How to save Research in Motion Commentary: An open letter to Thorsten Heins, new CEO
By Brett Arends, MarketWatch
BOSTON (MarketWatch) — An open letter:
Dear Thorsten Heins,
Congratulations! You’ve just become the new chief executive of Research In Motion, the BlackBerry maker.
In your first 24 hours on the job you’ve managed to wipe another $600 million off the company’s dwindling value. In case you hadn’t noticed, the stock fell another 7% on your first day.
Will RIM's new strategy pay off?
Research in Motion has gone to a single CEO, but will the rest of the rest of its corporate strategy evolve with it? Spencer Ante discusses on digits.
Thorsten, this is embarrassing.
On Wall Street, news of a big management shakeup should have sent your stock leaping. The short sellers would have rushed to cover, and analysts would have started penciling in all sorts of bullish possibilities. A company with a new CEO has a lot of “optionality.”
Instead Wall Street is already giving you a big thumbs-down.
Your first conference call, Monday morning, was a disaster. Apparently, you think everything was pretty much OK before you took over.
You expressed confidence in the company’s existing strategic direction, and vowed no “seismic change.”
On the call an analyst pointed out that you’d been part of the senior management team for the past few years, and asked what you weren’t able to do then that you are able to do now. Your response, according to a live blog from Engadget:
“I don’t think that there is a drastic change needed. We are evolving our tactics and processes. I don’t feel that I was held back in any way to do what I needed to do.“
This defies belief. RIMM stock was about $110 when you joined the company, in December 2007.
Today: $15.88.
This is like someone being appointed as the new captain of the Titanic, and saying, “Well, I wouldn’t really have done anything differently.”
Full steam ahead?
You also said you were looking for a new marketing honcho, and that you’d be open to “licensing” your operating system to other companies.
Oh, brother.
It would be ominous indeed if you thought your biggest problem was with marketing. As for licensing your software — don’t flatter yourself. Your company is giving off the stench of death. Meanwhile, there are already three operating systems out there that are better than yours — Apple’s iOs, Google’s Android, and Microsoft’s Windows Phone 7.
Thorsten: It’s not all bad.
Yes, you can save this company. But to do that you need to do three things. Three radical things.
1. Go with the hurry-up offense.
Anyone counseling patience and “steady as she goes” is a fool. The crisis is much worse than it seems from your new executive office.
You have one shot at fixing this company. One.
No, RIMM isn’t going to run out of money — not yet, anyway. As of November, you still had about $7.2 billion in cash, receivables and other liquid assets, compared to just $3.8 billion in liabilities.
But so what? Your biggest problem isn’t money, it’s time. And you are running out of that, fast.
Research In Motion
Your brand name is fading. Your market share is slumping. You’re actually below 10% of smartphones in the U.S., according to reports. And this industry moves fast. Just as with Nokia, RIMM is already yesterday’s news. If you hang around much longer you’ll be finished for good.
Don’t believe me? Try this. Stop listening to people inside the company. Stop listening to advisers, colleagues and friends. Instead, go out to Best Buy incognito, on your own, and have a look at what’s on offer and how your competitors stack up. Look at the products people are buying and what they’re talking about.
2. Throw away the conventional wisdom.
Why are you even making a tablet? Why are you making touchscreen smartphones? Why, in short, are you trying to do what everyone else is doing?
I can almost see the consultants’ flipcharts showing you how well Apple and Android are doing, and thereby implying that the way to succeed is to copy them.
This would like telling a single person that the way to get happily married is to find a happily married couple and try to move in with them. It’s totally nuts.
I actually have one of your PlayBook Tablets. The only reason I bought it is because I hate tablets, but I knew there would be a few occasions when one would be convenient.
So when you slashed the price of the Playbook from $499 to $199 before Christmas, I grabbed one.
If I really liked tablets, there is no way I would have bought yours. There are many much better ones out there. I’d have bought a Samsung Galaxy Tab, or possibly an iPad. The 8.9-inch Tab weighs about the same as your 7-inch Playbook and it runs Android, with all those applications.
While you’re in Best Buy, take a look at all the other tablets for sale. There’s a whole section. The makers are slashing prices to shift the products. This is an awful, cutthroat business. If I were in it, I’d get out. Why are you trying to get in?
And it’s about the same story for your latest “smartphone,” the touchscreen Bold 9900. I have one through work (more on this below). I hate it. I actually hate it so much that I actually carry a second cellphone with me.
I dislike the Bold’s voice quality. I dislike its operating system. I absolutely hate the touch screen, which seems to be sensitive to movements in the air. I have put it flat on a table and watched the cursor drift across the screen. Do you have any idea how annoying that is when someone is trying to type an email or even an article? Half the time, on the tiny touch screen, I end up touching the wrong icon or email title.
Oh, and I hate the battery life as well. This thing doesn’t last a day. (Perhaps this is just me, and my experience is atypical. We shall see.)
I don’t need to come to BlackBerry for a tablet or a touchscreen smartphone that lets me watch YouTube videos of skateboarding dogs. There are many companies out there that already do these things much better than you. The advisers telling you to make these products because Apple is making so much money from them might just as well tell you to go into the whisky business because, hey, look at all the money Johnnie Walker is making!
Fire them.
So what if you’ve already invested billions in research and development? That money is gone. It’s a sunk cost. Move on.
3. Rediscover your roots.
People once came to BlackBerry for one reason, and one reason alone.
Your products were workhorses.
They were built tough. If you dropped them, they bounced. Their batteries lasted three weeks. They had lovely, wide keyboards, so a grown man with fat thumbs could type out 200 emails a day with ease. They had a track wheel so you could scroll through them quickly with one thumb while doing something else. They were built for grown ups, they were built for work, and they did what you need.
Then you got an attack of iPhone envy.
You shrunk the keyboards, and started making brighter, fancy screens. You started making devices in different colors. You started making touchscreens, because that’s what Apple did.
I guess someone, somewhere, told you that you had to chase that important demographic, “young women, age 15 to 25.”
You offered them products so they could text their BFFs all day long in class. You made cute little keyboards so they could type out “LOL” and “ROTFLMAO” with long fingernails. You worried about upgrading your operating system and your screens so people could watch YouTube.
It made no sense.
Competitors were already hitting that demographic with all they had.
Meanwhile, you abandoned the core customers that kept you in business — and who are not being served by anyone else.
Your core demographic isn’t college kids. It’s the people who are paying the college kids’ bills.
I see how people use their BlackBerrys here at Dow Jones. It says something that many people deliberately hang on as long as they can to their old models, like the 8700 and the Bold 9000 — the ones with the big keyboards.
Most of us hate your new products. We hate the tiny keyboards and pitiful battery life.
We don’t want iPhones or Samsung Galaxy touchscreen phones because we want a physical keyboard. A wide one.
It’s amazing how few companies actually make a smartphone keyboard for men’s big thumbs.
Our BlackBerrys aren’t toys. They’re workhorses.
Thorsten, if you want to save your company, you should rediscover your core market.
But I’m not holding out much hope. Your conference call makes me think you’re going to flow with the tide, all the way out to sea.
If that’s the case, your stock will be worth $6.50 a share. That’s the value of your cash and other liquid assets, minus your liabilities.
Brett Arends is a senior columnist for MarketWatch and a personal-finance columnist for the Wall Street Journal.