Research In Motion(RIMM) has long been viewed as a company in freefall. Market share has been in decline, with
both iPhone and Android showing impressive gains. Among others, RBC’s Mike Abramsky suggested last summer that the company would be more successful splitting into a hardware company and a network operations company.
The network part of the business could capture more traffic for its smart “push” messaging capability if it were able to serve multiple handsets, while the devices business, which has stumbled to move to new models, could perhaps better innovate and attract developers if the unit were not so tied to the old values of messaging and instead looked to “new consumer experiences.”
“RIM’s end-to-end solution was conceived when data devices and networks were nascent – but times have changed,” writes Abramsky.
“Standalone, The Blackberry Network can target a 6x larger, ~400M unit multi-device market (including Android/Windows phones/tablets) with affordable, efficient, cross-platform mobile push messaging, social networking, cloud and business data services (and software) – interconnected to 595 carriers – with significant barriers to entry.”
Abramsky notes the $5 billion annual business is increasing revenue 25% per annum.
Why split off handsets? The QNX software coming to RIM’s handsets next year is not enough, thinks Abramsky.
“QNX is not a panacea,” he writes. “the Smartphone sector has become intensely competitive and turbulent, and there is no magic bullet for turning around RIM’s handset business overnight. Although QNX appears strong, if QNX doesn’t work, or further mis-execution undermines RIM’s turnaround, then RIM will be left without a ‘plan B.’”
New CEO Thorsten Heins, who replaced longtime co-CEOs Jim Balsillie and Mike Lazaridis, said in a conference call this morning that the company had no plans to split. It remains to be seen how long Heins will have to pursue his current strategy before the Board is forced to consider a plan such as this. By then, it may be too late.
Disclosure: Author holds no position in any stock mentioned
- Endgame: RIM’s Balsillie, Lazaridis To Step Down From CEO Roles (contentsutra.com)
- RIM’s CEO Swap is No Reboot (technologizer.com)
- Will demoting RIM’s CEOs save the handset maker? (gigaom.com)
- Research in Motion stealth take over. It clever, very clever.$RIMM $RY (financialskeptic.wordpress.com)