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Challenges for RIM's CEO

Posted: 27 Jan 2012 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone market? BB 10 OS? Blackberry?

When Mike Lazaridis and Jim Balsillie, co-chief executives of Research In Motion Ltd (RIM) stepped down after 19 years of leading the company together, the company named chief operating officer Thorsten Heins president and CEO. The resignation of the co-chief executives come after months of steady market loss and pressure from investors to change the leaders of the struggling Blackberry firm.

Lazaridis has become vice chair of RIM's board and head of the board's newly developed Innovation Committee. As vice chair, he will work closely with Heins to offer strategic counsel and provide smooth transition for the Blackberry brand. Balsillie, on the other hand, will continue to be a member of the company's board.

"There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership. Jim and I went to the Board and told them that we thought that time was now. With BlackBerry 7 now out, PlayBook 2.0 shipping in February and BlackBerry 10 expected to ship later this year, the company is entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond. Jim, the Board and I all agreed that leader should be Thorsten Heins," Lazaridis said.

Heins is confident of the company's tremendous potential.

"Mike and Jim took a bold step 18 months ago when RIM purchased QNX to shepherd the transformation of the BlackBerry platform for the next decade," Heins said. "We are more confident than ever that was the right path. It is Mike and Jim's continued unwillingness to sacrifice long-term value for short-term gain which has made RIM the great company that it is today. I share that philosophy and am very excited about the company's future."

However, RIM's new CEO may give the company a boost, but not enough to stop continued market share loss, according to a Wall Street analyst.

"While the change in management might reinvigorate the employee base, improve execution or even increase interest from potential acquirers, we maintain our belief the new BB 10 OS will not stem on-going market share losses to Android and iOS," said Michael Walkley, a technology analyst at Canaccord Genuity.

Walkley maintained his firm's "hold" rating on RIM's stock. "With competing OEMs introducing high-end smartphone products on more established software ecosystems and low-cost Android products pressuring RIM's international sales, we believe sales and earnings will decline," Walkley said.

RIM slipped to No. 4 in the world in smartphone sales last year, trailing Apple Inc., Nokia Inc. and Samsung Electronics Co. Ltd, according to market research firm IHS iSuppli. RIM's share of the U.S. smartphone market slipped to about 9 percent in the third quarter of last year from nearly 50 percent two years earlier, thanks to stiff competition from Apple's iPhone and smartphones that run Android, according to the market research firm Canalys.

RIM shipment share

Source: Strategy Analytics

Jack Gold, an analyst with J. Gold Associates LLC, echoed Walkley's sentiments, saying the management change in and of itself would not turn the tide in RIM's favor. RIM also must get BlackBerry OS 10 out as quickly as possible, while also making sure that the operating system performs well, he added.

But Gold said he does believe RIM can recover some market share if the company can deliver the new operating system and the PlayBook 2 media tablet in relatively short order. He said he hopes Heins can accelerate the schedule. .

"We do have to remember that BlackBerry is not doing badly in many parts of the world, and the company is still making money, so we have to realize they are not falling into obscurity," Gold said. "So they do have a little time. But obviously, the longer they take for a turn around the more market share they will lose in the U.S.

Gold said RIM also needs to get more aggressive in marketing. He said he believes BlackBerry OS 10 will offer some very compelling features, but the critical test will be execution and how well RIM can get the message out to customers.

- with inputs by Dylan McGrath
??EE Times

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