By May 28, 2012

RIM Death Spiral Continues: Massive Layoffs Looming

Just a week after the news hit that Patrick Spence resigned as EVP of Gobal Sales, RIM is in the spotlight again. And not in a good way.

According to an article in The Globe and Mail, RIM will soon announce another major global restructuring that will include “at least” 2,000 layoffs, dropping RIM’s employee base from 16,500 down to 14,500 near term, and possibly to as low as 10,000 by early next year.

The Canadian-based Blackberry manufacturer is already suffereing from a prior round of workforce reductions, having laid off 10 percent of its global staff last July.

And to add insult to injury, RIM also lost its top lawyer today when Chief Legal Officer Karima Bawa announced she would resign.

Earlier this month CEO Thorsten Heins revealed his plans to revitalize the company… whereupon RIM’s stock dove to hit an eight-year low.

Investors, it seemed, were not impressed. And given the recent and rather hasty departures of several of RIM’s top executives, they’re not alone.

Heins has a problem. He thinks RIM is in the handset business. They’re not.

They’re in the communications business.

The value behind the BlackBerry phone system is BlackBerry Messenger. It, and the backend services, are what make the platform valuable. Without it, a BlackBerry is just a so-so phone with a decent keyboard.

To survive, RIM needs to roll out a cross-platform messaging system for use on existing smartphones and tablets. That’s iOS. That’s Android. And that’s Window’s Phone. Sell companies and individuals on using your secure service for all of their important communications.

The potential market for a good cross-platform solution is tremedous.

And best of all, you don’t have to convince anyone to give up their existing iPhone or Android phone. Or their Blackberry, for that matter.

RIM can’t keep up with Apple and all of the other handset manufacturers churning out new phones every two weeks, nor can they keep up with all of the development resources third parties are pouring into those platforms.

A services strategy could give the hardware platform a bit more breathing room, if not subsidize it outright.

It could also introduce, through Message, a whole new set of users to the RIM platform.

It’s true that this would be a radical change for the beleagured company. And it’s entirely possible that the software and services approach would lead to a smaller RIM.

Then again, the company is already shrinking.

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