Research In Motion Ltd. made a "conscious decision" to focus on growing in emerging markets at the expense of its position in the United States, according to the company's new chief executive officer – a decision for which the Waterloo, Ont., company is now paying a heavy price.
In a wide-ranging discussion broadcast to RIM's 17,000 employees around the world, Thorsten Heins offered a more frank diagnosis of the company's challenges, as well as a clearer picture of his strategy and priorities, than in his public statements this week. It was his first address to staff since Mr. Heins took over from RIM's long time co-CEOs, Mike Lazaridis and Jim Balsillie, and The Globe and Mail obtained a copy of the video.
Mr. Heins assumes the corner office in the most difficult time in the company's history, with its U.S. market share collapsing and its international growth now at risk from an attack by Google Inc. and its Android operating system, which is growing exponentially. But he attempted to lift spirits at the technology company by stressing the company's highly successful push into developing countries in Asia, South America and elsewhere.
"When we started this strategy of going global, we knew we had to throw basically most of our resources into the global play, which we did, and look at the success," Mr. Heins told the employees. "But we had to do this a little bit at the expense of being very, very strong in the No. 1 competitive market of the world, which is the U.S. market. This was a conscious decision that we took. Now we have to get through this."
In response to questions that the company said were e-mailed from employees, Mr. Heins tried to squash the frequent rumours about a possible sale of the company. He said definitively that the company was not up for sale, adding: "Don't believe everything you read," in reference to rumours the company had hired Goldman Sachs or had talked to Samsung Electronics Co. Ltd. about a deal. His comments earned applause and cheers from the 100 or so employees in the room with him.
"Simply, simply no," Mr. Heins continued. "It's a fantastic growth and profit story. There's no reason to go and sell the company. You guys are fantastic. We have a fantastic brain base and intellectual base. We have fantastic board members supporting us, and also into the future. Why should we do this? We are going to do this ourselves."
In his comments, Mr. Heins praised Mr. Lazaridis and Mr. Balsillie, hinting that the two former co-CEOs would still play a role in guiding the company's strategy and future technology. He also stressed the need to straighten out RIM's dysfunctional internal processes, which have tarnished the company's reputation by leading to product delays and missed deadlines.
"One of the issues we really need to tackle in the future is not the innovation – that will be always covered as long as Mike and Jim are on the board and help us with strategic advice and counsel, and Mike will run the new innovation committee on the board," Mr. Heins said.
"It just gives me hurt feelings if we have such great ideas and then we get kind of criticized in the public because we miss it by three months, or we're not complete when we really want to launch something. That will be a huge focus of mine."
During the town hall, which lasted roughly one hour, Mr. Heins reiterated that his priorities were marketing the current line of smartphones running the BlackBerry 7 operating system, saying, "we have to get BB7 into the minds and into the brains of people." It also includes pushing out a software update in February for RIM's weak-selling PlayBook tablet computer, and then focusing the company's full attention on the BlackBerry 10 operating system that will run on devices the company has delayed until some time in late 2012.
Throughout his address, Mr. Heins talked about the company's strong balance sheet and its huge global growth. But he kept coming back to the way RIM's problems harm the company's brand in the eyes of its customers – citing, notably, the huge wireless carriers that are some of its most important partners.
"When I came into RIM, I think the biggest orders we got at that time were about [50,000 BlackBerrys]per order coming in, and there were marketing campaigns from carriers around us," Mr. Heins said.
"Today we sell them millions of units. They commit to marketing promotions that cost them $30, $50-million dollars. It really hurts their business, and our business, if we then have to call them and say, for whatever reason, you know, we're two weeks late."
"It was tough to meet with some of our customers in 2008, and you've got all these [complaints]– 'This isn't working, that ain't working.' And it's because we scaled. We were in this huge growing phase." Recently, Mr. Heins said, the quality of products RIM was delivering to carrier partners such as Verizon Communications Inc. had improved dramatically.
He also gave some rare insight into his personal life, saying he loved riding his red motorcycle through the Bavarian mountains of his native Germany but that he was learning to love riding in the Waterloo region, as well. "I love riding through the farmland, it refreshes your mind, it's amazing. Sometimes I ride for about 40 minutes, and all of a sudden I'm here. How did I get here?" he said. "It's very, very creative. I love it."