RIM: Can It Be Saved?

Oh dear! RIM’s latest quarterly earnings make grim reading — down on pretty much all metrics and a $125 million loss for the quarter. Is the company circling the drain or can it survive?

Glass half-full:

  • The firm still has solid revenues with good (albeit declining) margins and is making strides toward its new BlackBerry 10 platform.
  • The Playbook made decent inroads into the tablet space, admittedly after a very shaky start and heavy discounting.
  • RIM is still the recognized expert in enterprise messaging.
  • The developer ecosystem is still relatively healthy.

Glass half-empty:

  • BlackBerry 10 is still 6 to 9 months away. In the meantime, iOS, Android, and maybe even Windows Phone 7 will pull further away and define the market.
  • Giving up on the consumer market (which RIM also announced yesterday) means abandoning the place where most smartphones find their initial success.
  • Hardware manufacturing, once a point of pride, now seems like a rock around the firm’s neck. Its failure to build a desirable high-end smartphone demonstrates this.

What’s the prognosis?

RIM needs to turn the corner — and fast. The financial markets and analysts are already writing it off, and its best enterprise customers will follow suit unless it takes drastic action. Here are three options:

  1. Trim the product line and refocus. This is almost an extension of the announcement that RIM is moving away from the consumer space; get 3 excellent devices into the market soon with the new platform and make sure they are the best BlackBerrys ever.
  2. Do a “reverse Nokia.” If RIM is as confident of the BlackBerry 10 platform as it claims, get out of hardware and move into licensing. Who would be interested in yet another smartphone OS is a different question.
  3. Do an IBM. Quit smartphones and focus on infrastructure and applications. Much of RIM’s business smarts are in encryption, traffic management, third-party application support, and platform security. In the future app marketplace world, this could be the basis of a significant business across smartphone platforms. It also gets the firm out of the smartphone OS business — which some are already calling a three-horse race (clue: RIM is no. 4).