It’s finally happened. After months of mediocre product launches, investor grumblings and cuts to profit expectations, Research In Motion’s two chief executives have stepped down.
The move was announced overnight and comes as the Canadian mobile manufacturer – once the strongest company of its kind in the enterprise market – struggles to compete against the likes of Apple and Google.
In a statement yesterday, co-chief executives Jim Balsillie and Mike Lazaridis announced their departure, and their replacement: chief operating officer Thorsten Heins.
“In every successful company that’s developed by founders,” Lazaridis said in a statement to The New York Times, “there comes a time when it enters a new phase of growth and it’s time for the founders to pass the baton to new management.”
The change was initially welcomed by investors, but that didn’t last long. Heins soon stated in a conference call he felt there was no need for the company to make drastic changes – and shares promptly fell 8%.
In September 2011, RIM reported its earnings fell by 58% to $US329 million during the second quarter.
In the past year, RIM has lost three-quarters of its value. So how did this company, once the most valuable in Canada, fall this low?
Once upon a time, every executive owned a BlackBerry and raved about it. It’s easy to use, simple, and the idea that you could manage all your email directly from your device made it a no-brainer for office types.
Enter the iPhone. Although squarely directed at consumers, here was a device that made it easy for you to handle your email, browse the web and do everything else a BlackBerry could do. No wonder other companies, specifically Google, started copying the operating system.
Not so for Research In Motion. In the past five years the shape of a BlackBerry device has changed little, and only a few touchscreen-based models have been released.
Put simply, RIM has failed to innovate. Although the operating system has been updated, along with faster specs in the models, the company is still stuck in the past. It’s been making little tweaks when it needs a seismic shift in its products and its operations.
It happens every so often. A company loses focus on its core market to go mainstream and then ends up losing both. And it’s happened here.
When the iPhone was released in 2007, it changed the industry and smartphone models quickly began copying the touchscreen model. But it also marked a shift in how the products were marketed. While they were once an option for executives, they became sought by everyday consumers.
While that’s all well and good for the consumer-focused Apple, Research In Motion is focused on business. And now, more businesses are using iPhones because RIM was distracted.
Instead of fishing for the mainstream market, RIM should have done more to shelter its business customers.
The only company that seems to have made even a small dent in Apple’s tablet sales is Samsung, and despite that, the iPad maker owns the vast majority of the market.
RIM’s tablet, the PlayBook, has been a disaster. So much so, that last year RIM disclosed to the market it had warehouses full of them that it couldn’t sell, and as a result, the price was slashed to $US400.
It’s a decent product, but one that cost hundreds of millions of dollars the company couldn’t afford to lose. It was a reactionary move to the iPad, rather than a truly innovative product, and it wasted the company’s time.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
