RIM: The obits are a bit premature

Days before Research in Motion launches its PlayBook tablet analysts and tech observers are scrambling to predict the demise of the company. The gloom and doom may be misplaced.
Written by Larry Dignan, Contributor

Days before Research in Motion launches its PlayBook tablet analysts and tech observers are scrambling to predict the demise of the company. The gloom and doom may be misplaced.

Look, it's obvious that RIM has a few issues. Consider:
  • RIM co-CEO Jim Balsillie was so upbeat about the company's product roadmap that you wonder how he'll hold his job if the PlayBook flops.
  • The PlayBook is a frankentablet that can run Android, BlackBerry and QNX. If the PlayBook is seamless, it'll be a virtualization dream. If not, the PlayBook will be a slow motion trainwreck.
  • RIM talked up its next wave of BlackBerries, but those devices will run on BlackBerry OS 6.1. The problem: We all know that QNX devices are coming in 2012. Why would we buy a BlackBerry based on a soon-to-be-outdated OS?

Needless to say, these worries have tipped over RIM's bandwagon.

Jean-Louis Gassée, partner at Allegis Capital and a long-time tech veteran, notes that RIM has lost its mind. The conclusion is that RIM is rushing a tablet out to market and that the inmates are running the asylum.

Tom Krazit at PaidContent argues that RIM will be forced to sell if it has a lukewarm reaction to the PlayBook. He likens RIM to Palm. Krazit even argues that Microsoft could buy RIM. We'll overlook Microsoft's partnership with Nokia as we ponder the software giant buying RIM too.

Let's get one thing straight. RIM isn't Palm. For the fiscal year ending Feb. 28, RIM had $1.79 billion in cash and $330 million in short term investments. For fiscal 2011, RIM reported net income of $3.41 billion on revenue of $19.9 billion. Even if you assume the floor completely falls out from under the company RIM has the financial heft to be a player. Simply put, RIM won't be knocking on Bono's door for funding anytime soon.

In fact, so many analysts were downgrading RIM to "sell" on Friday that the contrarian in me wonders if the company is on the right track. Here's a recap from Wall Street's peanut gallery after RIM's disappointing first quarter outlook and calls for a huge second half rebound in fiscal 2012.

Deutsche Bank analyst Brian Modoff downgraded RIM and said that the QNX operating system will fragment itself. Fair enough. Supporting Android gives developers no reason to bother with QNX. This fragmented OS approach is the result of a co-CEO structure, argues Modoff, who adds that RIM has conflicting strategies. "We can think of few examples of companies with co-CEOs that have fared well," said Modoff. "We believe the multiple-choice approach to OS is a symptom of conflicting strategies internally." The problem with Modoff's argument: Balsillie has been co-CEO of RIM since 1992. That's quite a run.

Other research notes indicate that analysts don't believe RIM's confidence about fiscal 2012. Balsillie talked up the BlackBerry Torch last year and the device was solid, but far from spectacular.

Add it up and expectations are very low for RIM and its PlayBook. And that typically spells opportunity. Remember this: All RIM has to do is defend its enterprise turf with the PlayBook and the tablet will be a success. Apparently no one thinks RIM can rebound except for Balsillie. If he's right this time RIM will be a big surprise. If Balsillie is delusional, the company will continue to live off of its international sales and its enterprise installed base. Many companies would take RIM's worst case scenario any day.


Editorial standards