Wednesday, September 21, 2011

How To Save RIM

Last week was brutal for RIM . After announcing dismal quarterly results - profit down nearly 60%, revenues down 10% and PlayBook sales less than half of what was expected - the markets decided to punish them with a 20% drop in stock price.

RIM is going through a tough time right now. Like many other tech companies (for example, Apple in the 90s), years of neglect and complacency have led the technical foundations of the company to stagnate, ultimately affecting their ability to put out great products. Fortunately, it is still too early to write RIM off completely. Despite their troubles, they are still profitable, they have recognized their weaknesses and have acquired QNX and TAT to try and address them and perhaps most importantly, they command huge mind- and market share amongst young people. Should they be successful through this transition, they'll be one of the few companies competing in the mobile computing and communications market - a market which is likely to encompass nearly every person on the planet by the end of this decade.

One weakness they have not addressed however, is the lack of leadership at the top. Although it's understandable that RIM (like nearly everyone else) was caught off-guard by the iPhone's introduction in 2007, their inability to correctly asses the threat and create a competitive product over the last 4 years isn't. What they need then is someone with a wealth of experience in the consumer market and a keen eye for both hardware and software design - Jon Rubinstein.

Jon Rubinstein has one of the most impressive resumes in the tech world. After working with Steve Jobs at NeXT building their workstations, he was asked by Jobs to join him at Apple in 1997 and take over hardware engineering. Under Jobs' direction, Rubinstein was tasked with creating the iPod, which he did on an extremely tight schedule. After 10 years of numerous successes at Apple, Rubinstein left to become CEO of Palm.

In 2007, Palm was bleeding money, market share and talent and everyone expected them to go into bankruptcy soon. Nevertheless, Rubinstein managed to introduce the new Pre and WebOS - one of the most innovative and well-designed operating systems out there. Despite lacking the scale to become a major player, WebOS heavily influenced both Android Honeycomb and the PlayBook's OS.

I can't imagine Jon doing very well these days though. After HP acquired Palm with the intent of becoming a major player in the consumer space, a scandal and a change of CEOs led to a radical change of direction towards HP being an enterprise cloud provider with no interest in the consumer market. The cancellation of the TouchPad, Pre and the uncertain future of webOS imply that Jon has little, if any, future with HP.

This then, is a match made in heaven - RIM's still-solid position combined with Rubinstein's wealth of experience will increase RIM's chances of making through this transition and remaining a major player.  How likely is this to happen? Given the entrenched positions of both RIM CEOs, I think things will have to get much worse before major shareholders try and replace them. A shame then, given the current possibilities.

1 comment:

Adam said...

Could not agree more.