New CEO finally has a vision for RIM

Thorsten Heins plans to refocus on enterprise, and stop chasing consumers

by Joe Castaldo

When Thorsten Heins became the new CEO of Research In Motion just over two months ago, he downplayed the need for change. But after conducting an intensive review of the company, he’s charting a different course for the BlackBerry maker.

“It is now very clear to me that substantial change is what RIM needs,” he said in a conference call to discuss the company’s fiscal fourth quarter earnings on March 29. Indeed, Heins is developing something RIM has not had in a long time: a vision. He’s taking RIM back to its roots by focusing on the company’s core business customers instead of chasing after the broader consumer market. “We believe that BlackBerry cannot succeed if we try to be everybody’s darling and all things to all people,” he said. Heins also made clear that he’s considering all options for the future of the company, something his predecessors tended to dismiss. The company is undertaking a “comprehensive review” of its operations, according to Heins, even considering “partnerships and joint ventures.” He didn’t entirely rule out a sale of the company, but said strongly that selling RIM is not his intention.

Heins’s chosen strategy to reclaim the enterprise market is far from certain, however. As one analyst pointed out during the conference call, Heins is essentially turning the conventional wisdom of the mobile industry on its head. Growth has been with the consumer market for the past few years. Corporations are increasingly allowing employees to use their personal smartphones at work, which has been a blow to RIM. That trend is eroding the distinction between consumers and business users. Some in the industry have argued there will be no difference between the two markets in a few years. People want devices they can use both inside and outside of the workplace. To borrow a phrase from Heins, the market may very well want smartphones to be all things to all people.

But Heins contends the two markets are distinct, and that corporations still value the security and services that RIM provides. The company plans to upgrade aggressively its existing corporate clients to the latest line of BlackBerry 7 smartphones, and push the adoption of its Mobile Fusion platform. The latter service allows IT departments to manage multiple smartphones and tablets, including iPhones, iPads and those running Android, and provide many of the BlackBerry’s security features to those devices.

And from the initial comments Heins made today, it doesn’t sound like RIM is going to entirely ignore consumers. Instead, Heins said the company will target high-end users and position the BlackBerry as an aspirational brand. The company will, however, invest less of its own resources chasing consumers. “We will seek strong partnerships to deliver those consumer features and content that are not central to the BlackBerry proposition—for example, media consumption applications,” Heins said.

The other big change under Heins concerns staffing. RIM grew so quickly that a proper management structure was never really put in place. Decision-making was slow, and the organization grew too complex. Heins has been working to simplify that, and announced a significant executive restructuring. Chief technology officer David Yach and chief operating officer of global operations Jim Rowan are both leaving the company. Heins is now searching for a single person to serve as chief operating officer.

The fourth quarter results themselves show just how quickly Heins has to act to turn things around. RIM missed analyst expectations and earnings came in at the low end of its guidance. The company recorded a loss of $125-million compared to a profit of $934-million from the same quarter last year, and shipped only 11.1 million smartphones, down 21% from the previous quarter. Most worrying is that subscriber growth is slowing. RIM added just two million subscribers, roughly half as many as it added between the second and third quarters of the year.

The launch of BlackBerry 10 later this year, the smartphone that many analysts contend will essentially make or break the company, could help boost subscriber growth again. The problem is the mobile market is only getting more competitive in the meantime, and RIM is likely to lose even more market share. Nokia, for example, is planning its biggest launch yet in the United States for its new high-end smartphone, the Lumia. Nokia is also causing trouble for RIM at the lower end of the market with its Asha series of smartphones. Raymond James analyst Richard Li wrote in a research note earlier this month that the Asha will “intensify competition in emerging markets where RIM historically has had an e-mail service advantage.”

The biggest challenge, however, is getting developers to write apps for the new operating system that will run on BlackBerry 10. The market for BlackBerry and PlayBook apps is sparse compared to what’s available for Android and Apple’s iOS. “Users purchase ecosystems, not just phones,” wrote Colin Gillis, an analyst with BGC Partners in a recent research note. “There is little reason to see that an ecosystem is going to build around [RIM’s] operating system.” The good news is that Heins insisted development for BlackBerry 10 is on track. RIM will also hand out roughly 2,000 BlackBerry 10 prototypes to developers in May to help them get started designing apps before the official launch.

But one of the most influential figures in RIM’s history, Jim Balsillie, won’t be around for that launch. He’s stepping down from RIM’s board just two months after relinquishing the co-CEO role along with company founder Mike Lazaridis. Despite his unquestionably huge role in RIM’s success, Balsillie’s departure from the board may actually benefit RIM. After all, it’s tough for a relative newcomer like Heins to push for change when both his predecessors are sitting next to him at the boardroom table.

Joe Castaldo is a senior writer at
Canadian Business magazine.




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New CEO finally has a vision for RIM

  1. Vision, What vision? By early next year, you will see what that vision is. I have said, RIM will make Windows Phone.

  2. While I agree with Heins that businesses value the security and ruggedness of the blackberry phones, when you put that against the bottom line consideration of outsourcing their phone costs to their employees I think he’s giving himself an uphill battle.  If his sales guys can make a good case about the additional costs of interoperability between phones, maybe — but that’s becoming a tough argument to make considering how robust different phones are getting at handling different document formats already.

    Too bad too, I very much like my Playbook. More than my iPad anyway.. anybody that tells me apple knows how to craft user interface/experience either hasn’t tried one.. or hasn’t tried anything else.

  3. Perhaps the new RIM phones SHOULD combine personal and business phones…they could have two sim cards and thus the single phone (hardware) could have two number and even be on two different networks…oh i’m sure there are a bunch of hurdles to get that to work, but I’m sure it could be done (if it isn’t already…)

    • I expect the market for such a thing wouldn’t be big enough to justify the extra costs in manufacturing it.  Businesses that are letting employees use their own phones have nothing to gain from it, and as competition drives down wireless costs, the extra cost for such a phone  to business that buys and pays for the airtime for their employees wouldn’t outweigh the slightly cheaper costs gained by not paying for personal calls.

  4. I don’t believe that reasearch in motion can compete with the likes of apple or almost any other smart phone technology company.

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