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RIM revenue drop leads to more job losses and delayed handsets

Blackberry manufacturer Research in Motion (RIM) has revealed plans to cut 5,000 from its workforce and delay the release of its Blackberry 10 operating system after losing $518m in its fiscal first quarter ended June 2.

The loss results to a 33% year-on-year slump for the smartphone pioneer which has been steadily losing market share to Apple’s iPhone and Google’s Android operating system. In a conference call with analysts yesterday RIM’s president and chief executive Thorsten Heins said that getting the new system right, which is now slated for an early 2013 release, was more important than doing it quickly. He also conceded that developing the software and processing the code associated with it had been more time consuming than initially anticipated.

When Heins took over at the helm in January following the departure of long time co-chief executives and co-chairmen of the board Mike Lazaridis and Jim Balsillie, he outlined plans to streamline operations and save up to $1bn in the financial year. One of his first acts was to concede defeat in most consumer markets, by announcing that RIM was going to ‘return to its roots’ by mainly focuses on its business customers. Heins recognised RIM’s limited success trying to enter consumer markets in recent years and said that “substantial change” was required in order to turn it around.

“We can’t do everything ourselves, but we can do what we’re good at,” said Heins at the time. “We plan to refocus on the enterprise business and capitalise on our leading position in this segment. We believe that Blackberry cannot succeed if we tried to be everybody’s darling and all things to all people. Therefore, we plan to build on our strength.”

At the end of May it was reported that RIM was preparing for a major restructure which would see it cut an additional 2,000 positions globally, on top of the 10% of its workforce that it axed in 2011.

Last month RIM appointed Frank Boulben as its new chief marketing officer as part of a corporate reshuffle and launched a multi-million dollar global campaign that celebrated ‘people of action’ and highlighted its latest range of smartphones and tablets. However, in an opinion piece for M&M Global, Bordello planning partner Scott Wilkinson argued that “the brand is now beyond most marketing department's abilities to help”. Ironically, the consumer-facing campaign broke just a month after Heins announced that Blackberry was giving up on most consumer markets in order to focus on its business customers.

Despite the big negative numbers, RIM did manage to ship approximately 7.8 million phones during Q1, sell 260,000 of its Playbook tablet devices and the number of subscribers to Blackberry services did rise slightly to 78 million globally.

Last week, the EMS Middle East results revealed that Blackberry devices perform well in the region with a 57% penetration compared to Europe’s 9%.

Martina Lacey, London