Rim Swot Analysis
How management has failed at RIM
By Joe Castaldo | January 19, 2012 Update: On January 22, Research In Motion announced that Mike Lazaridis and Jim Balsillie would step down as co-CEOs and co-chairmen of the board of directors. Lazaridis will now be vice chair of the board, and head up a new innovation committee. Balsillie will become a director. Their replacement as CEO is Thorston Heins, formerly RIM's chief operating officer for products and sales. Barbara Stymiest, who became a director in 2007, will now chair the board. Investors reacted negatively to the news, with RIM shares opening 5% lower on the NASDAQ on January 23. Is it all falling apart? It seems an absurd question to be asking about a company like Research In Motion, Canada’s most successful and influential tech firm. Just how successful it would become was hard to imagine when Mike Lazaridis set up shop in a tiny office above a strip mall in Waterloo, Ont., in 1984. Jim Balsillie joined eight years later, bringing with him the sales and strategy muscle to take RIM’s products to the world. Together, they were unstoppable. They turned RIM into a global powerhouse that delivered mobile e-mail to the masses, sparking a revolution in mobile communication and defining the smartphone as we know it. Under their stewardship, RIM continues to rake in billions in revenue each month and attract new subscribers at a time of fierce competition. But somehow, lately, something’s gone terribly wrong. A deep-rooted dysfunction seems to have overtaken the company. Balsillie and Lazaridis have so badly lost the confidence of the market that investors and analysts no longer seem to care about the billions in revenue or the 35% increase in subscribers over the past year. The highlights of 2011 are almost too painful to mention: the PlayBook, RIM’s first tablet, was a flop; its latest line of BlackBerry smartphones was delayed; weak sales forced the company to issue a profit warning in the spring; its network was hit by a massive service outage in the fall; and it suffered the largest wave of layoffs in its history. Once dominant in the smartphone industry, the company has lost significant ground to the competition: RIM’s chunk of the U.S. market dropped to just 12% by year-end from 44% in 2007, according to research firm Strategy Analytics. Its share price on the Toronto Stock Exchange has fallen even further—losing a full 75% of its value in 2011. What isn’t fully understood is how RIM ended up going from the company that could do no wrong to the company that can’t seem to get anything right. RIM declined to make either Balsillie or Lazaridis available for interviews, but discussions with a number of high-level insiders who left RIM during the past year portray a company that has grown unwieldy and unorganized, and where conflicting opinions and a lack of clear direction compound an already difficult situation.
There’s no question that 2011 was a year to forget, but so far 2012 isn’t looking much better. On a conference call to discuss RIM’s fiscal third-quarter results in December, the co-CEOs revealed that their newest smartphone line, dubbed BlackBerry 10, will not be available until the latter part of the year. That means RIM will have no major new products in the North American market for months, and it is already behind the competition in many respects. Instead, it plans to spend upwards of US$100 million per quarter to market its existing smartphones in the U.S. Balsillie and Lazaridis still enjoy support in some quarters, including from prominent investors such as Fairfax Financial Holdings CEO Prem Watsa. But others are calling for the co-CEOs to break RIM into pieces, sell it off or relinquish control entirely. For the two guys who essentially created the smartphone market and built a multi-billion-dollar company in the process, the calls to step down must seem outlandish. In December, the pair announced they would each take $1 in annual...
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