Microsoft Looms As White Knight For RIM

Troubled smartphone maker seeks strategic options as BlackBerry 10 delayed until 2013.
How IT Views RIM's Future: Exclusive Research
How IT Views RIM's Future: Exclusive Research
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Execs from Microsoft and RIM met earlier this year to discuss a partnership that would see RIM ditch its Blackberry OS in favor of Redmond's Windows Phone as the main operating system for its smartphones, according to a published report.

Microsoft CEO Steve Ballmer is said to have huddled with RIM executives after former RIM co-chiefs Jim Balsille and Mike Lazaridis left the company in January. Ballmer pitched a plan under which RIM would drop its own OS for Windows Phone, Reuters reported Friday.

The Waterloo, Ontario-based smartphone maker rejected the proposal, preferring instead to go forward with BlackBerry 10, according to the news agency.

But there is said to be renewed pressure on current RIM CEO Thorsten Heins to seek other alternatives in the wake of the company's announcement that BlackBerry 10 would be delayed until 2013. The options include reengaging with Microsoft, adopting Google's Android OS, or abandoning hardware and building a business around its mobile networking operations for corporations.

[ Read Slumping RIM Explores Strategic Options. ]

"They need to get to a strategic decision soon," said Wedbush Securities analyst Scott Sutherland. "Even though it may cause some near-term pain if you separate the business, it might be the best course of action," he said, according to Reuters.

RIM's present troubles represent a big comedown for a company that once dominated the enterprise mobile market, and whose platform was so addictive it was dubbed CrackBerry. The roster of loyal customers who couldn't put down their BlackBerrys even included President Obama.

But RIM's failure to respond to innovations from competitors such as Apple and Google put the company into a spiral from which it has not recovered. A number of observers say Balsille lost focus due to a lengthy legal battle involving his efforts to bring the National Hockey League's Phoenix Coyotes to Ontario.

Even if RIM does team with Microsoft, there's no guarantee that such a move would resurrect the company's fortunes. As of April, Redmond held just 4% of the U.S. smartphone OS market, according to Comscore. RIM itself held 11.6%, down from 15.2% in January. Apple held 31.4%, while market leader Google had 50.8% of the market. Microsoft is hoping the launch of Windows Phone 8, slated for later this year, will boost its numbers.

RIM shares plunged almost 18% in morning trading Friday, to $7.94.

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