"Once we rid ourselves of traditional thinking, we can get on with creating the future."
-- James Bertrand
Running a business is all about innovation. Whether you're a biotech upstart, a cutting-edge technology company, or a large-scale retailer, innovation is paramount to a business' success. Without innovation, companies run the risk of complacency and getting passed by competitors, or, even worse, folding up shop altogether like Circuit City did a couple of years ago.
No company gets a free pass when it comes to adapting its business plan -- so when push comes to shove, we need to ask ourselves: Will this company innovate or die?
Today, let's take a closer look at Research In Motion (Nasdaq: RIMM) to determine if the company can adapt to rapidly changing consumer demands or if it will be pushed into the background.
What's wrong with RIM?
The primary problem with RIM is that it's sitting on its laurels, complacent with its product and its position in the smartphone arena while its competitors -- Apple (Nasdaq: AAPL), Samsung, and Motorola Mobility (NYSE: MMI) -- are innovating and changing the way consumers use their phones.
RIM has been slow to adapt its BlackBerry platform to a quickly changing consumer market that relies on its phones to do more than simply secure emails nowadays. After focusing for so long on the enterprise market, RIM appears to be a deer frozen in the headlights as it tries to bring new and hip products to consumers. Based on a first-quarter analysis of smartphone market share from ComScore last month, Google's (NYSE: GOOG) Android operating system swept RIM under the rug to gain the top spot, with Apple also gaining ground.
Getting RIM back on track
I'm not the CEO of RIM, but for a moment let's pretend I am. As I see it, RIM needs to do three things to get its business back on track:
- Pick a target audience: Please! On behalf of shareholders, pick a target audience! If you're going to keep those archaic keyboards on your phones, continue targeting enterprise customers and stop trying to beat Apple on its own playground.
- Innovate faster than molasses in winter: One of the biggest drawbacks of RIM has been its speed of innovation. In general the company is usually on the tail-end of new designs – see the BlackBerry PlayBook as evidence of this. In order to maintain its status as a major player in the smartphone market, it will need to listen to its customers and adapt quicker.
- Test the waters: RIM is a cash cow despite its recent problems and it should test the waters about potential joint ventures within its sector, or perhaps even putting itself up for sale. RIM has taken a rather standoffish approach to spreading its wings and shareholders would be best served if RIM took a few chances rather than sitting back and playing it safe.
What's the verdict?
Many have claimed that RIM is going to go the way of Palm and be a distant memory in just a few short years. Unlike Palm, RIM is still in a pivotal, industry-changing position, thanks to the 27.1% market share it still holds with smartphone subs. The company certainly isn't going to win over customers by being complacent, and it will definitely need its enterprise clientele to remain strong if it is to continue raking in the cash as it has been for the past few years. Based on its strong balance sheet and minute forward P/E ratio (5.35!), I still feel the company has a good chance of becoming what Apple was in the 1990s -- a successful turnaround story.
Are you buying into the potential for a RIM turnaround? Share your ideas in the comments section below and consider adding Research In Motion, Apple, and Motorola Mobility to your Watchlist to keep up on the latest news in the rapidly changing mobile sector.
