“RIM’s woebegone story is the stuff of science-fiction epic. A technology juggernaut that emerged from a sleepy Canadian backwater, RIM came to dominate the smartphone industry in a few years. Its BlackBerry managed to become an indispensable tool of the global elite in Davos and Washington D.C. as well as a status symbol to tweens shopping Tokyo’s Ginza and San Francisco hipsters alike. Just three years ago, Fortune named RIM the world’s fastest growing company, as it expanded profits at a monster rate of 84%. But after months of increasingly dire struggle, RIM announced this week that it had engaged JPMorgan (JPM) and RBC Capital to “review” its strategic options, all but confirming that the end of RIM as we know it is finally at hand. The behemoth appears to be wasting away at time-lapse speed. What happened?”
MICHAL LEV-RAM Fortune (May 30, 2012)
Even as corporate meltdowns go, this one is pretty spectacular.
A year ago I wrote on this page predicting trouble ahead for RIM, the Canadian company behind the iconic BlackBerry phone. At the beginning of 2012, I doubted that the company would see out this year in its present form.
That turned out to be optimistic. RIM has just announced that is it asking investment bankers to consider its “strategic options.” The end is nigh, as Michal Lev-Ram pointed out in Fortune last week. Charles Arthur in The Guardian was even more scathing: “Here’s what I think: RIM is heading for the breakers’ yard, as surely as a ship that has reached the end of its life.”
Analysts are outdoing themselves in their attempts to describe the RIM downfall. One even used two metaphors simultaneously: “This is a train that’s left the station;” and “you just can’t put that genie back in the bottle.”
Overheated hyperbole aside, the facts are clear. RIM is now trading at 10% of its peak share value; it is valued at a hundredth the market capitalization of Apple. After the latest gloomy announcement, trading in its shares had to be halted. Some estimate that only one in every ten new BlackBerries sold actually goes to a new customer.
“What the hell happened?” is a legitimate question for students of business to ask here. After all, BlackBerry has been one of the most successful products in history. As the excerpt reveals, RIM was the world’s fastest growing company just 3 years ago. It was the darling of the world’s CIOs, who placed big orders on behalf of their organizations because they loved the control features BlackBerries gave them: email encryption; website blocking; remote wiping of stolen devices. So what went wrong?
In 2007, Apple’s iPhone arrived. RIM immediately dismissed it as an overpriced toy, gimmicky and having no appeal for the enterprise market. It was followed rapidly by a slew of devices using Google’s new Android mobile operating system. These also began selling rapidly. But RIM was unmoved.
Mobile applications started taking off in 2009, with Apple and Google opening online “app” stores. Suddenly, the smartphone became a multifaceted, powerful mobile computing device – not just a phone with email. Consumers – including enterprise consumers – began demanding the slick new interfaces. CIOs lost procurement power. Still RIM did nothing.
Finally tablet computers appeared, with Apple’s iPad taking an early lead. Now RIM did react – disastrously. It tried to do a belated me-too, introducing a flawed Playbook that sank like a stone. A year after that experiment, it may be too late. It is hard to see what RIM will do next, save for selling the underlying assets. Mr Arthur put it bluntly: “It doesn’t have any rabbits. It barely has a hat.”
In short, RIM’s leaders had multiple opportunities to spot upheavals in their markets. They looked away smugly every time. Their fame now will be as a business-school case study, for the wrong reasons.