RIM juices BlackBerry enterprise, dilutes consumer

The BlackBerry-maker says it will continue to target consumers, but through partnerships rather than through its own internal development efforts
Written by David Meyer, Contributor

BlackBerry maker Research In Motion is focusing its efforts on enterprise devices and delegating its consumer development to partners, after racking up massive losses in the last three months.

Thorsten Heins RIM CEO

RIM is refocusing its efforts on the enterprise and delegating its consumer development to partners, chief executive Thorsten Heins has said. Image credit: RIM

Although it was previously profitable for many years, RIM lost $125m (£78m) during the fourth quarter of fiscal 2012, it said in its earnings report on Thursday. Its revenues, which totalled $4.2bn, were down by 19 percent from the previous quarter, and shipments of BlackBerry smartphones fell quarter-on-quarter by 21 percent, to just 11.1 million units.

The Canadian mobile maker will no longer provide financial predictions for the coming year "due to a desire to focus on long-term value creation and the current business environment", it said, and announced the resignation of former co-chief executive Jim Balsillie from its board of directors.

In an abrupt about-turn, chief executive Thorsten Heins said RIM will "refocus on the enterprise business" to take advantage of its lead in that area. Just two months ago, the newly-installed Heins was saying the company had to be more consumer-oriented.

"We believe that BlackBerry cannot succeed if we try to be everybody's darling and all things to all people," Heins said in an earnings call, according to Seeking Alpha's transcript. "Therefore, we plan to build on our strengths to go after targeted consumer segments. We will seek strong partnerships to deliver those consumer features and content that are not central to the BlackBerry-valuable position — for example, media-consumption applications."

On Friday, the company hit back at reports that it is moving out of consumer devices. "The claim that RIM has said it will withdraw from the consumer market is wholly misleading," Patrick Spence, a top marketing executive at the company, said in a statement.

Reality check

The change in heart came after a comprehensive internal review to gauge the health of RIM's business, according to Heins.

"I did my own reality check on where the entire company really is," he said. "From the vantage point of CEO, it is now very clear to me that substantial change is what RIM needs."

According to Heins, the company was too slow to capitalise on the bring-your-own-device (BYOD) movement. However, it plans to regain lost enterprise market share through services such as BlackBerry Mobile Fusion. That console allows BlackBerry Enterprise Server (BES) users to manage devices on non-RIM platforms, such as iOS and Android, as well as BlackBerry smartphones and PlayBook tablets.

"The Enterprise business... is already aggressively moving to upgrade our enterprise space [with] the new BlackBerry 7 devices and to drive the adoption of BlackBerry Mobile Fusion," he said.

Consumer sales

Consumer sales of BlackBerry smartphones overtook enterprise sales a few years ago, largely due to the popular BlackBerry Messenger (BBM) service and the availability of entry-level models such as the Curve 8520.

We believe that BlackBerry cannot succeed if we try to be everybody's darling and all things to all people.
– Thorsten Heins, RIM

In the UK, the free and encrypted messaging service gained a degree of notoriety in last year's London disturbances, when it turned out to be a significant communications tool for rioting youths. At the start of March, RIM noted that the UK accounted for 11 percent of its revenues.

However, Heins said that BlackBerry's "traditional strength in security, efficiency and push" is not highly valued by some of its customers, though BBM continues to be a "value driver" for some of its customers. The Canadian company will try to come up with new services to take advantage of the enterprise-friendly security and other capabilities, he said.

'Competitive shift'

Other platforms are now targeting the low-end smartphone market, he pointed out, though he added that RIM is determined to fight back.

"This competitive shift makes our growth in international markets more challenging. As a response to this, we have new BlackBerry 7 devices scheduled to come out in the next few weeks to reinvigorate our competitive positioning in this key segment and support our efforts to continue growing the subscriber base by upgrading feature phone users to smartphone customers," Heins said.

The RIM chief said 70 percent of PlayBook users upgraded to version 2.0 of the tablet's OS within 30 days of the update's release. He promised that BlackBerry 10 — the upcoming OS that will span both smartphones and tablets — was still on track for release in "the latter part of this year".

The company may try to license BlackBerry 10 to other manufacturers, Heins hinted, saying it will "evaluate ways to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives".

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