What do Research In Motion and the Vancouver Canucks have in common? Both are Canadian organizations that jumped out to a huge lead, only to cough up their advantage to rivals and find humiliation. In both cases, rioting ensued.
In the case of BlackBerry maker RIM, the choking hasn’t resulted in looted stores and burning police cars (yet), but the calls for the heads of the company’s co-CEOs have now turned to howls. For Canada, that may be just the beginning of the upheaval to come.
RIM appears to have four potential paths back to relevancy – and all of them will probably make the company decidedly less Canadian. More likely, these options will become parts of the same chain, which could ultimately result in RIM being only tangentially tied to Canada.
1. New bosses. With institutional shareholders abandoning ship, it’s just a matter of time before co-CEOs Mike Lazaridis and/or Jim Balsillie are shown the door. A new leader will have to figure out exactly what’s wrong the company.
The debate over that is hot and heavy right now, with pundits suggesting everything from the engineering to the marketing of products. On Friday, Business Insider published a scathing letter from a former employee who said the CEOs are woefully out of touch with the market. Lazaridis and Balsillie have gotten too comfy with their success in the business segment and “are culturally blind to the gaping holes in their armour regarding consumer. They honestly think they understand consumer product, business, mentality, marketing – but they really don’t.” Whether or not the author is legit is besides the point because he or she sums up the general analyst consensus: RIM just doesn’t get the consumer market.
An anecdotal example of that are the company’s current TV ads for the PlayBook. One ad touts the tablet’s Flash capability while another spotlights its multitasking chops. The average Joe really doesn’t care about or even know what either of those is, so the ads don’t really give them a reason to buy it.
The new boss will have to have an understanding of how to create devices for every-day people, as well as how to sell them. If no one at RIM currently has that capability, as is clearly the case, then surely the list of people in Canada who do is short to non-existent. The smartphone game is global so if RIM is to attempt to solve its problems with new leadership, it’s going to have to look outside the country for someone with experience running a multinational, consumer-oriented company.
2. New location. A new leader will bring a welcome change in direction. I’ve written before about how RIM can’t currently compete with its better-resourced rivals Apple and Google, so while a new boss will help in the short term, it won’t fix that long-term problem. The company will have to expand operations in other parts of the world, particularly Silicon Valley, if it hopes to attract the same quantity and quality of engineers as its two main rivals. That means some of the great work that has been done so far in Waterloo, Ontario is going to be divvied up and diluted.
This will, of course, have huge implications on Canada, where RIM has been the anchor of the high-tech industry.With the company’s recent layoffs, the tremors are already starting to be felt. More RIM jobs elsewhere will mean even fewer jobs in Canada.
3. New partners. One of the more intriguing options being tossed around is the idea that RIM should adopt Android for its BlackBerry devices. Doing so would tie the company to what is clearly going to be the top smartphone operating system for the near future, as well as it give it access to the critical apps that are needed to sell devices. That’s not a bad idea, but getting in bed with Microsoft might make more sense. While Microsoft’s Windows Phone 7 hasn’t exactly set the world on fire, the Seattle software giant still has a number of things going for it. The company has a track record of convincing developers to work with it, a mammoth business customer base (many of whom use BlackBerry) and an inexhaustible pile of cash with the appetite to be a major smartphone player to go with it.
As two companies that make a lion’s share of their money from dealing with businesses, RIM and Microsoft have always had much in common – much more so than RIM has with Google. At this point, RIM and Microsoft are both on the outside looking in, with Google their common enemy. As the cliche goes, the enemy of your enemy is your friend. Uniting with Microsoft would also solidify RIM’s core business base, rather than fragment it as the Seattle company inevitably comes after it.
4. New owners. RIM supporters and patriotic Canadians alike seem oblivious to or completely opposed to the inevitable, which is that the company will eventually be bought by a much larger foreign concern. The fact is, Google and Apple are giant companies that have their fingers in all kinds of businesses – smartphones are only one small albeit important part of their fortunes. RIM has nothing else to fall back on; if its phones and tablets don’t sell, it’s done. Finland’s Nokia has traveled the same path and, as several analysts have pointed out much to the company’s chagrin, it is now all-but-owned by Microsoft.
That’s not a defeatist attitude, it’s merely reality. Canada has plenty of smart people and great entrepreneurs who have created many innovative technology companies – ATI, Cognos, BioWare, Corel, Nortel, just to name a few. In some cases, as with RIM, those companies have created their own markets, thereby attracting much bigger and better-resourced competitors. Some companies, such as Corel and Nortel, simply couldn’t compete and ended up imploding. Others, such as ATI and BioWare, decided that getting acquired and being part of a bigger whole were the better way to go. History simply does not support the idea that relatively tiny RIM can continue to independently compete against the behemoths that are Google, Apple and Microsoft.
That’s nothing to be ashamed of. Canada is a country of small- and medium-sized businesses that can do well – up to a point. Canadians should be proud that they can sell their ideas and talents to the rest of the world, the same way they’ve been doing with their musicians, comedians and even hockey players for decades. There are those who believe otherwise, but they’re probably the same people who cheered for the Canucks as “Canada’s team,” despite the Boston Bruins having just one fewer Canadian player on the roster.
And just who might buy RIM? Well, even though the company and Microsoft have similar customer bases, BlackBerry might make a better fit with Apple. Unlike Google and Microsoft, RIM and Apple both take an integrated approach to their devices by designing both the hardware and software. They could work better together since they share that philosophy. Apple also has a stated desire to make more inroads to the business market, so since Microsoft appears to have its dance card full with Nokia, the iPhone maker may be the best partner available.