RIM Is Hurting, But It’s Not Dead Just Yet

There’s been plenty said about RIM since it released its rough fiscal financials a few days ago, just about all of it negative. It’s hard not to be, honestly — the company reported its first operating loss in eight years, announced that a full 5,000 employees would be getting the axe, and topped it all off by revealing that the first BlackBerry 10 devices wouldn’t hit the market until the beginning of 2013.

It seems to me that RIM’s problem (well, one of them anyway) is that the company’s brass seems to look at the game they’re playing as one of time, and they think they have plenty of it. Their decision to push back BlackBerry 10′s release until the first quarter of next year is a testament to that — I understand Heins’ concerns about quality, but it would have been rough enough for the company to mount a comeback if it had managed to ship on schedule.

Suffice it to say, hope for the company is at an all time low. It looks to many like RIM is totally screwed, and they just might right be depending on their definition of the word. For what it’s worth though, RIM has been around for a long time, and I think RIM can survive — just maybe not in its current form.

Weighing The Options

So how could RIM stick things out? Well for one, it could turn to creating hardware for other mobile platforms. Much ado has been made about the fact that Android design chief Matias Duarte has said he would “really welcome it” if RIM turned its attention to creating Android devices with “great physical keyboards.”

Considering that Heins said during the company’s (otherwise very depressing) earnings call that RIM would continue to “lead in the full QWERTY segment,” this doesn’t seem like that bad a matchup.

Credit where credit is due, RIM has always been at least above-average when it came to the quality of its smartphones. For a time there (I’m thinking specifically 2005 to 2008 or so), I’d even go as far as saying RIM’s design team was downright great at it — as Duarte noted, RIM’s keyboards were excellent, but more importantly the company managed to make some of the finest devices to ever run with the portrait QWERTY design. What’s more, that particular segment may be in need of some serious players, as companies like HTC have begun to move away from physical keyboards.

And of course, Android isn’t the only viable smartphone platform interested in a fresh boost of hardware expertise. The news that Microsoft has been poking around Waterloo in hopes of striking some sort of alliance just made the rounds earlier this week, and as the story goes, Microsoft wanted to effectively make RIM the new Nokia — a company devoted to the Windows Phone platform in exchange for a small equity stake. RIM, despite plenty of gloomy forecasts, isn’t worthless just yet.

Still, it doesn’t seem like RIM is taking those sorts of overtures to heart. There’s another possibility here too, though it’s something that’s been batted around at RIM HQ before — the company could put aside its delusions of smartphone grandeur and focus on all its other services. It was rumored that former RIM co-CEO Jim Balsillie was fighting like crazy to take the onus off the smartphone side of the business by opening up the BlackBerry network to other devices, though there’s been little news on whether or not it remains a viable option now that Heins is in control.

And it’s not as though RIM is a total dud in the network space, as it currently has 78 million subscribers around the world. Bowing out of a hardware space the company has been floudering in doesn’t seem like a completely unfeasible move (though it would require plenty of new layoffs).

Time Helps, Time Hurts

Those two are far from the only options the company could take, and RIM is clearly taking the strategic review process seriously since it brought J.P. Morgan Securities and RBC Capital Markets to help them weigh options. Here’s the thing though — I wouldn’t expect to see too many official developments on that front for the next few months. I have a feeling that it’s only when BlackBerry 10 is revealed (and is subsequently glorified or vilified) that we’ll see where the one-time smartphone giant crawls next.

That said, RIM’s situation may be more time-sensitive than the company would hope. From a purely financial perspective, it’s not doing terribly — it has just over $2 billion of cash and equivalents on hand, so it’ll be able to hang in there for at least a little while longer. Meanwhile, confidence in the company is utterly shaken and a look at its stock tells quite the tale nicely. It nearly hit a 52 week low before the earnings statement went out, and it’s since sunk even lower than that. RIM’s stock price hit a low of $7.34 on Friday — that’s over 19% down since the market opened, and the lowest it’s been since 2003. As such, RIM’s market cap has also been shredded, as it’s now sitting at a scant $3.81 billion, compared to over $78 billion just four years ago. With every day that goes by, RIM is left with a growing gap between it and the customers that could save it.

Thorstein Heins strikes me as a shrewd guy, and I have to commend him for sticking to a plan, but man — those numbers would be enough to make any CEO’s eyes water. And yet the company is doing whatever it can to survive until it can push BlackBerry 10 out the door. What comes after that is anyone’s guess.

Now I could be wrong about all this. With BlackBerry 10, the company may be able to deliver just the right mobile experience coupled with just the right hardware at just the same time. With any luck those few extra months in the oven will do the nascent platform well, but the extra time can be just as harmful to people’s expectations of the final product as it is helpful to the process of making it. Pushing the launch of the first BB10 smartphones back by months to ensure it lives up to internal standards will mean nothing if the expectations of RIM’s potential customers have already changed in response to the competition.

And honestly, what are the odds that BlackBerry 10 is perfect right out of the gate? If all this build-up still leads to a product that isn’t equipped to compete with iOS and Android, it may well mean game over for RIM as we know it.