RIM: What could go right

RIM: What could go right

Summary: The consensus view is that RIM is screwed and that it will lose enterprise, service revenue and money on every PlayBook it sells. Here's what could go right.

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Research in Motion is betting on the BBX operating system---the primary reason the company is sticking with the PlayBook tablet---but analysts are throwing in the towel on the company's turnaround prospects. Given the pessimism it may be worth pondering what could go right if only for giggles.

Lazaridis and Balsillie

Last week's warning about profits, revenue and PlayBook inventory set in motion a series of doomsday outlooks. What's unclear is whether current RIM management---co-CEOs Jim Balsillie and Mike Lazaridis---has anything up its sleeve to pull the company out of its tailspin.

In many respects, BBX looks like yet another savior product for RIM---a company that has had too many miracle products fail to even take seriously. National Bank Financial analyst Kris Thompson gave RIM a $10 price target.

Thompson wrote:

Many investors are expecting RIM’s new BBX operating system to resurrect the company next year. While we are cheering for this outcome, we have little confidence that any management team could save RIM in its current form. Turning around a $20 billion company with 17,000 global employees in a fast moving, hyper-competitive market is a massive task.

In addition, Thompson expects RIM's subscriber base to peak this fiscal year and then enter "a decay phase from churn as post-paid contracts expire."

Thompson doesn't even believe that RIM's patents are worth much in a breakup or acquisition scenario.

Are things really that bleak? The consensus view is that RIM is screwed and that it will lose enterprise, service revenue and money on every PlayBook it sells. Given the pessimism let's play devil's advocate and ponder what could go right.

Here's a look at the positives:

  • RIM's outlook could have been worse. RIM said it expected third quarter revenue to be below its range of $5.3 billion to $5.5 billion. Earnings will also be lighter than projected, but not by much. A $485 million charge will be taken to account for PlayBook inventory, discounts and promotions.
  • BlackBerry shipments in the third quarter will be 14.1 million. That's still a lot of BlackBerry devices.
  • BBX turns out to be the real deal. RIM correctly is keeping its PlayBook alive if only to make sure BBX isn't tethered to a disaster. In other words, RIM learned from HP, which killed its TouchPad and WebOS in one swoop. BBX is an elegant OS and could look good on a superphone.
  • RIM gains market share with money-losing PlayBooks. RIM's PlayBook is headed to $199, a price that's a screaming deal even if the company lacks much of an ecosystem. The PlayBook is a test run for future phones.
  • There could be a new PlayBook in February. Paradigm Capital analyst Barry Richards said he expects RIM to deliver PlayBook 2.0 in February. RIM could benefit from low expectations and a lower bill of materials and native email.
  • The BBX Android ecosystem has potential. The company is betting on a franken-tablet ecosystem that allows the PlayBook to run Android apps. Jason Perlow has tested the RIM Android approach and it's promising.
  • BBX is expected to have native email and calendar in February. It's inexcusable that RIM still doesn't have native email support, but in February that problem goes away---assuming RIM hits its timelines.
  • RIM could get new management. The company has issues, but the board could toss Balsillie and Lazaridis. Ditching its co-CEOS could revitalize the company.
  • The company still has strong service revenue that's estimated to be up 30.4 percent from a year ago.

My point: RIM still has assets and many positives in its corner. What it lacks is credibility. New management could stabilize the company and build from there.

Related:

Topics: Tablets, Mobility, BlackBerry, Security

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45 comments
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  • RE: RIM: What could go right

    RIM is toast! They were the cool new tech when they hit the enterprise and they had to do very little marketing... Now that lack of marketing experience with Bad Management Decisions (the Storm Touchscreen is one such item as it was poorly implemented) has led them to the edge!
    slickjim
    • The only way RIM or Nokia can survive is to use Android

      The longer they postpone this decision, the more they stand to lose!
      Uralbas
      • RE: RIM: What could go right

        @Uralbas

        Absolutely correct.
        HappyXWindowsUser
      • RE: RIM: What could go right

        @Uralbas
        Yeah because RIM is going to compete with Samsung head on...not.

        RIM can still be an Apple "light" that makes plenty of money off an increasingly smaller share of a bigger and bigger pie. Look at the Mac. It is a total "failure" by every standard but the one that counts: profits. The iPhone is likely to loose share dramatically over the next few years; but let's pretend Android makes gains and Windows Phone manages to pass iOS too, and its share falls to 10% of the phone market or less...wanna bet who will still be making the most money on smartphones by a long mile?

        If RIM can maintain a loyal user-base who will pay a premium for their product (deserved or not), they may survive and even thrive. And right now, just surviving is winning. But they won't get that with Android.
        x I'm tc
  • RE: RIM: What could go right

    I think they still have a chance. If BBX really is "all that", runs Android apps and keeps a low price they will earn a bigger share of the market. The question is do they have enough time to turn it around or will they run out of money?
    BoloMKXXVIII
    • RE: RIM: What could go right

      @BoloMKXXVIII
      I thought they were still profitable, and thus in no danger of "running out" of money.
      x I'm tc
      • RE: RIM: What could go right

        @jdakula
        You are correct, profits are down, but they are still profitable, and indeed, they are still acquiring other companies. When you're buying other companies you are quite far from 'running out of money'
        Doctor Demento
  • the HP or IBM should aquire RIM

    RIM needs a good buyer. Android is the way to go.
    The Linux Geek
    • RE: RIM: What could go right

      @The Linux Geek - well "good buyer" rules out HP then
      tony85
    • RE: RIM: What could go right

      @The Linux Geek Google should buy them for their IP and messenger client.
      slickjim
  • RE: RIM: What could go right

    RIMs problems are mostly software related. It takes time and a huge monetary commitment to solve software problems of the type that RIM faces. We know that RIM will have email in February. Any guesses as to how will it will actually work in the hands of users? Think of the time and money Apple has spent in making iOS what it is. To equal that, another entity must do the same thing. I just don't see it, even though having a real competitor for iOS would be good for everyone.
    noibs
    • RE: RIM: What could go right

      @noibs +1. There might still be room for RIM under the MS umbrella. Between them they own enterprise messaging. MS could merge BES into Exchange and offer still competent hardware alongside Nokia.
      capeleopard
      • RE: RIM: What could go right

        @capeleopard
        This thought just occurred to me: Nokia buys the Blackberry brand and gets all of Blackberry's handset capacity, while MS buys BES and folds it into their own offerings. This would be one way for Nokia to enter the US market again.
        x I'm tc
  • NEWS FLASH...BBX now Blackberry 10

    http://www.marketnews.ca/LatestNewsHeadlines/RIMRenamesBBXBlackBerry10.html
    IT_Fella
  • Losing Hope

    Was a big fan for a long time. The playbooks main reason for being, in my humble opinion, is the bridging applications from the phone to the playbook and the applications are horrible. Many updates and they never improved them even a little bit. My biggest complaint about RIM is that there is no way to give them any feedback on what we the end users of their devices want these devices. They make the process of expressing our opinions completely impossible. So I have to assume they think they know what we, the end users of their devices, want. So far they have been completely wrong.
    ricksterd6
    • RE: RIM: What could go right

      Hi @ricksterd6,

      Alex from RIM here. I???m sorry to hear you???ve had a hard time reaching us to provide feedback. Our goal is to give our customers a wide variety of options to get in touch with us for help, or to simply offer suggestions and provide input. In the future, please feel free to reach out via our website support form (http://bbry.lv/hPe8dh), on Twitter (@BlackBerry or @BlackBerryHelp) or on Facebook (http://bbry.lv/bdmrXv). Bottom line ??? we always love to hear from our customers.

      Cheers,
      Alex, RIM Social Media Team
      alexkinsella
  • RE: RIM: What could go right

    I've had blackberry phones for some time now in my business. With the price drop on the playbook, I jumped on that. I compare to an android tablet that I have, and I really like the overall operation of the playbook much better. With the way it easily communicates to my cell phone, I can be online anywhere I have a data signal without having to go to a coffee shop. But they need to concentrate on the apps. I know that they are hoping that someone else will write all the apps, but I don't need to play Angry Birds, I need to carry out my job without the pen and paper. It's getting better, but there is still a long way to go.
    mmeade1
    • RE: RIM: What could go right

      Hi @mmeade@...,

      Alex from RIM here again. When it comes to work, I hear you loud and clear on the importance of professional apps. That???s why we???re quickly ramping up enterprise-level apps for the PlayBook. We recently added a SharePoint client, which helps online meeting collaboration, a Citrix receiver for connecting to your work computer remotely, and an upgraded version of BlackBerry Mobile Conferencing to make conference calls a breeze.

      When you have a chance, check out this Inside BlackBerry for Business Blog post on the top five business apps for the PlayBook: http://bbry.lv/odyRdU.

      Cheers,
      Alex, RIM Social Media Team
      alexkinsella
  • RE: RIM: What could go right

    Toast. Past 'sell-by' date. Nuff said.
    Heenan73
    • RE: RIM: What could go right

      @Heenan73 Good argument! Really valuable!
      radleym