RIM Needs To Realise BlackBerry Is Burning!

Is BlackBerry maker RIM having its “burning platform” moment?

Nokia CEO Stephen Elop, early into his tenure, sent employees a now well-circulated memo that included the story of a man working on an oil platform in the North Sea. When one night an explosion sets the platform on fire, the man considers a once-unthinkable option — plunging 30 meters into the dark, freezing foreboding water — rather than be consumed by the flames.

 BlackBerry – a falling knife?

Shortly afterward, Elop announced that he had signed an agreement with Microsoft to move on from Symbian and make Windows Phone Nokia’s focus. Nokia was on a burning platform, and this was what was required to save it.

RIM is in a similar position. On 28 June RIM fanned a fire surrounding its BlackBerry fortune, announcing that it was yet again delaying the release of its BlackBerry 10 platform. Word of the delay accompanied news of a $518 million loss during RIM’s most recent quarter and confirmation that the company plans to let go of 5,000 employees.

RIM earlier this week denied reports that it’s considering splitting its handset and services businesses, telling eWEEK June 25 that CEO Thorsten Heins’ months-earlier statement—that the best way to drive value for RIM’s stakeholders is to execute on its plan to turn the company around—“remains true.”

During a conference call June 28 to announce quarterly earnings, however, Heins sounded more resigned to additional options. RIM is running “strategic assessments” with teams it has engaged, Heins said according to a transcript, referring to analysts with J.P. Morgan Securities and RBC Capital markets, and these “range from RIM executing on its plan, stand-alone, to whatever other model you could think about.”

Canaccord Genuity analyst T. Michael Walkley wrote in a June 27 research note that Android or Microsoft devices could run virtualized versions of BlackBerry OS, making RIM’s “key strategic assets … attractive to potential suitors.” Reuters reported the next day that Microsoft CEO Steve Ballmer approached RIM in recent months, offering to strike a deal similar to the one Microsoft has with Nokia.

Analysts agree that, for RIM, the time has come for hard choices.

“I believe that at this point RIM’s best solution is to accept Microsoft’s offer (and probable cash life-line) and move to Windows 8,” analyst Ken Hyers, with Technology Business Research, told eWEEK. “Unlike Nokia, it should not abandon its existing efforts to develop its own next-generation platform, but should immediately shift resources to preparing for Windows 8. Unlike Nokia, RIM’s customer base is heavily weighted toward enterprise users, who will be receptive to a Windows 8 BlackBerry.  At this point, RIM desperately needs a lifeline, and if Microsoft is throwing one to them, they should grab it.”

Strategy Analytics Executive Director Neil Mawston, not missing the irony of the iPhone’s five-year anniversary June 29, isn’t surprised where RIM has found itself.

“An irrational pride in its QWERTY phone designs and an overconfidence in its enterprise email system have cost RIM dearly over the past five years. Because of the further delays to the mission-critical BB10 platform, it is now probable that RIM will have to seek a white knight partner,” Mawston told eWEEK.

“Possible merger partners that could potentially save RIM include Microsoft, Facebook, Amazon, Google, or a private equity firm. However, RIM is still in a decline phase at the moment and many companies will be wary of trying to catch a falling knife.”

The company may be in trouble, but what about BlackBerry phones? Try our quiz!