“Substantial change is what RIM needs,” said CEO Thorsten Heins while addressing shareholders and analysts to announce the BlackBerry manufacturer’s fiscal year 2012 earnings. RIM posted a loss of $125 million on a revenue of $4.2 billion (down 19 percent from Q3) and saw its smartphone sales dropping a whopping 21 percent from the preceding quarter to 11.1 million units. RIM also announced its former Co-CEO Jim Balsillie, CTO David Yach and COO Jim Rowan would be leaving the company. Also Read - Outgoing BlackBerry CEO Thorsten Heins "will keep cheering from the sidelines"
Just 10 weeks after stepping into the CEO position, Heins has been more forthcoming in accepting the problems plaguing the company and is willing to do something about it, a departure from his former bosses and Co-CEOs, who founded the company. “We are undertaking a comprehensive review of strategic opportunities including partnerships and joint ventures,
licensing, and other ways to leverage RIM’s assets and maximize value for our stakeholders,” he said during the call. Also Read - Who is BlackBerry's interim-CEO, John S Chen?
Apart from sweeping changes at the top management, Heins is also convinced RIM should focus on its core user base – enterprises – rather than focusing on consumers. “We plan to refocus on enterprise. We believe BlackBerry cannot succeed by being everybody’s darling and all things to all people,” he announced. “It became clear to me that it would be extremely difficult for RIM to develop this initiative (consumer VAS) into a profitable value added services business at this time. With the heavy ongoing investment required to run this initiative does not make sense in RIM’s current position and marketing strength,” he added. Also Read - BlackBerry's Fairfax deal dead, CEO Heins out
RIM has 77 million BlackBerry customers globally but its market share is decreasing in the US and Europe. Most of its growth is coming from emerging countries with predominant prepaid market and more sales of entry-level Curve series offering than its higher-end Bold series. RIM has sold 40 million units of the Curve series and is going to launch new models in that series in coming weeks.
The absence of a popular all-touch product as well as LTE-enabled smartphones means RIM has no chance of gaining (or even maintaining) its market share in the US and other major markets till devices running on its new BlackBerry 10 OS are available towards the end of the year. RIM’s BlackBerry 7 smartphones did not sell well in these markets and the company lost $267 million on inventory provisions on these products. This is in addition to the $54 million hit RIM took as a result of a global service outage last year and $485 million on account of unsold PlayBook inventory.
Things look bleak for RIM this year as its average selling price will keep dropping as it will have a higher mix of entry-level products where it will also face greater competition and pricing wars. The company is entering what could be a fatal spiral, especially if there are any further delays in the introduction of BlackBerry 10 smartphones.