RIM Delays Next-Gen Phones As Sales Crumble; May Partner With Microsoft - HotHardware
RIM Delays Next-Gen Phones As Sales Crumble; May Partner With Microsoft

RIM Delays Next-Gen Phones As Sales Crumble; May Partner With Microsoft

How much trouble is Research in Motion (RIM) in? Enough that the company is reportedly considering previously unacceptable options like spinning off the handset business, or partnering with Microsoft. The company's quarterly results, reported yesterday, were disastrous. Revenue tumbled by a third from Q4 2012 levels and the company's gross margin fell 11 percentage points. Worst of all, CEO Thorsten Heins revealed that RIM's next-generation devices and the new BlackBerry 10 OS have both been delayed until Q1 2013.

"Based on the current status of the software integration, it has become clear that the schedule we were working towards, which would have the first BlackBerry 10 smartphones in market this calendar year, is no longer realistic," Thorsten said. "We now expect the first BlackBerry 10 commercial launches to occur in the first quarter of calendar 2013 on a global scale."

According to Reuters, the situation has decayed to the point that last-ditch alternatives to save <em>something</em> are now under consideration. RIM's stock has fallen 70% in the past year and has fallen more than 95% since the company's high-water mark in 2008. Steve Ballmer has reportedly been in talks with RIM concerning a Nokia-style partnership, but the BlackBerry board is loathe to give up its independence. Building a business around the BlackBerry Messenger (BBM) software service and licensing that IP to other handset manufacturers is another possibility, but that would mean dumping its hardware assets.



The idea that RIM would follow Nokia's cough-success-coughcoughcough underscores just how small the company's chances of surviving as an independent entity are. According to StatCounter, RIM's share of the OS market continues to slump quarter after quarter, despite the fact that the company's total number of customers worldwide continues to grow. Some analysts believe there are only three possible outcomes at this point. "They either sell, break up the company or die,” said Matt Thornton, an analyst at Avian Securities LLC in Boston who has a neutral rating on RIM. “It is just a question of when.”


The new touch-based Blackberry 10

By the time BB10 is ready, RIM will be facing off against Microsoft's Windows Phone 8, a new rush of tablets based on Windows 8, an entrenched Android built around 4.0/4.1 (ICS and JB respectively), and iOS 6. Margins slumped this quarter because the company was forced to slash prices on existing products and compete aggressively on price at the bottom of the market. The problem with that strategy is that's it's not sustainable over the long term. Microsoft could afford to let Windows Phone 7 bumble along with minimal market share as it designed Windows Phone 8 and built up a stockpile of apps for its App Store. RIM has no such luxury. The problem with waiting until Q1 to launch BlackBerry 10 is that the company still has to carry the phone through an initial slow period where few apps are available and device bugs are still being worked out.

There's no evidence that RIM has the cash reserves to build the OS over a year or more -- and therefore, virtually no chance that the company will survive as an independent entity.


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"May Partner With Microsoft": RIM really needs to rethink that.

There's an old saying that goes something like " A Microsoft Partner Is Just Someone They Haven't Gotten Around To Killing Yet ". Ask Nokia or Yahoo how their partnership worked for them. If RIM wants to hand Microsoft all their remaining customers on a silver platter, get gutted, and be totally irrelevant in five years - full speed ahead.

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