Blackberry maker RIM posts huge losses; cut jobs

30 June, 2012

Once the most popular and prestigious, Blackberry is gradually facing the death of its popularity. With huge losses posted in the first quarter of the current financial year, experts say the company may be forced to shut shop in the near future.

HAVING A blackberry was a symbol of status not many years ago. But with the fast evolution of telephone hardware and with the advent of the capacitive touch screen equipped smartphones, the once popular corporate phone is seeing a massive downfall in sales. Research in Motion (RIM) had not been able to keep pace with the evolving market.

When the customer preferences shifted from brick design to a chocolate bar design, from chunky qwerty keypads to virtual keyboards on touchscreen and from small screen to large screens with AMOLED display – RIM continued making Blackberries the way they had always done – for corporate who wanted to have mail on the go. It was only recently that they realized that today’s corporate world has a personal life too, and checking official mails is not the only thing that they do with their phones – but the realization probably came a little too late.

“I was always a Blackberry fan,” says Pooja, a senior software professional. “I actually saved money for months to get my first Blackberry – it gave me a sense of achievement. More than a phone it was a status symbol – like owning your own cabin in the office. But that was then. Today, my phone works as my camera, my music player and also my secondary internet surfing device. I have moved to Samsung Galaxy S few days back."

The story of Pooja is not unique. Vrijesh, an entrepreneur, is in his late twenties. He carries a smartphone and a tablet on the go – none from RIM. “Blackberry is for old people. It’s not trendy. Tell me one thing that Blackberry gives you and I can’t do with my current HTC?”, he says upfront. What about secured mailing?

He waves his hand and brushes aside the topic in a way that only tells you that he is not concerned about the same. RIM was probably getting to know how the consumer mindset was changing – the promotional campaign around, “We are the blackberry boys,” actually tried to create a positioning change for the company, but all came a little too late. Samsung, HTC and Sony have already invaded the territory and conquered most of it. Internationally, the success of iPhone and Android based phones did no good to the balance sheet of RIM.

The fall in revenue of RIM had been in news for last year, and experts were not expecting a miraculous turnaround shortly given the company’s latest product Playbook failed to make an impact in the market. However, the results for the latest quarter were even worse than the predictions of many analysts. While analysts polled by FactSet predicted a revenue of $3.1 billion, the numbers slided even further and fell by 43 percent to $2.8 billion. While the expectation was to lose out 3 cents per share, the actual were a loss of 37 cents per share.

To make the situation worse, the product rollout from the company has been delayed too. Despite the fact that CEO Thorsten Heins continuously kept saying on public forums that the production of Blackberry’s new series called Blackberry 10 will arrive as scheduled, it was only recently he clarified that the phones will not be available until next year. It only means that the company will miss the year-end celebration season, and will also enter in a market to compete with already launched new iPhone and a few more improved windows based phone. That doesn’t seem like a rosy picture with RIM already fighting a lost battle.

And on the eve of a fear of economic downturn, the Canadian company has now reportedly decided to layoff 5,000 of its employees i.e a whopping 30 percent of its total manpower. The company aims at trimming down $ 1 billion in its total annual cost and this reduction in manpower is said to be a part of the plan.

In such a scenario, rumours are rife in the market that gradual cash crunch may lead to the closure of the once so successful Blackberry maker. Every eye is on Blackberry 10, and the picture will be clearer by March 2013. Till then, well wishers and investors alike will hope that the last straw of BB10 will manage to help the drowning Blackberry stay afloat.