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Rooting for RIM: Why we still love this iconic Canadian brand
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goldengirlfinance.ca
True story: On a recent Friday night, a friend attended a dinner party and was seated with three other couples she didn't know. During dinner, the conversation turned to Research in Motion (TSX:RIM.TO - News) and how the fortunes of the beloved and venerable BlackBerry maker had fallen. Everyone shook their head and wondered if the company will survive or go the way of the beeper. Yet at the end of the night, as promises were made to stay in touch, eight BlackBerries were pulled out of pockets and purses. BlackBerry bar codes were scanned, PINs were swapped and new BlackBerry Messenger contacts were added. How can something so many people rely on be in danger of disappearing?
Proud to be Canadian
RIM is a homegrown Canadian success story that became an international superstar. Not only did it change the way people do business globally, it became the go-to personal device for celebrities, politicians, corporate executives, personal assistants, soccer moms and everyone in between - worldwide. No other Canadian export has become so famous, so fast. Ok, maybe Justin Bieber, who proudly sports his own Crystal-Skinned BlackBerry Bold. [More: Buying stocks: Is it time to get greedy?]
CrackBerry love
When you are stuck in traffic and the kids are starving, you grab your iPhone (NSQ:AAPL - News) to search for the nearest Swiss Chalet, then hand it to the kids for an appeasing game of Angry Birds. On date night, a sleek Nokia (NYSE:NOK - News) slips into a clutch perfectly. But when you need to type a message superfast (or singlehandedly), no touch screen keyboard can compete with the BlackBerry typepad. And BlackBerry Messenger is the bomb for keeping you in free, all-day touch with your sister, hubby and BFF, anywhere in the world. Until another smartphone tops these features, we're not ready to relinquish our BlackBerry just yet.
The highs
The first RIM BlackBerry as we know it was introduced in 1999. By 2006, Webster's dictionary made CrackBerry its word of the year. By 2007, RIM was the most valuable company in Canada. By 2008, there were 16 million BlackBerry users worldwide. Perhaps the highest point of RIM's popularity was reached in 2009 when Barack Obama refused to give up his BlackBerry upon becoming President of the United States. [More: Dip your toes in the market: DIY investing explained]
The lows
For many BlackBerry fans, the first sign of the apocalypse came last summer when RIM laid off 11% of its workforce. A few months later, chaos ensued as a massive service outage saw millions of BlackBerries get thrown at walls all over the world. RIM's market share of American smartphones fell from 44% to 10%. Over the past year, the company's stock has dropped by 75%.
RIM's time-honoured strategy
The BlackBerry was originally designed for business. It was targeted less at users and more at the techies running corporate IT departments. The ability for a company to control employees' access and data combined with the security of RIM's closed network were irresistible. RIM's theory was that once companies embraced BlackBerries, personal consumers were sure to follow. This was how the telegraph, the telephone, the personal computer and even the internet evolved. All began as sophisticated business tools used by governments and corporations before making their way to little ol' you and me. [More: American outlaws: The inside story on insider trading]
But times changed
RIM's strategy worked — for a while. Then suddenly, technology started flowing in the other direction: from consumers to corporations. Facebook, Twitter and blogs began as personal and social tools. Now every business - from the brand of jeans you wear to your local pub - wants you to "like" their Facebook page and begs you to follow them on Twitter. Tablets designed for fun and games evolved into business tools for salespeople and medical professionals. BlackBerry created a slightly less corporate-looking model, the Curve, and tried to amp up its cool factor by enlisting celebrity spokespeople such as John Mayer.
The Era of BYOD
The proliferation of smartphones made texting, remote emails and instant messaging the norm for personal as well as business life. Gone are the days when a person's only phone was the work-issued model. Kids growing up with smartphones expect their phone to be a reflection of their personal style. The era of Bring Your Own Device (BYOD) began. Today most people start a job with their own phone or BlackBerry — the one they like and the one they want to keep using (see: Obama). Once the iPhone came out, personal users of the BlackBerry switched over in droves.
Got an app for that?
RIM was slow to join the app revolution and continues to make life tough on app developers with frequent changes to their screen specifications. Businesses of every kind now create apps for their customers and app access has become necessary for employees. iPhones and Androids (NSQ:GOOG - News) have eaten up BlackBerry's market share with consumer friendly app-appropriate phones while strengthening their security measures to make corporate clients happy. One analyst estimated that Apple's App Store alone is worth over $7 billion - roughly the same value as RIM's shrunken market capitalization.
Who's in charge?
RIM's founders and co-CEOs Mike Lazaridis and Jim Balsillie were heavily criticized for not adapting to the new BYOD mindset and for taking their market share for granted. This past January, a new CEO was appointed — Thorsten Heins. While many analysts and investors were hoping for an outsider - someone fresh and visionary - Mr. Heins is a RIM veteran since joining the company in 2007. Will he have the objectivity and creativity to get RIM back in the game? [More: Getting active in the markets: From buy and hold to active investing]
Remember the Apple
Perhaps Mr. Heins should remember that Apple's road to world market domination was not straightforward. Apple is credited with designing the first home use personal computer in the 1970s and won a huge following with the Macintosh in the 1980s. But Apple was unable to maintain its first-to-market advantage. For years it languished as a niche player and was often unprofitable. Then in 1998, they introduced the iMac and everything changed. The iPod and iPhone were soon to follow, bringing so much market share and profits that today, if Apple wanted to, it could buy Greece!
Can they do it?
The challenge RIM faces is daunting. The Economist magazine has said, "The company has already lost a lot of ground on its competitors. Too much, perhaps, for Mr. Heins to make up." Will RIM become the next Sony Walkman or Palm Pilot? Or will it be like Apple and reinvent itself with courage, confidence and imagination? We hope this Canadian icon can pull it together and regain its lost glory. Perhaps we'll BBM Mr. Heins a message right now and tell him so.
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