Blackberry manufacturer, RIM, presented their second quarter results this week. It was not a pretty story, year on year profits dropped from $797m down to $329m. The Playbook has failed to meet anyones (except maybe Apples) expectations with only circa 200,000 shipped in a last quarter. Compared to the iPad launch with 1m units shipped a month the Playbook is a big disappointment. The company did ship 10m smartphones, which must not be ignored, but the trend is a scary downhill.
In July RIM cut 2,000 jobs which is around 10% of its workforce, this cost cutting has also contributed to this quarters profits through cost cutting. The outlook for RIM is poor and their stock dopped 10%.
The question on my mind is how did this happen? RIM were the leader of the smartphone and introduced the first portable email device. The company was built on innovation and named around it - Research In Motion. However the research appears to have halted in favour to maximize the then cash cow.
Observing from the outside, I believe RIM have falled for the biggest mistake in the book. They were a market leader who became arrogant. They appeared to focus on widening consumer reach to increase profits with cheaper budget version of their devices and lost touch with the direction the early adopter consumers were going. It looks like three years of being out of touch while Apple and Google romped all over the world with innovative desirable devices has left them wondering what on earth happened.
It appears as if the mistake stems from the love CTOs and IT Directors worldwide had for Blackberry Enterprise. BB Enterprise answers all the policy problems faced by IT, no wonder they buy it. But the unforseen challenge was the power shift when it comes to the mobile device in big firms. It is no longer the CTO / IT Director who gets to choose. The fellow board members want an iPhone or a Droid. The Sales team want an iPhone to integrate with Sale Force, the marketing department are delivering hard revenue through the companies iPhone app and need iPhones. And as with every group of people as soon as one person is allowed the new shiny toy, the corporate 'me-to' affect kicks in. The CTO or IT Director no longer has the power, the business has a need for Droid or iPhone. The policy problems are of no interest to anyone else in the organisation. This power shift in mobile acquisition has left RIM without the forecasted sales and safe position it believed it had. And now its devices are being compared like for like with the rest of the market. Oh dear.
Watching RIM is similar to watching a smart intelligent pupil in a classroom fail exams because their attention was on girls and staying out late. They have the smart talent, they have the experience, they even have all the right connections, but I believe they are missing the culture.
Can they turn this around?
That is only a question the board and executive team can answer. To do so they need to let go of their past and recognise the mobile industry has moved on. The new QNX OS held promise but there is a long way to go and the current early performance of QNX is not filling me with confidence.
In a similar fashion to Microsoft and Nokia the development lifecycle is simply too slow. Google and Apple revise and improve in a very agile manner compared to the traditional mobile manufactures. If RIM are to turn things around they must become agile.