Research In Motion: Managing Explosive Growth
Research In Motion Ltd. (RIM)
* RIM was a world leader in the mobile communications market. RIM designed, manufactured, and marketed the very popular line of BlackBerry products that had recently reached 14 million subscribers worldwide and had just over $6 billion in revenue. * RIM generated revenue through the “complete BlackBerry wireless solution,” which included wireless device, software, and services. Revenues were heavily skewed to handheld sales (73%), followed by service (18%), software (6%) and other revenues (3%). * Just six months after launching Facebook for BlackBerry, downloads of the popular social networking software application had topped one million, indicating that younger consumers were gravitating toward the popular handhelds. * RIM had over 270 carrier partnerships in more than 110 countries around the world. Therefore, expanding the global reach of BlackBerry solutions was a fundamental part of RIM’s strategy. * In 2007, 57.9% of RIM’s revenues were derived from the U.S., 7.3% from Canada and the remaining 34.8% from other countries.
The Wireless Communications Market and Smartphones
* A shift in the telecommunication industry was moving demand beyond just cellphones to smartphones. * In 2007, key competitors to RIM’s BlackBerry lineup included the Palm Treo 700 and 750, Sony Ericsson P900 series, the Nokia E62, Motorola Q, and the Apple iPhone. * The number of wireless subscriber connections worldwide had reached 3 billion by the end of 2007. Chine led with over 524 million subscribers, followed by the United States at 254 million, and India with 237 million. * Worldwide demand for wireless handhelds had been fueled by several global trends. Coupled with the growth of IM as both a business and personal communications tool, the demand for wireless handhelds and smartphones was robust.
* Symbian, a proprietary OS designed for mobile devices jointly owned by Nokia, Ericsson, Sony Ericsson, Panasonic, Siemens AG, and Samsung, held an estimated 65% worldwide share of the converged devices shipping 77.3 million smarphones in 2007 (up 50% from 2006). This was significantly ahead of Microsoft’s Windows Mobile OS (12%) and RIM’s BlackBerry OS (11%). * However, in North America, RIM led with 42% of shipments, ahead of Apple (27%), Microsoft (21%) and Palm (less than 9% and shrinking).
R&D at RIM
* R&D and engineering were the heart and soul of RIM.
* R&D had increased significantly both in terms of the total number of employees as well as the geographic scope of its operations. * However, the exponential growth in sales, competition, and industry changes was placing tremendous pressure on the R&D teams at the Canadian HQ. * Similar to other players in the telecommunications industry, it was RIM’s policy to maintain its R&D spending as a consistent percentage of total sales. * R&D expenses were seen as a proxy for new product or service development and therefore used as a key indicator of future revenue potential.
Organizational Development for R&D at RIM
* The culture at RIM HQ was seen as one of its differentiators and was s key factor in RIM’s low employee turnover rate. RIM’s R&D department is flexible, adaptable, and able to work collaboratively and collegially. * Maintaining its unique culture was a priority for RIM. Remaining centered in Waterloo nurtured this ability. But it was becoming clear that growing mostly in Waterloo was going to become increasingly difficult. * Attracting outside talent to Waterloo was difficult given the competitive nature of the global software development industry. * In software, breakthrough innovations often came from small teams led by a visionary. And in the dynamic wireless communications market, exceptional software developers were scarce.
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