RIM talks itself into a BlackBerry corner, leaves no room for error

RIM talks itself into a BlackBerry corner, leaves no room for error

Summary: Listening to Research in Motion's earnings warning conference call made me wonder if co-CEO Jim Balsillie was talking himself out of a job.

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Listening to Research in Motion's earnings warning conference call made me wonder if co-CEO Jim Balsillie was talking himself out of a job.

Does this man know something we don't?

The conference call was that bizarre. As background, Balsillie just a month ago talked about how RIM's latest products would be game changers. The PlayBook was hot and BlackBerry OS 6.1 devices would rev up carriers, consumers and enterprises. The biggest leap was that RIM projected a strong second half to its fiscal years as these new products stoked demand. The first half would be ok, but nothing great.

A month later Balsillie was explaining how RIM cut its outlook from just a few weeks ago because these new products were delayed slightly. Balsillie also made a few tweaks. For starters, BlackBerry OS 6.1 is now OS 7.0 because it's a major upgrade. Obviously, Balsillie realizes that an incremental OS update means RIM is screwed until 2012.

Key points from Balsillie-land:

  • "Natural aging" of the BlackBerry line led to the outlook being cut.
  • RIM is renaming BlackBerry 6.1 products BlackBerry 7.0 devices. Certifications are taking longer than expected yet carriers want the devices sooner than later. Delays are more weeks than month.
  • Those new products were described as "beautiful" and "magical for the consumer and enterprise."
  • BlackBerry 7.0 products are in the "final stages of being done." Why are they 7.0 now? "It's a huge upgrade with enhanced Web browsing, fluid touch screen graphics, improved memory and battery life," said Balsillie. "It's a huge upgrade for us. Wait until you see the styling."

These products will appear next week at BlackBerry World, which will resolve analysts' doubts. Memo to self: If these devices allay analyst worries they are miracle devices. Very few if any analysts bought Balsillie's pitch.

The big question: Do you believe? Balsillie does and argues that the new RIM product cycle sets it up for the next decade. Check out the PlayBook, urged Balsillie. "No one can doubt the performance of that machine," he said.

I'll give Balsillie that take on the PlayBook, but call me a skeptic about these new devices that'll save the day. If they don't deliver RIM---and Balsillie---will have problems. "There's no question these products are beautiful, they are going to happen and demand is high," said Balsillie.

These magical products are why RIM is sticking to its guns about $7.50 a share in earnings this year despite cutting the outlook for the current quarter. Bottom line: Balsillie is leaving RIM little to no room for error---especially if consumers and enterprises don't see the latest BlackBerries as magical, beautiful game changers.

Topics: BlackBerry, Hardware, Mobile OS, Mobility

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32 comments
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  • Bottom line:

    Bottom line: Balsillie is leaving RIM
    Andrew Sheppard
    • Nahh...

      Translation: RIM is now on Palm post 2004 mode. <br><br>What does that mean?<br><ol><li>They have a OS that has hit a wall [ Palm OS Garnet - BlackBerry 6.0 ] which has had a very fruitful lifespan, but it's now time to retire it into oblivion.</li><li>The competition [Windows Mobile - Android] has sidestepped them first copying their interface, then coming with something new.</li><li>They are building a new refresh [Palm OS Cobalt - BlackBerry OS 7.0] but are not quite sure how to finish it.</li><li>They are toying with a mayor overhaul based on a completely different approach [Linux - QNX] since they know that the up-and-coming version is still based on old technology</li><li>In the end, they will surrender, adopt the competition (see point 2, aka Windows Mobile Treo), have a near death experience, then come out renovated with an option 4 product. That product will be so revolutionary, some third party will buy them [HP - guess who?]</li></ol><i>P.S.: History has a funny way of repeating itself, ain't it. <br>BTW. Just replace Microsoft Windows Mobile and you have the same story, kinda.</i>
      cosuna
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @cosuna Any company that's in 2004 mode today is dead. History is not an indicator of the future. Anyone who thinks it is completely misunderstands George Santayana's adage: "Those who cannot learn from history are doomed to repeat it." Indeed, without any evidence to support your wildly optimistic and unrealistic hypothesis, you're actually abusing common sense. Nothing of the history you describe here has actually happened in relation to RIM.

        Furthermore there is not only an awful lot of evidence that it won't, all the indicators are that RIM will continue its terminal decline at the hands of Balsillie and his verbally challenged COO Lazaridis. But I guess if you're a Blackberry user, you won't be best placed to recognise these 'small' details.
        Graham Ellison
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @cosuna Linux is not QNX. QNX is its own OS. Infact QNX and Linux are very different OS's.
        Jimster480
      • sorry to burst your bubble

        @cosuna
        talking about THE competition, you put there that company with more or less 3% market share, and going down, and leave out the leader of the market. Cognitive dissonance?

        And talking about Palm, they were killed by the Kiss Of Death from MS, that is embracing MS OS (a crappy OS, of course). Same thing will happens to Nokia. And that's where you got it right: history repeats, meaning Nokia is now DOA.
        theo_durcan
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @cosuna
        My sneaking suspicion is the Balsille will leave, but then somehow RIM will wind up looking like Nokia as another MS partner. The natural synergies make a lot more sense here than they ever did with Nokia.

        So, you are right about history repeating itself, just not which history :)
        x I'm tc
    • RIM-tastic

      RIM has a history (actually, their whole history) of making anemic devices with a patchwork of features, aimed at providing a status symbol for C-level executives, and meanwhile, foisting bad software and crappy devices on the rest of mankind.

      Example: The "pearl". WHY ON GOD'S EARTH, in the age of touch screens, would you even consider putting a trackball on a device? THERE IS A REASON laptops haven't had them since 1996, and THERE IS A REASON people ONLY buy optical mice these days: TRACK BALLS SUCK. Further....2G? as late as 2008? Really? 2....G....?

      Where RIM CLEARLY understands their market, they lack the technical ability to deliver features that actually work as expected.

      Meanwhile, Microsoft had their chance and blew it. The biggest market for RIM, the corporate market, requires special licensing and a gateway called a BES in order to integrate with your corporate e-mail system. Microsoft's ActiveSync is licensed alongside their flagship e-mail product, Microsoft Exchange. So.... if you already run MS Exchange as your e-mail back-end, and you already have MS Outlook on all the desktops, then you already own all the integration points for Windows Mobile AND YOU GET THE LICENSING FOR FREAKIN FREE! AND YOU CAN CONTROL IT THROUGH GROUP POLICY!

      Meanwhile, Apple has penetrated the consumer market quite nicely, but doesn't really understand the corporate user, nor the "new world order" where IT Security is paramount to feature/functionality, and centralized management by policy is mandatory. I know there are ActiveSync and BES connectors for iPhone, BUT...... if there was a way to SECURELY STORE and ACCESS corporate e-mail from an iPhone, AND control the device (e.g. lock down app store) via group policy deployed by Active Directory, WE WOULD ALL BE USING iPHONES RIGHT NOW and RIM would have zero market (except probably the gov'ment, who is slow to change)
      jparr
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        I hate to talk to myself, but I just had someone ask me "What about the investment we have in RIM?"

        Here are the investments:
        - Cost of handsets
        - BES infrastructure and license
        - Custom development / workflow

        Handsets: Should be on a 2-year replacement cycle. This is driven by provider contracts, subsidies from the provider, as well as declining supportability as the handsets age. This means that with a side-by-side infrastructure, your company can phase out BES over a 2-year cycle, dropping maintenance in year 2. Don't confuse "investment" with "TCO". Handsets are a recurring cost, and are therefore TCO, NOT any kind of asset.

        - Infrastructure: Is cheap. A relatively small infrastructure for either BES or ActiveSync will support a large number of users. Set up a parallel infrastructure for ActiveSync, and drop maintenance on BES in year 2.

        - Custom apps and workflows. THIS IS A MAJOR CONSIDERATION. Best case, you don't have any. Worst case, it's integrated through BES down to the handset. If you're somewhere in the middle, you may be able to handle simple workflows through existing web / portal interfaces that are already in place, or inexpensively migrate workflows in to e-mail. Worst case scenario would be custom development and deployment of multiple applications to Windows Mobile, and this would be QUITE an investment. Conversely, if your BES apps are aging, and you were considering a re-write anyway, why not consider doing it as a web portal that would be device-independent and nearly future-proof?
        jparr
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @jparr
        I agree with you about RIM and MS. It's clear that ActiveSync makes loads more sense than BES, especially given how dreadful RIM's phones are. (Trackballs?! Oy!)

        As for Apple, though, I have a slightly different view: Apple understands corporate users, it just doesn't care. It likes selling devices to consumers. And it doesn't care a hoot about centralized policy management for mobile devices. As a consumer-focused vendor, it doesn't have to. That's someone else's problem. They just make and sell the things. How and where people use them isn't their problem.

        I do agree with you that Apple could have made a killing in the enterprise market if it provided methods of managing multiple iOS devices. Even if it just made hooks into its own OS X Server product, that would have made more sense. Instead, they killed they true server hardware line and apparently are folding the server software line into the general OS (another move that baffles me).

        But I guess in some ways, it's not unlike auto companies: some covet fleet sales (like GM and Ford) and others don't care about them at all (like BMW or Porsche).

        Apple doesn't need to be the biggest player in any given market to make obscene amounts of money for its investors. And as long as they continue to, it won't matter if they cater to the enterprise market or not.
        jscott69
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @jscott ((( "As for Apple, though, I have a slightly different view: Apple understands corporate users, it just doesn't care." )))

        Exactly what I was going to say, nearly word for word. The irony, though, is that the iPad is one of the most (if not THE most) quickly adopted devices in corporate history. This, despite Apple basically giving the finger to corporations from day one.
        buddhistMonkey
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @jscott ((( "As for Apple, though, I have a slightly different view: Apple understands corporate users, it just doesn't care." )))
        That's grossly misstating the case. Apple has, and continues to make great efforts to accommodate corporate use of its products, as is most evident with all the iOS business level enhancements and in working closely with Fortune 500 companies on mobile devices. The reality is that Apple, more than any other company, realized that when they leave the office, corporate executives are consumers who will buy outstanding hardware and software for their own use, and then advocate compelling solutions for their companies. This can be far more productive marketing than trying to gain entrance to enterprises through formal portals, where there is great resistance to marketeering.
        Quidproquorum
  • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

    I realize that RIM is big in the enterprise, but the amount of competition they face from Apple, Microsoft, Google, and HP is only going to increase. The difference is that all of those companies have MAJOR businesses outside of phones. They can afford to weather a few storms.<br><br>I feel like RIM is Palm 2.0. I would say that Microsoft should just buy RIM, but I doubt they'd make their money back.
    Rich Miles
    • Easier to forecast

      It is precisely because they are big in the enterprise that Balsillie can take what looks like a huge risk in promising that RIM will still hit $7.50/share for the year even though they've just lost a few weeks.

      What Balsillie knows that the rest of us don't is what its big, slow-moving corporate customers are committing to.

      A company that's planning to sell through Best Buy and the wireless carriers has no idea what to expect when they finally set the dog food down in front of the dogs. Will the critters bite? Will they turn up their noses and walk away? Nobody knows.

      Balsillie does know, because his sales force has been previewing these products under Non Disclosure to people who can cut orders for thousands of units at a pop.

      He must be hearing good things.
      Robert Hahn
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @Robert Hahn

        Excellent point. Intel, Microsoft, and IBM are all great examples of this.

        My gut tells me that something just doesn't feel right with RIM's strategy, but I'm having difficulty articulating it. To further the discussion, I would pose the question: "Why should enterprises stick with Blackberry?"

        It could very well be that I just don't understand BES enough to have a valid opinion.
        Rich Miles
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        Deleted - Duplicate post.
        Rich Miles
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @Robert Hahn
        " What Balsillie knows that the rest of us don't is what its big, slow-moving corporate customers are committing to. He must be hearing good things."

        Excellent Point. Coprprate clients are slow to move, but when they do they are committed to the product for a business cycle of at least three years providing the products are not a total failure.

        From the standpoint of mail handling and security RIM just flat out does a better job. BES provides them with management of these by groups which provides the peace of mind needed for sensitive and secure data.

        I hope they pull it off.
        wperry@...
      • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

        @Robert Hahn, Well the market hates RIMM right now: 48.72 -7.87 (-13.90%)

        A few choice words! It's a beautiful thing, as someone in a TV drama recently said.

        Update:

        48.68 -7.91 (-13.98%) Since I started typing!
        Graham Ellison
    • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

      @Rich Miles : see my comment above...

      You're in the money...
      cosuna
  • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

    The name change from 6.1 to 7.0 makes sense to me. RIM has always said that update will be big, and not some incremental thing, so calling it 7.0 just seems like the smart move.

    I'm really curious to see how this plays out. RIM's huge, and it takes companies like that a long time to fall. Enough time to catch on somewhere.
    Darkninja962
    • RE: RIM talks itself into a BlackBerry corner, leaves no room for error

      @Darkninja962@... I'm finally beginning to understand Blackberry users... they're the sort of people who are impressed by a company that can't decide what to do about the competition, name an upgrade 6.1, realise too late [after it's announced] that something is killing their company, decide it's the name of the forthcoming upgrade, blame the upgrade - publicly [in an earnings warning!], and expect everything to work out the way their over-optimistic PR statements predict. Have I got that about right?

      Let's assume I haven't. Let's assume I'm 100% wrong. Anyone care to have a serious wager with me?
      Graham Ellison