July 11, 2012

BlackBerry 10 Holds Key To RIM Turnaround

redOrbit Staff & Wire Reports - Your Universe Online

Research in Motion Ltd.´s new chief executive acknowledged his company´s challenges on Tuesday, but said the next-generation of BlackBerry devices would reverse RIM´s direction and revitalize its future prospects.

Speaking in Waterloo, Ontario, at his first shareholder meeting since replacing longtime CEOs Mike Lazaridis and Jim Balsillie in January, Thorsten Heins said RIM has spent the past several months reorganizing its operations and working "around the clock” to launch its BlackBerry 10 devices early next year.

RIM announced disappointing financial results less than two weeks ago, along with plans to reduce its workforce by 30%. During Tuesday´s meeting, Heins said the company would likely book another operating loss in the current quarter amid pressure on the sales price of its older BlackBerry models.

"I want to assure you that I am not satisfied with the performance of the company over the past year," Heins said.

But beyond his faith in the next generation devices — which are already months behind schedule — Heins offered shareholders little else about which to be hopeful.

"We understand shareholder support is not unanimous, and it's a difficult period for our shareholders," Heins said.

The company´s stock, which was already trading at a multi-year low, fell an additional 5% following Heins´ remarks.

The chief executive said RIM would harness its strengths in corporate markets with the Blackberry 10 products, but that it would still "take time to have a meaningful impact on our performance."

RIM has said it plans to reduce costs by cutting its external manufacturing facilities from 10 to three, outsourcing its global repair services and cutting jobs as part of a plan to save some $1 billion this year.

The company is clearly hoping its new Blackberry line will help it better compete with popular rivals such as Apple Inc.´s iPhone and devices running on Google´s Android operating system.

But analysts are skeptical RIM will have enough time to execute an effective turnaround strategy.

Indeed, sales of the BlackBerry smartphones, once the gold standard in corporate environments due to their reputation for security and reliability, fell 41% during the latest quarter, a trend that is likely to continue until the Blackberry 10 devices become available next year.

But consumers will have even more choices by then, including a new iPhone expected this fall and a number of new devices running the latest version of Google's Android software known as ℠Jelly Bean´.

Phones running an overhauled version of Microsoft's Windows operating system are also due out this fall.

The BlackBerry has lost much of its perceived luster as competing devices proved their ability to meet the needs of business customers. The U.S. market share for the Blackberry has plunged from 41% in 2007, when the iPhone´s were launched, to less than 4% in the first quarter of 2012, according to figures from research firm IDC.

However, Frank Boulben, RIM´s new marketing chief, isn´t disheartened, saying the company´s next generation BlackBerrys will include features that current competing devices lack, such as the ability to run multiple programs at once and allowing users to switch between programs without returning to the home screen. The new BlackBerrys will also feature the multimedia, web browsing and apps experience users have come to expect with smartphones.

Better multitasking is one way the new BlackBerry won't become a "me too" product, Boulben told The Associated Press on Monday.

"You'll be able to flow seamlessly from one application to another," he said.

"The underlying operating system is truly multitasking."

But RIM faces challenges in promoting its new features, since the BlackBerrys will still lag behind rivals in terms of games, maps, photo-sharing programs and other apps and tools that extend the device´s functionality and popularity.  Apple and Google each claim more than half a million apps for their respective smartphones. BlackBerry's app store has fewer than 100,000.

But Boulben noted that the smartphone market is still growing, giving RIM an opportunity to pursue the millions of people worldwide who are still without smartphones. Moreover, since U.S. smartphone users replace their device every 18 months, on average, RIM also has a chance to win their business with the new BlackBerrys.

"We won't be present for this year, but next year we will be present in a larger market," he said.

Boulben said RIM has taken a new approach with the Blackberry 10 products, having developed a global marketing strategy rather than using national or regional campaigns that sometimes had conflicting messages.

Such centralizing marketing will also reduce costs, allowing RIM to harness the power of global social-networking services, he said.

Despite RIM´s recent struggles, Heins expressed optimism on Tuesday about the company's future after it launches BlackBerry 10.

"In May, we had BlackBerry World, where we had 5,000 attendees. And we provided a sneak preview of the BlackBerry 10 interface and some camera features and we got some extremely good feedback," he said.

Heins said that quality is more important than rushing the new devices to market, and noted that some wireless carriers prefer a 2013 launch because their latest-generation networks would be more widely operational by then.

Shares of RIM´s stock fell 4.95% during trading on Tuesday, closing at $7.29.

A webcast of the company´s shareholder meeting on Tuesday can be viewed at http://webcast.streamlogics.com/audience/index.asp?eventid=13661920.