Research In Motion, the BlackBerry maker whose struggles in the U.S. smartphone market have been evident now for several quarters, is planning to zero in on the enterprise space as part of a comprehensive shift in its strategy.
The Canadian company also plans to home in on targeted consumer segments, RIM CEO Thorsten Heins said Thursday during the company’s quarterly conference call with financial analysts and investors.
“We believe that BlackBerry cannot succeed if we try to be everybodys darling and all things to all people,” said Heins, who was extremely candid about the challenges facing a company that he took over only several weeks ago.
Heins acknowledged that the company continues to struggle in the U.S. market where it faces stiff competition from the likes of Apple’s iPhone and a range of smartphones that feature Google’s Android operating system.
“We are continuing to face pressure on our subscriber base in the United States and the lack of an LTE product and a high-end consumer offering in this market is hurting our performance,” he conceded. “The majority of RIM’s subscriber growth is coming from international markets,” he said later.
RIM is partly placing its faith in the upcoming BlackBerry 10 platform. The hope is that BB 10 will reinvigorate interest in its smartphone portfolio in North America. The company anticipates launching its first BB 10 smartphone in the latter part of the year.
“The plan is to have the products in carrier labs by the early summer with a commercial launch sometime in the fall,” CIBC analysts Todd Coupland and Robin Manson-Hing wrote in a research note. “Mr. Heins indicated that carriers continue to encourage RIM and are supportive of its product road map. We believe this is true as carriers such as AT&T … have consistently talked about multiple platforms being desired as well as the fact RIM’s core strengths of radio frequency, battery life, and use of scarce bandwidth have to be considered assets to any carrier offering.”
Heins cited the BB Curve 8520 as evidence of RIM’s success in the international market.
We define the entry-level smartphone segment around the world,” he said. We have sold more than 40 million entry-level Curves into this market segment.”
However, this success did not go unnoticed by our competitors and there are now a number of handset vendors targeting this segment using price as their primary competitive tool,” Heins added. “These competitive shifts make our growth in interiontal markets more challenging.”
Heins said new BlackBerry 7 devices are scheduled to hit the market in the coming weeks, and the company is hoping that the handsets will reinvigorate interest in its product and encourage customers to upgrade from feature phones to smartphones.
Under Heins’ leadership, RIM also appears more willing to consider strategic options. “Options on the table include partnerships, JVs and licensing that would improve RIMs weaknesses with consumers in the current smartphone revolution,” CIBC analysts wrote. “Mr. Heins did admit a sale of RIM could be considered but that it was not a mandate he had received from the board. His core objective is to execute a successful turnaround.”
Some Wall Street analysts, however, don’t think a sale is likely in the near term.
“We believe that the U.S. government would block most acquirers due to security issues,” Jeffries analysts wrote in a research note. ” We think Amazon would be unlikely to want so much enterprise exposure, that Google is set after the MMI [Motorola Mobility] acquisition, and that Microsoft will wait to see how Windows 8 does before making a bid for RIMM.”
RIM has plenty other of things to focus on besides a sale. One of its focuses, CIBC analysts said, is to lower operating costs by $1 billion. The company also has shown the door to some high-level executives while it works to bring in fresh blood.
I recognize that these are difficult times for our shareholders and its likely that the next few quarters will continue to be challenging for our business,” Heins said.
However, Heins identified a number of core strengths at RIM, including its peer-to-peer network, growing customer base, relationships with carriers and the operating system that will form the basis for its BlackBerry 10 platform.
“Thorstein Heins deserves credit for doing what his predecessors could not — being candid about the challenges the company faces,” Deutsche Bank Securities analysts wrote in a research note. “Unfortunately, what is left at the company may not be enough alone to overcome their competitive challenges.”
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October 15 2018 @ 20:26:22 UTC