Complete restructure and an extraordinary makeover. That’s what analysts said to Research In Motion, a company that’s losing market share with its smartphone portfolio to Apple’s iPhone and Google’s Android technology. RBC analysts said that the company needs to modernize its organization by splitting the company into two separate businesses: Blackberry Network and RIM Smart Devices.
“Each business can pursue independent growth strategies and may unlock up to 75-100 percent more shareholder value,” RBC analysts Mike Abramsky and Paul Treiber advised investors.
“Recent mis-execution exposes RIM’s challenges of switching platforms and transitioning to a consumer technology company,” Abramsky and Treiber observed. ”Splitting RIM’s two distinct businesses — BlackBerry [Network] and RIM Smart Devices — may allow each to more quickly expand and innovate, would separate each business from different market forces, and could make each more attractive to potential acquirers,” they wrote in an investor note.
In June, RIM’s market shares dropped to 25.7 percent from 30.4 percent from the previous quarter, while Android’s share jumped to 38.1 percent from 33 percent, and Apple’s share moved up to 26.6 percent from 25.2 percent.
Facing a tremendous amount of pressure, RIM announced its upcoming product line, which includes seven new Blackberry smartphones aimed will help to reverse its market decline, and build some positive reports for its prospects. The new devices will run the Blackberry 7 OS, which is not an extreme upgrade from its previous operating system version, and will still need to compete with Apple’s iOS 5, the ever-evolving Google Android and even Microsoft’s Windows phone. “We’re going to come out ahead,” co-CEO Mike Lazaridis told investors during a July 12 annual meeting.
RIM’s playbook tablet has received several negative reviews from the experts, further damaging the company’s outlook as far as its mobile market position goes. Reports note that the device sold 500,000 units in its first quarter of release, but on a blog posted by Boy Genius Report dated July 13 features an unnamed RIM employee insisting the company didn’t sell those at full margin. RIM’s PlayBook hasn’t exactly proven to be an iPad killer.
Moreover, RIM is reportedly going into the home entertainment business with a rumored set-top box in the works intended to rival Apple TV. According to reports, RIM is developing a Blackberry OS-based media box that is similar to Apple’s set-top box, dubbed as the “BlackBerry Cyclone.” Its expected features include HDMI, Wi-Fi connectivity and access to Netflix and YouTube.
During RIM’s earnings call last June, RIM’s co-CEO Jim Balsillie suggested that it would lay off employees, and will start its “streamlining of operations” to make the company more efficient. Balsillie also defended the co-CEO arrangement, claiming that he and Lazaridis had been partners for nearly 20 years and that, of the challenges facing RIM today, “few companies would have been able to survive, but we have.”