June 1, 2012

BlackBerry’s Bleak Outlook

Peter Suciu for

This week BlackBerry was named the “Coolest Brand Overall” for the second time in the Sunday Times Generation Next 2012 Brand Survey Awards, which were held this week in Johannesburg, South Africa.

The BlackBerry smartphone has reportedly become an “indispensable social tool and lifestyle device for active, connected young South Africans.”

On the other side of the world BlackBerry is reportedly worth just one percent of Apple´s market capitalization. The Canadian technology company Research in Motion, the maker of the BlackBerry, remains in a downward tailspin and may have to seek a buyer to survive.

On Wednesday the company´s stock hit its lowest level since 2003, the same year that RIM transitioned from making two-way email pagers to smartphones. The stock has now fallen 93 percent since its 2008 peak. That was back when BlackBerry was still a dominant player where business users constantly looked at their devices — earning the handset the moniker “CrackBerry.”

Flashback to 2007 with Apple´s arrival on the scene with the iPhone followed by the Android invasion that began in the fall of 2008 singled a quantum shift in the smartphone arena. RIM has reported a 25 percent revenue decline in the latest fiscal quarter. On Tuesday the company warned that it would lay off a “significant” number of employees.

While numbers were not mentioned specifically analysts speculate the number could be between 6,500 and 16,500 jobs in total.

However, the firm remains committed to customers.

“RIM is in regular communication with our corporate customers to share updates and to keep them apprised of our ongoing efforts to refocus the company and to continue meeting their needs,” the company said in a statement to Reuters.”As such, we have noticed no measurable increase in the number of questions or concerns following (the) update.”

This week the company also announced that it had hired deal-making banks from JPMorgan Chase and the Royal Bank of Canada to help it provide a solid review of the company´s business.

RIM could face going down the same path as rival Palm, the company behind the once popular Palm Pilot. In 2010 the company was bought by HP.

The shift in RIM´s business comes as Apple and Android have chipped away at its market. Just half a decade ago many IT departments still maintained control over what device employees hand in their pockets. But with the arrival of the iPhone and Android handsets many companies have opened what handset their employees are using.

Reuters noted this week that General Electric Co noted that one-third of the mobile devices it provides to employees are iPhones. Other large corporations have also made the shift, with major brands including Cisco Systems Inc., FedEx Corp and Amgen Inc providing alternatives to the once dominant “CrackBerry.”

Even the United States Department of Defense, which is one of RIM´s biggest corporate customers, has stayed mum on RIM´s strategic review and has refrained from discussing contingency plans.

Back in South Africa this week Lanie Visser, marketing director for South Africa at RIM, stated, “We are delighted that South Africa´s youth has chosen BlackBerry as their smartphone of choice and as South Africa´s coolest youth brand for the second time.”

South Africa is also home to the Cape of Good Hope, and it may take a lot of hope for good things to save RIM.