Ignoring calls from prominent investors to ditch the hardware market and truly reshuffle operations, RIM’s co-CEOs announced in an earnings call that the company will bring new hardware to the smartphone and tablet markets.
Laziridis and Balsillie did not hint at stepping down, but both have agreed to join the select $1 club – taking just a dollar for their annual salaries, usually reserved for corporate titans like the late St Eve of Jobs. Industry watchers will be wondering about their Christmas bonuses, because third quarter earnings fell a massive 71 percent as it pushed the doomed Playbook.
Handset shipments, too, are penned in for a very weak quarter. After-hours trading saw RIMM’s shares fall to a seven year low. Despite the hopeless facts and figures, the plucky CEOs continued in their attempts to reassure investors with equal parts delusion and optimism. The Blackberry maker will be introducing further hardware in the smartphone segments and, crucially, tablets. Just how well RIM can manage a market based on wide-ranging eco systems and with so much popular, cheap competition out there is up for debate. It doesn’t bode well.
RIM is pinning its hopes on exactly what was expected of it. The CEOs urged investors to take a wait-and-see approach as the next range of hardware is readied, featuring the same OS as the Playbook. But for now, RIM hasn’t got the chipset ready, delaying Blackberry 10 until late 2012.
The CEOs acknowledged that brand awareness for Blackberry is slumping, but failed to see the bigger picture – Balsillie didn’t admit that the ecosystem wasn’t there or that the products were not good enough to win over North America. Instead, he said, the problem was with marketing. So it will be spending more on that throughout 2012.
SVP of Investor Relations, Edel Ebbs, said that increase in marketing won’t benefit Q4 sell-through, where sales figures are expected to be similar to Q3. As a result, there will be a higher level of inventory in the channel than it thought. But Ebbs thinks, with the disaster of the Playbook behind it and more Blackberry 7 products floating around, revenues will be up slightly in Q4.
It is clear that the co-CEOs still see a bright future in Blackberry where no one else can. They were keen to highlight an increase in subscribers in the emerging markets, with the base subscription rate up 35 percent on the same time last year. Unfortunately for Blackberry, the difficulty with emerging markets is that they are increasingly being recognised as a key segment for Android device makers, and companies such as Nokia are plugging the gap otherwise with long-life feature phones.
Although you wouldn’t know it from the up-beat earnings call, RIM has had a catastrophic time trying to compete in a market where it is seen as yesterday’s player. Critics say it just doesn’t have the right ecosystem in place to outgun companies like Apple, Google or even Microsoft with its Windows phone – and the USP of robust security is quickly falling away as developers realise it can be applied, at an app level, to other operating systems.
Meanwhile, a services outage earlier this year meant Blackberry handsets stopped working for a full three days as RIM maintained an unhelpful air of silence about the PR disaster. Laziridis has stormed out of a BBC interview, outright refusing to address concerns about security meted out by governments worldwide, and the nail in the coffin has been the lacklustre Playbook – which required a Blackberry to run properly and received negative reception across the board.
In the UK, a key market, the Blackberry is only spotted in episodes of The Thick Of It or is perceived as the rioter’s handset of choice. Executives managed to turn around not a company, but a plane, as they drowned their sorrows on a flight until the pilot was forced to land.
Although those in charge of RIM clearly don’t want to admit it, the company is quickly becoming more and more redundant. Blackberry is turning into an iconic relic of a certain time. As the world and its dog has been wheezing for the last couple of years, if RIM wants to impress and turn itself around, it will really need to pull something special out of the bag. Unfortunately, aside from Blackberry 10, it looks like the bag is empty.