Research In Motion Limited (RIM), the maker of Blackberry smartphone, is experiencing troubled times. The Canadian firm, which faced increasingly fierce competition from Apple iPhone and Google Android, saw its market share shrinks into single-digit percentage and stocks tumbled 80% in just 9 months. The rapid fall of Blackberry is a stark, frightening reminder of how fast technologies in modern world evolved, and those who fail to innovate, simply die out.
The fate of Blackberry and Nokia should and likely does send shivers down the collective spines of executives at other companies. Intel, Hewlett-Packard, Dell, Microsoft — all of the giants of the modern tech era must now be aware of how quickly it can all go sour.
Even Apple, sitting atop that heap today but facing market erosion, knows from experience that we could be writing the same story about it in five years.
It all began in 2003 when RIM pioneered the smartphone industry with its Blackberry devices and went on to become the most dominant smartphone maker. The company now finds itself in grave danger of becoming extinct, as both Apple and Google continue to swallow its market share. Some analysts even believe the company is now near its death and will be remembered soon as the historically company who liberated corporate email from the PC, freed mobile workers from being chained to their PCs, letting them email and be productive anywhere on phone.
At the height of its glory, Microsoft decided to challenge Blackberry. While successfully ended its reign of dominance, RIM’s business was built around robust corporate solutions that included hardware, software and secure services specifically targeting the enterprise.
It did
well in this market and
defended it well even against
Microsoft’s continued assault
through advancements in
Exchange Servers and Windows
Mobile OS.
But problems began with the
release of Google’s Android and
Apple’s iOS. Back in 2006, the
market is all about Blackberry
and Windows Mobile as the
future of smartphones, today
things are turnaround and
transformed so thoroughly that
it becomes Android and iOS.
Blackberry market share in the
US, once impenetrable over 60%,
is now down to 9%, while
worldwide 3%. One of its
greatest failures was lack of
innovation. When talking about
the most innovative companies
over the past five years, RIM
rarely enters the discussion.
When you dominate a market
like RIM did, there is a
tendency to become complacent
and believe you are untouchable.
However when you combine the
rapid pace of technology
advancements with a free
market society, no company is
ever really safe at the top.
Similar case happened to other
fallen giants like Nokia and
Yahoo! in recent years.
RIM’s stock prices was over $60
in March, now $13
Speaking during the conference
call on Thursday, RIM co-CEOs
and founders Jim Balsillie and
Mike Lazaridis announced they
are taking a $1 a year salary,
and were adamant about finding
ways to curb the sharp decline
in the share price, signaling that
they might be seeking for
outside help.
A few years ago, Research in
Motion appeared to have an
unassailable position as the
dominant provider of what used
to be known as “PDAs.” Now,
many in the industry and on Wall
Street have concluded that it is
a dead man walking, soon to join
Palm and other early movers like
Atari and Netscape as
technology has-beens.
Its fall is twined with the
equally dramatic reversal for
Nokia, which had been by far
the leading maker of cell phones
globally throughout the first
decade of this century. While
both Nokia and Research in
Motion are still multi-billion
dollar franchises, their business
have deteriorated with stunning
Blackberry once had a 60%
market share and successfully
defended against Windows –
before the rapid rise of iPhone
that is
Some predicted a quick firesale
or acquisition of the company as
RIM still has deep wireless data
patent portfolio, carrier and
enterprise deployments, and
hardware expertise. BGC
Partners analyst Colin Gillis
however, believes that the
company is not for sale due to
market size, but management
could focus on three product
lines to protect its brand,
especially in the low end
markets. He though
recommended selling RIM
Jim Suva of Citigroup, in the
conference call, asked about the
restructuring efforts, and CEO
Balsillie said that it’s
“absolutely not business as usual
at RIM. We’re going to do what
it takes to get the value for
shareholders in the company,
and we’re totally redoubling our
efforts on the execution here.”
Balsillie and Lazaridis have
traditionally struck a defiant
tone during RIM’s earnings
events. The latest conference
call, though, was different, with
the executives acknowledging
the need for vastly improved
strategic direction. With revenue
down, earnings weak, products
delayed, and enthusiasm for
Blackberries waning, the
company has seen the value of
its shares plummet in the past
few months, and its brand
severely tarnished.