Balsillie's Secret Plan to Save RIM: Crazy Or Smart? - InformationWeek
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Eric Zeman
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Balsillie's Secret Plan to Save RIM: Crazy Or Smart?

After RIM's board shot down former chief Jim Balsillie's big idea to turn the company around, he quit. Now RIM's survival depends on BlackBerry 10.

Leading up to Research In Motion's leadership change in January, everyone could see that the company needed a major strategic shift—everyone, that is, except the BlackBerry maker's former co-CEOs, Mike Lazaridis and Jim Balsillie. RIM spent much of 2011 floundering from catastrophe to catastrophe, all the while losing market share to rivals Apple and Google.

The two men eventually stepped aside and allowed Thorsten Heins to take the reins at the beginning of the year. The damage, however, was already done. Close to three months into Heins' tenure as chief, it appears RIM is ready to make those changes. But the backstory just got real interesting.

According to sources cited by Reuters, Jim Balsillie pitched a radical idea to the board. He wanted RIM to let North American and European network operators use its proprietary network to offer messaging and social networking services to low-end smartphones, including RIM's popular BlackBerry Messenger. Balsillie's vision was that this would allow carriers to offer smartphones with less expensive data packages attached to them. Volume would make up for the lower cost of the service. The board rejected the idea, and Balsillie resigned as a director as a result.

[ What will the new Blackberry look like? See RIM BlackBerry 10 Image Leaks. ]

Balsillie's idea had merit, but was not without fault.

RIM's hardware business generates the lion's share of the company's revenue. Sales of BlackBerry smartphones are a core part of RIM's business. At last check, about 70% of RIM's revenue came from its smartphone business. Services, on the other hand, accounted for closer to 20% of RIM's revenue, with software sales making up the rest.

BlackBerry Messenger is RIM's defining product. It's a combo text messaging / instant messaging client that lets BlackBerries send messages back and forth without counting against monthly text message limits. RIM has staked a lot of money on the draw this feature has for its smartphone. Earlier this week, in fact, RIM released new versions of Twitter and Facebook for BlackBerries that are directly integrated with its BBM service.

Licensing out the company's one ace in the hole might have added to its services revenue, but damaging BlackBerry sales could offset any gains made in the licensing terms.

RIM's board, instead, decided to pursue the idea of targeting emerging markets with low-end gear for the remainder of 2012 while it scrambles to reboot its BlackBerry business. The company hopes to launch new platform software and new hardware late in the year to better compete with Apple and Google, but by then it might be too late.

RIM already has taken some steps toward playing nice with equipment from other hardware makers. Earlier this month, it made its Mobile Fusion product available to businesses running its BlackBerry Enterprise Server software. Mobile Fusion gives BlackBerry admins within the enterprise limited control over select features of Android smartphones and the iPhone. The free product from RIM means IT can manage a slew of different platforms from the same console.

Even more interesting, Reuters reports that RIM had already packaged up the inexpensive messaging software for Android and iOS. It's ready to go, but RIM is sitting on it for the moment.

Perhaps the most bizarre aspect of this entire saga is that RIM has decided to pursue "dramatic change" after all. In late March, CEO Heins laid bare his plans to bring the company back from the brink of the abyss. Heins said that "all options are on the table." That includes potentially licensing out its BlackBerry 10 platform, divesting portions of the business, and possibly selling off some of its patents. Heins wasn't clear about whether RIM would put itself up for sale. But wouldn't licensing out BlackBerry 10 include licensing out its messaging services?

It would seem not.

Either way, RIM has its work cut out for itself. It has a lot of ground to make up, and the only way it can do so is if BlackBerry 10 is a smash hit.

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User Rank: Apprentice
4/17/2012 | 7:44:20 PM
re: Balsillie's Secret Plan to Save RIM: Crazy Or Smart?
There are a lot of ex-Nokia Symbian Software engineers out there twittling their thumbs since Nokia chose Windows Phone. If Software Engineers (who know Phone concepts) is all RIM needs, I am betting they can get those Nokia folks pretty cheap.
User Rank: Apprentice
4/16/2012 | 7:12:37 PM
re: Balsillie's Secret Plan to Save RIM: Crazy Or Smart?
It's amazing to me that each & every blog or media publication chooses to ignore the "giant" pink-elephant in the room: if RIM could port BBM to other OS's they would have done it a long time ago!!! The reality is that RIM doesn't have the engineers or minds to make this a reality, the proof is in the fact that QNX can't work with "old" BB functions (BBM, BES, BIS). RIM waited an entire year to release a major update for the PlayBook & all the did was fix a lot of the bugs, but NO BBM! Don't expect BBM to be on BB10 devices in Q4. RIM has run out of time, so expect them to talk-up a lot of rhetoric about "change" & "innovation". Meanwhile, RIM really plans to change NOTHING & stick to what's been ruining their company! They have NO strategy to compete with Apple/iOS. They have NO apps or an app-ecosystem to keep their customers around. They have NO strategy to keep developers interested in coding for BB10, since they refuse to design tools or at the very least make it easy for developers to program & design functional/useful apps that customers will have no problem buying. Plus, RIM has NO idea how to play "catch-up" while thinking 5-6 years ahead to how the market will look. This article is another example of how J. Basillie made big statements & had big ideas, but NO follow through & NO real way to accomplish his goals. RIM got too used to stuffing supply-chains, while "fudging" forecasts & quarterly revenue figures. Now that a company like Apple has emerged, that actually sells every product they manufacture, the endless supply BB-models taking up space & collecting dust on inventory shelves has finally caught up to RIM's books. Now they have no way of selling their "crap" to carriers who are more interested selling the latest & greatest devices to eager customers.
User Rank: Apprentice
4/15/2012 | 6:15:22 AM
re: Balsillie's Secret Plan to Save RIM: Crazy Or Smart?
Eric, you should include a voting mechanism like this one:
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