While analysts and investors have long been calling for change at the top of embattled BlackBerry manufacturer Research in Motion (TSX: RIM), when change came Sunday evening the markets didn’t react positively.
The Waterloo, Ont.-based company’s stock fell by 9.11 per cent on the TSX Monday, closing at $15.67, down $1.57. It was the first day of trading following the announcement that co-founders and co-chief executives Jim Balsillie and Mike Lazaridis were resigning their executive positions, with RIM insider and former Seimens executive Thorsten Heins taking their place as president and CEO.
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Analysts have long been calling for an executive shake-up at RIM, which has struggled to grow beyond its enterprise base and compete with Apple and Android in the lucrative consumer smartphone market, and has suffered from a number of embarrassing delays bringing competitive new products, particularly smartphones based on its new QNX-based OS, to market.
RIM needed to shake things up and eliminate the co-CEOs and it’s done that. On the surface, that’s a good thing, said Mark Tauschek, a lead research analyst with London, Ont.-based Info-Tech Research Group. But he said the market didn’t react positively for a number of reasons.
“They waited too long. They should probably have done this six months ago,” said Tauschek. “(And) they’ve done it with what for most is an unknown quantity (Heins).”While Heins may be a known quantity within RIM, proving himself a capable technical and product manager to the company’s board, Tauschek said for most people, Sunday evening was the first time they’d ever heard of Heins.
While he did like what Heins had to say about innovation, Tauschek said the message of stay the course and no big changes that Heins preached as he made the media rounds Monday wasn’t what the market wanted to hear.
“It seems like it’s an insider promotion with a focus on what they’ve been doing well, and just a need for better execution,” said Tauschek. “That doesn’t win the hearts and minds of investors.”
The appointment of Heins may be a sign RIM will begin to look beyond the major carriers for advice on product development and market positioning. That’s the hope of Tenet Computer Group Inc., a Toronto-based ISV and RIM Select Alliance partner.
“As a multi-talented exec with sales and customer service exposure, (we hope) Heins will be able to recognize the latent value that resides in the channel,” said Tenet president Carlos Paz-Soldan. “As resellers and partners, we can all offer RIM clarified perspectives that might be more valuable, coming from outside of their entrenched, internal company culture. We simply need to see the desire from RIM to reach out to us, and encourage an open channel for such an exchange.”
As a long-time RIM partner, despite the company’s ups and downs Paz-Soldan said Tenet continues to see product advantages and development opportunities in working with RIM. What he’d like to see though is RIM recognize the value partners have by having its ears to the ground with customers, and instead of just supporting channel sales efforts, also developing partners as a market feedback mechanism.
“RIM should be able to start seeing the market as a much larger ecosystem, with a multitude of devices and operating systems, each with their own strengths and weaknesses that can be leveraged to showcase a RIM-based innovation,” said Paz-Soldan. “At Tenet, we don’t see RIM as being limited by their historic role as a solution for loyal corporate or government end-users; instead we see that heritage as brand value that can be built upon in a larger market for handheld devices and applications.”
If RIM is to move forward successfully, Paz-Soldan said it must open itself to new voices and new perspectives.
“Tenet remains open and available to provide RIM with all sorts of insights, opinions and perspectives that can help RIM to perceive itself more clearly in the market,” said Paz-Soldan. “Feedback that RIM might have otherwise been too institutionally sheltered from, as a result of communications channels that are filled with RIM devotees and vested-insiders.
The question remains though what future direction RIM wants to take. Info-Tech’s Tauschek speculates the board may just be positioning the company to either sell or widely license its intellectual property. But if RIM does want to be a force in the market again, he said they need to drive a new level of innovation, a level of innovation the current corporate culture may not be able to foster. The new OS won’t be enough.
Tauschek said he doesn’t have the answers, but he’d like to see something like the BlackBerry Watch get a second look, or new form factor devices using flexible OLED displays.
“They need some really cool, attention-getting things,” said Tauschek. “They need to move beyond what they are today.”
Follow Jeff Jedras on Twitter: @JeffJedrasCDN.
