Research in Motion is struggling and everyone can see it, including new CEO Thorsten Heins. Heins was adamant that RIM was not a turnaround story just 2 months ago when he accepted his new post, but in the latest earnings call he made it clear major changes are needed. The stock has already taken a beating, losing 75% of its value in the past year, with more pain on the horizon. The company also lost 3 notable executives, including Jim Balsillie who ran the company for 20 years before stepping down earlier this year. The other two executives were David Yach, CTO, and Jim Rowan, COO. The most telling sign, in addition to the previously mentioned departures, is that Heins himself acknowledged selling the company was on the table. This is a big about-face for Heins who had repeatedly dismissed the idea since taking over, but earnings have fallen off a cliff and can't be ignored. The company swung to a loss of $0.24 per share after a profit of $0.51 per share the previous quarter and $1.78 per share in the same quarter last year.
It's no surprise the company has swung to a loss; sales tumbled 25% in the latest quarter and are unlikely to pick up in the near future. RIM's line of devices running their new BlackBerry 10 platform isn't due till later this year, so demand is likely to continue to fall.
Where does Google and its rumored tablet come in to play? At this point RIM only has a few options, the most lucrative being licensing its OS or selling assets. A Google tablet makes both options more lucrative because current Android manufacturers are likely to start shopping for viable alternatives. Several tech giants have already shown interest in working with RIM, though nothing concrete has surfaced yet. Perhaps the most notable of the firms previously expressing interest is Amazon, maker of the Kindle Fire.
Amazon's Kindle Fire is the only other tablet besides Apple's iPad with sizable market share and it does run Google's OS. Unfortunately for Google, the Kindle runs a separate branch of Android and has its own Amazon-controlled marketplace. The Kindle Fire is the dominant Android tablet and Google isn't even in the driver's seat, much to its chagrin. If the rumors of Google selling their own devices are true, the Kindle Fire likely has a lot to do with it.
Google has already put its content distribution under one roof, called Google Play, and will likely subsidize their devices in a manner similar to Amazon. The tablet, which is likely to surface around the release of Android's latest version, Jelly Bean, will be sold directly by Google. Google has tried the direct approach once before with its Nexus phones, though in that case the experiment failed badly. A tablet may fare better because its use isn't tied to a wireless carrier.
Google's entry into the tablet market has the potential to disrupt and heightens the already tense rivalry in the sector. It also becomes problematic for most other manufacturers in the space because Android is the only real competitor for Apple's iOS. Apple's dominance has reinforced the idea that working to meld software and hardware together yields result; a Google-made tablet is seen as a direct threat to other brands. Building a successful OS from the ground up has proven difficult and even in the face of recent struggles BlackBerry still has a significant market presence. In the smartphone space RIM still holds a distant third, but places well above other competitors.
RIM's tablet, the BlackBerry Playbook, hasn't been the big winner RIM hoped for, but according to Heins it "now has over a million customers." By most accounts RIM's BlackBerry OS is well-regarded, though it lacks the consumer apps that have quickly become the selling point for Apple and Android. Another bonus is the fact that RIM is leaving its consumer focus and turning back to its enterprise roots, leaving the licensee free of competition, at least from RIM itself. The same reasoning works if the company is forced to sell.
As I mentioned earlier, several companies have expressed interest in working with the company, I suspect those same companies would be willing to buy all or part of RIM given the chance. Prior to its deal with Nokia, Microsoft was a prime candidate for RIM's assets but I think Amazon is now the best fit, particularly when considering anti-trust issues. Amazon has continually diversified from its online bookstore roots, and purchasing RIM would be another step in that direction and could significantly bolster its Kindle lineup.
Speculation aside, anything that increases demand for RIM's assets is critical at this point. Since the company has given up on stoking consumer demand itself, making a deal with another company is the next best alternative. Google's potential entry into the tablet market just helps add urgency to potential suitors.
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