Research In Motion is betting a punishing year will give way to a renaissance in 2012, when the company unveils its next generation of high-powered mobile devices that run on a brand-new operating system.
But by then, many are concerned it will be too little, too late.
Canada's most important technology company is aiming to get through 2011 with a focus on cutting non-essential operations and offering products that run on a slight upgrade of its current operating system - which is significantly less powerful than the one it plans to use on its phones next year.
It's that business-as-usual attitude that has many questioning whether the company, which has already seen its value cut in half since January, is doing enough right now to stop the slide. Indeed, calls for change at RIM have not only gotten louder, the prescriptions are becoming more drastic. This week, RBC analyst Mike Abramsky suggested the company be split into two separate businesses.
One of the biggest challenges the company faces in the short term is attracting customers and application developers to phones it launches this year, when they know a new generation of devices that runs on the updated QNX software - which already powers the PlayBook - is just around the corner.
"If I'm a BlackBerry developer, and I'm thinking of building an app for a device coming out in November, why do it with a new operating system coming out in a few months?" asked Kunal Gupta, CEO of Polar Mobile, a development shop that designs apps for virtually all major smart phone platforms.
Co-CEO Jim Balsillie, answering shareholders for the first time at an annual general meeting on Tuesday, insisted RIM's foundation is strong. But the day after the executive was greeted with warm applause on stage at the AGM, investors remained cool on the stock, sending it down 33 cents to $28.15 (U.S.) - and a plan to regain market share from Apple and Google remains a long-term proposition .
"We do not intend to make significant cuts to areas or development projects that are critical to RIM's future direction and growth, and believe that the efficiencies we create will allow us to grow profitably and renew earnings growth in the latter half of this year," Mr. Balsillie told the hundreds of investors who packed the company's AGM.
Those investors will have to wait until September to find out exactly what cuts RIM plans to make. By then, the smart phone maker will have unveiled some of the seven products it will bring to the market by the end of the year. Those devices include what co-CEO Mike Lazaridis described as the single-biggest product launch in company history.
RIM might be able to maintain its leadership role in many overseas markets this year, but its slide in North America is likely to continue, Mr. Gupta said.
"Nobody's talking about RIM," he said of Polar's customers. "They like the idea of being on multiple handsets, but they're demanding … that there's more emphasis and innovation placed on what they call priority platforms."
For virtually all customers, those platforms are Apple's iOS operating system and Google's Android, he added.
Although many investors at Tuesday's AGM were optimistic about RIM's future - many said the company's stock price was well below where it should be - some analysts think more short-term pain is in store.
Kris Thompson, an analyst with National Bank Financial, estimates RIM will need to eliminate 10 per cent of its current work force of 17,500 over the coming quarters. But, he adds, the cost savings from the first round of layoffs - amounting to less than 1 per cent of revenue - will not be enough, and that a further slide in global smart-phone market share from 14 per cent to around 10 per cent will necessitate further cuts.
"We expect the company will need to make much deeper head-count cuts, which is very unfortunate to the Waterloo [Ont.]community," Mr. Thompson said. "We're not confident that RIM will ever regain global smart-phone market share above 10 per cent. Based on this assumption, our cursory analysis is that the company may be able to operate a successful niche enterprise business and own a small percentage of the consumer market."Report Typo/Error
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