Research in Motion's Surprising Announcement

In a recent with interview with Financial Times, Thorsten Heins, the brand-new CEO of Research in Motion (Nasdaq: RIMM  ) , confidently shrugged off any notion of a sale or buyout of the struggling mobile-phone company. Instead, he says, he's prepared to make a go of Blackberry as it is. Here's why he may be onto something.

The comeback kid
"In the US, I think it is a turnaround story in terms of our position in the market, our perception in the market. A turnaround in the U.S. is going to happen." So said Heins to the Financial Times -- brave words from the leader of a company whose operating system polled just 4.5% in a recent U.S. smartphone market-share survey.

Also brave words from a CEO who came to the position less than two weeks ago, and who is as much an insider as the men he replaced: Mike Lazaridis, the engineer who founded RIM, and Jim Balsillie, the marketing expert who joined the company a few years later. The pair were co-CEOs and co-chairmen, and while the company was obviously faltering, their leadership was at least both long-tenured and very experienced.

Heins was previously RIM's COO for products and sales, and has been with the company since 2007. Given the decline of this once-mighty smartphone company (founded long before anyone actually used the term "smartphone"), one could argue it would have been a better idea to bring in someone from the outside, someone with a fresh perspective on the company's perilous situation.

The great, smart hope
But, to his credit, Heins is actually pinning his hopes on something real and substantial, a factor that makes the Blackberry system truly different from its most dogged competition, Apple (Nasdaq: AAPL  ) iPhones and Google Android devices.

That factor is that Blackberrys operate on a closed, integrated system, the main benefit being the calls you make and the data you send are inherently more secure than that of an iPhone or Android running on a traditional cell networks. Hence, Blackberrys have always been a favorite of companies and governmental organizations who place a premium on security.

Out with the old, in with the, umm … newer
While enhanced security is something working in favor of RIM, something currently working against it, and something Heins intends on fixing, is the fact that the majority of U.S. Blackberries still run on old operating systems, i.e., Blackberry 5 and 6, both of which can run slowly, something no smartphone user wants to deal with.

The latest OS, Blackberry 7, is ready and available for use and is about to receive a hard marketing push. As for the long-awaited Blackberry 10, the next generation OS, it's facing delays, which makes it even more imperative to at least get Blackberry 7 out there into as many hands as possible.

Worth another look
Your Foolish columnist had previously been a hair's breadth away from writing RIM and Blackberry completely off, but that opinion may be changing. With its enhanced security, the RIM/Blackberry system really does hold a slight advantage over its prettier, more 21st-century-looking rivals. If RIM can capitalize on this, it might find a solid market niche in government and information-sensitive companies.

Heins also mentioned the traditionally buttoned keypad as being a significant advantage for Blackberry. And it's true, there are still people who prefer typing on actual buttons rather than the touch screen of an Apple or Android device. Apple stills sells "classic" iPods, with the traditional interface, right next to the iPod Touch, which operates via touch screen. There's no reason two formats can't coexist in the smartphone world, either.

Finally, and happily for RIM, the company is doing significantly better overseas. Heins said that overseas sales of the Blackberry jumped 50% in the fourth quarter of 2011.

Is RIM, therefore, ready to turn things around and retake its lost market share from Apple and Android? Probably not. But might the company be able to turn its fortunes around enough to find a comfortable niche to settle into? It's far from out of the question. Heins makes a reasonable case and tells a believable tale, one worth following.

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Fool contributor John Grgurich tries to keep an open mind on all things, even though he did grow up in Pittsburgh, but owns no shares of any of the companies mentioned in this column. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a scintillating disclosure policy.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 07, 2012, at 9:02 PM, bigdawguga wrote:

    RIMM needs a game plan. 1. Voice Recognition. Acquire/partner with voice recognition software company and make voice recognition better than Apple's Siri. 2. Battery Life. Get with a battery company, nano tech such as XDSL. Make a battery that lasts ten times longer than current technology. 3. Tailor and pre-load applications. RIMM could have a phone with preloaded applications available for business people (great stock app, great business related apps, CNBC app etc), athletes (ESPN app, sports TV apps, etc.), teacher (education apps) home maker (recipe apps), you get the point. Basically, consumers want apps user friendly and phones personalized to the individual consumer. 4. Speed. RIMM needs to join the bandwagon for the fastest phone. 5. Cool factor. Spend a little extra time on making the phone a little cooler. Make phones with University's mascot and sell around universities. IE make a phone with a Georgia bulldog painted on it and sell it in Georgia. Innovate innovate innovate.

  • Report this Comment On February 08, 2012, at 9:53 AM, XMFGrgurich wrote:

    The new CEO, though an insider, I think has some good ideas. It's not out of the realm of possibility that RIM can find a niche and survive.

    Thanks for the comments. Cheers.

  • Report this Comment On February 08, 2012, at 7:01 PM, jelp2 wrote:

    @bigdawguga

    1. vlingo has been around on BB's for years now, you can send email, text and search with it by voice. It doesnt hold a conversation with you, but is that really a bad thing??

    2. Battery life is better than the other platforms already, thats already a major selling point.

    3. To preload or not to preload. That could go either way. That depends on the consumer.

    4. Not sure if you have tried the OS7 devices,but their speed is comparable to many of the devices in their class.

    5. Coolness factor is a matter of opinion. The new phones have nice style to them already. The Torch 9850 is an great design. To design a phone with school logos,etc will limit sales to people who may be onto that. There are plenty of companies already who will embellish your phone to your liking.

    I think their game plan is pretty clear to date. With the new OS for the PlayBook about to drop anyday now, to the new BB10 phones coming later this year, the new marketing push, the co-ceo's stepping down and getting all the negative issues out of the way before the new ceo took over. I think there is plenty of innovation coming out of RIM this year.

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