20
Dec

RIM’s Bosses Might Be Clueless, But They Aren’t Stupid

Written by Andrew Jaquith. Posted in Blog Post

Two days ago little-known “activist investment fund” Jaguar Financial made a lot of waves in the Twitterverse by calling for Research In Motion to take dramatic steps to save their business. They want RIM to:

  • Fire the co-CEOs
  • “Monetize its patents,” which I interpret as meaning “sue lots of people and hope to bring in lots of money”
  • Focus exclusively on services, notably the RIM delivery network
  • Sell off the handset and tablet businesses

I’m probably giving Jaguar far more exposure than it deserves by writing up a quick post about this. The first idea, firing the co-CEOs is hard to argue with. It is clear that, five years after the launch of the iPhone, RIM is no closer to figuring out how or why Apple has — somehow — managed to eat its lunch. Its next-generation BBX (whoops, BlackBerry 10) operating system will be over a year late. And anecdotes from former RIM insiders make it sound like a place that puts the “fun” back in “dysfunctional.” While I never wish anyone in corporate life ill, it is clear to me that the company needs new leadership. RIM’s co-CEOs (how weird is that, anyway?) should gracefully retire before the board fires their asses.

Other ideas are questionable. The “monetize your patents” recommendation is no shingle to hang a sign on. Patent wars are the last refuge of the desperate. It hasn’t worked out too well for Kodak, its neighbor 175 miles to the east, has it?

The last recommendations, to (1) sell off  the hardware division and (2) focus exclusively on services strikes me as the sort of crazy you might get from someone who doesn’t actually understand RIM’s business. Has Jaguar been reading the news over the last few months? RIM had a series of crippling outages earlier in the fall that knocked its uptime back to three nines (99.9%) and left millions of customers without connectivity. RIM is the only handset vendor that continues to cling to a proprietary network delivery model, years after TCP/IP over cellular became ubiquitous. Most enterprise buyers I talk to are dumping their BlackBerry devices largely because of network problems. RIM’s network isn’t  some kind of shining jewel; it’s an albatross. In fact, I’ve previously forcefully argued the opposite of Jaguar’s recommendation: that RIM must get rid of its network before it’s too late. Telling RIM to focus on its network is like telling AT&T that it needs to beef up its investments in ATM and X.25, or that Kodak ought to redouble its efforts in silver-halide photography.

Which brings us back to recommendation #1. Investors can make a strong case for firing co-CEOs Mike Lazaridis and Jim Basillie on the general grounds of being technologically tone-deaf, strategically blinkered and competitively clueless. But stupid they are not, which is why I give Jaguar’s recommendations a zero percent chance of happening.

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Andrew Jaquith

Andrew Jaquith is the Chief Technology Officer of Perimeter E-Security. Before Perimeter, he was a senior analyst with Forrester Research and Yankee Group.

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