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    Home»Opinion»Duncan McLeod»Saving the Berry

    Saving the Berry

    Duncan McLeod By Editor25 January 2012
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    By Duncan McLeod

    Looking around SA, it’s hard to believe BlackBerry maker Research in Motion (RIM) is in trouble. The BlackBerry remains South Africans’ smartphone of choice but in developed markets consumers are shunning it in favour of alternatives.

    The resignations this week of long-serving RIM co-CEOs Jim Balsillie and Mike Lazaridis weren’t unexpected. Many analysts and shareholders have been calling for a change at the top of the Canadian company for some time as its share price has tanked — it’s down 75% year on year — and as it has haemorrhaged market share to Apple’s iPhone and devices running Google’s fast-growing Android platform.

    It’s a spectacular fall from grace for the company that popularised modern smartphones. In the brutally competitive world of consumer electronics, however, where innovation and creative destruction are rampant, RIM has fallen behind the curve. Consumers, especially in developed markets, are turning in droves to what they perceive to be superior platforms and software ecosystems.

    RIM has made a number of strategic missteps in the past 18 months that have cost it dearly. It’s failed largely to keep pace with Google and Apple in developing powerful application and media stores around its platform; its first foray into the tablet market with the PlayBook was rushed and a poor effort; and it badly mismanaged the crisis around the three-day outage across its network last year, coming across as incommunicative and, fairly or not, somewhat arrogant.

    RIM’s saving grace so far has been its strength in emerging markets, like SA, where the flat-rate and unmetered Internet service known as BIS, coupled with its instant messaging platform, has proved a runaway success, especially among cost-conscious youngsters. But even that could change, especially if rival handset manufacturers convince operators to offer flat-rate services similar to BIS on their platforms.

    Analysts hoping the exit of Lazaridis and Balsillie would result in sweeping changes at RIM and a resuscitation of the BlackBerry brand were probably disappointed that the company, in announcing the resignations, made it clear it would continue along the same strategic course. This has prompted some commentators to wonder if the new CEO, former Siemens executive Thorsten Heins, will last long or whether the former co-CEOs have asked him to dress the company up for a sale.

    Already last week, rumours were flying that electronics giant Samsung was preparing to make a bid — rumours quickly debunked by the Korean company.

    Others have suggested Microsoft, which is struggling in the smartphone market, should buy RIM. But that doesn’t make a lot of sense, especially as the software giant’s efforts in the space are focused on its (very good) new Windows Phone platform. Nokia, which has wedded its future to Windows Phone, represents Microsoft’s best chance of eroding the positions now held by Apple and Google.

    Certainly, RIM’s commitment to staying the course probably played a big role in the fact that its share price plunged by more than 6% on Monday after the news of the management shake-up broke over the weekend.

    Technology commentator Arthur Goldstuck says there was a “startling lack of urgency” in RIM’s statement announcing the CEOs’ resignations. “[The company] can’t afford to keep doing business as usual but that seems to be the message. By sticking to the roadmap, they’re suggesting they needn’t change the business, and that’s wrong.”

    Goldstuck is right. What’s clear is RIM needs a plan to beat Apple and Google (and, soon, Nokia and Microsoft). And it needs to do it with urgency if it’s not simply to be swallowed — or worse, become irrelevant.

    • Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail
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