appearance on a BlackBerry handset, and is unlikely to receive the same warm reception as Android among hardware manufacturers, particularly since Google’s mobile platform is given away for free.(Olympus Stylus 800 Digital Battery)
That said, hacking the company in two would certainly “accelerate organizational change” as Abramsky suggests, but it doesn’t seem like a very surgical solution. In reality, splitting up RIM will not address any of the company’s fundamental strategic challenges, like distracted and ineffective co-CEOs, a lack of co-ordinated strategic planning, a fractured product catalogue, consistently poor performance in addressing evolving consumer needs, and a reluctance to reinvent its relationship with enterprise IT customers, with more than 70 per cent of the Fortune 100 now actively piloting or deploying iPhones. (Fujifilm Finepix 6800 Zoom Battery)The following anecdote from a RIM insider sums it up nicely: “The fact that people are spending their own money to buy the iPhone when their company is giving them a ‘free BlackBerry’ sends quite a message.”
Rather than “Split the Berry,” Balsillie and Lazaridis need to shift their focus away from speakerphones and NHL franchises and toward designing and building the seamless, secure, and feature-rich mobile experience that consumers, IT administrators, and developers have been craving since the iPhone first launched over four years ago. They need to rediscover the “lightning” that characterized the company in its youth, and capitalize on the 70-million-strong RIM faithful who have waited – so far in vain – for a response to Apple’s technological hegemony.(Fujifilm Finepix f610 Battery)
Breaking up the company may provide a short-term boost to shareholders, but, like many prescriptions for growth that originate within the banking sector, it’s really just kicking the can down the road.
more tags: Sony DCR-DVD305 Charger, Samsung wb5000 Battery, Sony Np-f960 Battery, HP Mini 110 Battery, Olympus Li-50b Battery, Panasonic Nv-ex3 Battery, Dell Inspiron 6400 ac Adapter , CANON DC95 battery, Panasonic Dmw-bch7e Battery, Sony Np-fv100 Battery, IBM 40Y7667 ac Adapter, TOSHIBA Satellite L25-S1196 ac Adapter, HP G5000 AC Adapter , Toshiba Satellite Pro 2100-203eb Battery, MACINTOSH APPLE M8244G/B Battery
next blog: Fujitsu Battery Manufacturing