Disappointing Q1 2013 for RIM! BB10 is Their Last Chance!
The picture for Research In Motion Ltd. is not very bright at the moment and there are small possibilities for it to be brighter ever again. The earnings from the last quarter are disappointing, the stocks are dropping, there are and will be substantial employee cuts and even rumors for acquisition have come up in the news. Despite that fact the guys from Waterloo are really not going to give up without fight – they have pinned their faith on their last hope – The BB10. But how bad the things really are and what actually made everything happen this way.
Less revenue, cutting employee positions, market share literally evaporating and even rumors for acquisition!
The results from the Q1 2013 fiscal year have been announced and the charts and numbers are exceedingly going down for RIM. They have reported $2.8 billion revenue which is $300k less than the predicted from analysts and $1.4 billion than the revenue from Q4 2012. Furthermore sales are also dropping – in Q1 2013 7.8 million BlackBerrys and 260k BlackBerry Playbooks were sold while in the previous quarter the numbers were much higher – 11 million BlackBerrys and twice more tablets – 500k BlackBerry Playbooks. And it is like the lower numbers weren’t hurting enough – what added more salt in the wound were the rumors about tearing the company apart and then consuming what is “edible”. I am particularly talking about the informal approach made by IBM towards RIM, reported by Bloomberg a few days ago. According to the announcement International Business Machines Corp. are intending to invest in the core part of the RIM business – security servers that support BlackBerry devices and we all know that separating the software from hardware might be fatal for the company. Staff reduction, masked as life-saving measurement that is going to increase the efficiency, is just the next hole in the once-mobile titan from which blood leaks (of course the BB10 department won’t be affected). 5 000 people are planned to be given the sack in the next quarter which is supposed to save $1 billion. This means that after the changes RIM is expected to employ 9 000 workers which is quite insignificant compared to the 20 000 which were once in action.
What made RIM hit the bottom?
The key factor that RIM literally missed or simply neglected was “to innovate”. Let’s turn the reel a little bit back when the iPhone was announced. At that time RIM and the BlackBerrys were big and popular on the mobile market and their main users were from the business class. They perceived the freshly announced keyboardless device of Apple as a joke that won’t have almost any success and that is why they didn’t take any actions into developing a competitor. WRONG with capital letters because the iPhone turned out to be the most profitable product for Apple Inc. Despite that RIM still didn’t want to abandon the physical buttons from their design because the BlackBerry is a business device that is text and email-orientated. After all the major providers like AT&T, Verizon and Vodafone have asked whether RIM will make a touch-screen rival of the iPhone, the slider BlackBerry Torch 9800 was released. It is basically a hybrid – small capacitive touch screen and a physical keyboard which was expected to return the glory of RIM, or what had left from it, but instead things got even worse and users got even more negative against RIM and their product line.
BB10 and what are the prospects of RIM to survive?
BlackBerry 10 might be RIM’s panacea but the users are already getting nervous and skeptical after the two delays – currently the new device is said to be announced in the early 2013. On the other hand these delays can be easily attributed to two simple facts – lack of funds, as I have spotted in the first paragraph, and what is more probable – RIM are actually giving their best about BB10 and the developers have to do everything perfectly, because it is the baby that have to act as a lifesaving injection for its dying parents. Some define the refusal of RIM to proceed the things with IBM as bold and risky but obviously Thorsten Heins has decided to put everything at a stake. If BlackBerry 10 succeeds RIM might have some future but if it fails the vultures will came and from the company only the name will be left. Believe me the chances are not 80/20 for the vultures. BB10 is really said to be a major change for RIM as long as the term “innovations” is concerned. People that are more optimistic have even started to compare RIM with Apple in the late 90s, when they were nearly bankrupt (and would have if it wasn’t for Microsoft). Look where are Apple now – Number 1 on a global scale. Who knows, RIM might get out of the hole in which they are now. After all experts were considering them and Microsoft to be competing for the third place on the mobile market, not to die.