RIM’s decision to pull out of the consumer market may have taken many by surprise, but when you look at the company’s performance over the past couple of years, its really no great shock. Over that period, the dominance of iOS, and rise to prominence of Android, has been mirrored by a sharp reverse in RIM’s fortunes, slowed only by the unexpected – and, from RIM’s perspective, unplanned – obsession among teenagers with its BBM platform.
After a couple of months in office, new CEO Thorsten Heins has had enough time to take a cold, hard, dispassionate look at the company, and realised what many have been saying for a long time: it’s in a very bad place. This recognition itself should perhaps be seen as a major step forward.
After all, only a few weeks ago at Mobile World Congress, Rory O’ Neill, RIMs VP, regional marketing EMEA, told Mobile Marketing that the company was actually in rude health. 2011 was “an unbelievably good year” for the company, according to ONeill, as it drew in 20m new customers, and revenues increased 57 per cent year-on-year.
Glory days
The cold facts are these – two years ago, RIM was the undisputed smartphone leader in the US. A May 2010 mobiLens report showed RIM ahead of Apple, taking a 41.7 per cent market share. Back then, of course, Android was still a relatively minor player – the report shows it in fourth place, with a meagre 13 per cent market share.
Nine months ago, RIM revealed figures which fell short of its profit forecast, causing shares prices to drop sharply, and saw the manufacturer cutting headcount by 10 per cent. It was then that a need to “streamline operations” was first mentioned.
In the latest mobiLens report, RIM held third place, behind Apple and Android, with 15.2 per cent of market share, and continuing to fall.
Today, RIM has reported a net loss of $125m (£78m) for Q4, 2011 – compared with a profit of $934m a year earlier. Total revenue fell 19 per cent from Q3, 2011, and 25 per cent from the year before, to $4.2bn. The number of BlackBerry smartphones shipped was down 21 per cent from Q3, 2011, to 11.1 million in Q4 – less than a third the number of iPhones shipped by Apple.
The times, they are a-changing
Its not a pretty picture – but what has changed in BlackBerrys fortunes over the last two years, to get to this point?
Most obviously, the growth of Android – from that 13 per cent market share in 2010, the OS has grown to encompass 48.6 per cent of the US smartphone market – has done much to stifle RIMs position. 
RIM has also struggled to keep up with wider trends – as the success of apps continues to grow, it remains a weakness of BlackBerry devices. The platform is widely considered to be more difficult to develop for than its competitors, leading to a paucity of apps – and with less users downloading them, there has been little reason for that to change. And BBM – long considered RIMs USP and what attracted that teenage market – has been joined by a range of over-the-top apps, including WhatsApp, which serve the same purpose across platforms.
Perhaps the final nail in the coffin was the three day outage BlackBerry suffered in October 2011, and RIMs consumer-infuriating response, which saw its remaining cachet with the public fall catastrophically.
Victor Basta, director of technology consultancy Magister Advisors, agrees that the company has fell behind the times. “The real issue is fundamentally strategic,” says Basta. “Why should RIM exist when all other smartphone makers are developing better products faster? RIM spends billions on R&D, but consistently delivers me-too products, and is outpaced in a market that demands innovation. RIM has already lost the consumer battle and its main asset is its enterprise customer base, so retrenching to a corporate-only focus makes sense.”
What next?
But will this move really save RIM? BlackBerry was traditionally been seen a businessmans toy, but iOS and Android smartphones – and the iPad especially – have moved into that space with equal success. Meanwhile, RIM is moving away from the teenage market, cutting off a pocket money stream of revenue which might have helped slow its descent over the last year, and which it has recently targeted with BBM Music. Perhaps that isnt the point, however. “Our CEO has gone public to say there will be no change in ownership”, ONeill told us at MWC – a claim that, though made in good faith, now looks somewhat dubious, as CEO Thorsten Heins has stated that the company is open to a buy-out. Speculation has started to build that this is the logical way forward for RIM – and that this move might be a way of redressing the company to make it more attractive to enterprise mobility companies such as SAP and Sybase.
At this stage of proceedings, you have to say that the quicker a sale can be achieved, the better it looks for RIM’s shareholders, because with each passing day, the long-term prognosis for the firm only looks bleaker.
Update:
RIM issued a statement this afternoon that said: “The claim that RIM has said it will withdraw from the consumer market is wholly misleading.” For more on this, click here.
