Research In Motion Ltd.’s new chief executive officer says the company is on the right course and does not need a change in strategy, and instead must focus on marketing as the company attempts to revive flagging BlackBerry sales.
Thorsten Heins, who replaced co-CEOs Mike Lazaridis and Jim Balsillie in an extraordinary weekend shakeup, takes over at the most difficult juncture in the company’s long history. Its market share in the United States is collapsing, and the company is battling larger, better-capitalized global players such as Apple Inc. and Samsung Electronics as it tries to maintain its huge growth in emerging markets.
But Mr. Heins, who had been chief operating officer, says everything is in place for the company to grow and succeed in a rapidly-changing smart phone sector in which some critics think RIM has been left behind. The company will immediately set out to hire a chief marketing officer to help repair the BlackBerry’s dented brand, he said, and will not rule out licensing RIM’s new BlackBerry 10 operating system to other handset manufacturers in a bid to find new growth.
He said he remains confident as he steps up as CEO at Canada's most valuable technology company. (Mobile readers can click here to follow our live reaction Monday morning.)
“It’s a fantastic growth story and it’s not coming to an end,” Mr. Heins said. “What you will see with me is rigour and flawless execution.”
The changes, unveiled in a remarkable interview with The Globe and Mail at the company’s sprawling Waterloo headquarters, are part of RIM’s attempt to win back the confidence of consumers and investors after a horrible year. The slump in BlackBerry sales has forced RIM to streamline operations, cutting 2,000 jobs. It is now refocusing its still-vast resources on developing a new line of wireless devices later this year, running a revamped operating system that many think will either save RIM or consign it to high-tech’s history books.
The new operating system is based on technology RIM acquired in 2010 with the purchase of Ottawa-based QNX Software Systems, and is the same technology behind RIM’s PlayBook tablet, which has failed to capture the imagination of consumers.
But in the era of Apple Inc.’s unstoppable iPhone and Google Inc.’s enormously successful global push with its Android operating system, it is unclear whether staying the course at RIM – which effectively invented the smartphone but has lost 75 per cent of its value over the past year – will be enough to turn around the company.
One of the problems for RIM is that customers are increasingly drawn to smart phones because of the software applications they can use on them – but compared to the iPhone and Android phones, there are relatively few apps for the BlackBerry.
Mr. Lazaridis, who founded RIM and along with Mr. Balsillie has been co-CEO for about two decades, said now was the perfect time to complete the leadership transition to Mr. Heins. Mr. Lazaridis said the decision to step back from operational responsibilities was difficult to make after building the company from a start-up to a global franchise that at one point surpassed Royal Bank of Canada in market capitalization. But, he stressed, “The bigger mistake is waiting too long.”
The two former CEOs also relinquished their co-chair positions on the board, with Mr. Lazaridis becoming vice-chair of the board with special duties to examine innovation and Mr. Balsillie becoming a director with no executive responsibilities. Barbara Stymiest, a former senior executive at the Royal Bank who once ran the Toronto Stock Exchange, is the new chair.
But the radical changes at RIM may not be enough to stave off shareholder discontent. When asked whether he thought the appointments of Ms. Stymiest as chair and himself as CEO would be enough to satisfy investors, Mr. Heins retorted that RIM had strong financials, with $1.5-billion in cash, negligible debt and revenues of $5.2-billion in the last quarter
"People ask about change," he said. "We’ve made a lot of changes in the past 18 months. Not changes, but also evolution. I changed a lot of my management team, in hardware, software ... I’ve trained a lot of other people in the last four years. What do you think I did?
“We didn’t stand still in the last 18 months, we did our homework. And I think we will complete our homework soon.”
Mr. Heins, who has helped make the BlackBerry an aspirational brand in high-growth emerging economies, says he is confident in the current line-up of BlackBerry smartphones, the software update that will bring new functionality to the weak-selling PlayBook and the integrated nature of the company. RIM’s business stretches from handsets and easy-to-use messaging services such as BlackBerry Messenger to the powerful, secure servers and technology that have made it the communications company of choice for the world’s most valuable corporations, as well as government agencies.
“I’m happy that we’re not just a handset manufacturer,” Mr. Heins said. “It’s this integrated platform.”
Referring to other handset manufacturers using Android that have seen poor financial results as Google’s Android spreads, Mr. Heins said that it makes sense for the company to continue to develop its own software platform. But he stressed that he would be open to talking with other handset makers about licensing RIM’s own QNX-based BlackBerry 10 software.
With that Mr. Lazaridis agreed, even though some of the company's critics believe the strategy has little chance of success.
“I think it’s that unwillingness to sacrifice our long term value for short term gain,” Mr. Lazaridis said. “That’s why we didn’t choose Android. That’s why we decided to build the future on QNX.”