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Research in Motion’s market cap has dropped to just $6.8 billion, which is less than what Microsoft paid for Skype when it purchased the VoIP company for $8.5 billion this year. As the pressure mounts upon the company, the CEOs have cut their salaries to almost nothing.

CEOs take a knock

Research In Motion’s co-CEOs, Mike Lazaridis and Jim Balsillie, cut their salaries to just $1 per year during the company’s most recent earnings call. Even with that cut, the press around RIM’s leaders ranges from scepticism to downright cynicism. Reporting on the salary cut, CNet’s Larry Dignan writes: ‘Nevertheless, RIM carries on with its current management. Co-CEOs James Balsillie and Mike Lazaridis are taking $1 in salary a year. This token gesture inspires instant cynicism. The two may only be worth $1 a year at this point. You get what you pay for.’

Investors making suggestions

Activist investors Jaguar Financial, who for the last few months have been calling for a shakeup at Research In Motion, have also weighed in, recommending that the company ditch its handset business entirely and rather monetize its high-margin services business. ‘Jaguar believes that the road map to value restoration lies in a sale of RIM whether as a whole or in separate parts,’ Reuters reports.

The problem with this thinking, of course, is Research In Motion’s entire service business is built atop sales of its BlackBerry handsets – in many ways they are one and the same – the one exists to augment the other.

Now what?

The fact that Microsoft paid more for Skype than Research In Motion is currently valued at is very symbolic. 2011 has been a torrid year for the Canadian smartphone company, and if 2012 gets off to a similar start, the long-term viability of Research In Motion will be called into question.

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Sterne Agee Analyst Shaw Wu says that Research in Motion has been blindsided by the aggressive pricing of the Amazon Kindle Fire tablet. The Fire, which shares much of its hardware and build style with RIM’s Playbook, costs a fraction of what the BlackBerry tablet PC costs, and is selling at a much quicker rate, too.

Response

RIM recently slashed the price of the Playbook by $200 (£130), and then $300 (£195), with Analyst Shaw Wu saying that the move us likely a response to the Kindle Fire, and that it made the Playbook a loss-making device. ‘Our understanding is that RIM was blindsided by Amazon pricing its Kindle Fire aggressively at $199,’ says analyst Shaw Wu [via AllThingsD]. He continued, saying: ‘We estimate that the company is losing $50-$75 per PlayBook sold.’

Wu says even with the massive $485 million write-down RIM has taken with the Playbook, the company will need to pour more money into promoting the BlackBerry tablet PC if they are to sell the units still on hand, thereby increasing the loss made per unit sold.

2007 redux

For Research in Motion, being caught unawares by the launch of a big-deal mobile device is not a first. In 2007, when Apple unveiled the iPhone, the company was adamant that a phone with a screen that large was impossible to make without it being a heavy drain on battery. At the time, we wrote: ‘According to a former RIM employee and a commenter on a Shacknews post, supposedly the Apple smartphone “couldn’t do what [Apple was] demonstrating without an insanely power hungry processor, it must have terrible battery life”.’

The iPhone turned out to be mostly battery with a tiny logic board strapped to it, as confirmed by iFixit’s teardown of the device.

Back against the wall

2011 has been unkind to Research In Motion who has seen sales of BlackBerry smartpones spiral downwards, suffered a major outage of the BIS service and have watched their BlackBerry tablet PC struggle to make an impression on the market. There are doubts about how long the Canadian mobile devices giant can carry on like this for. Maybe 2012 is the year the BlackBerry maker returns to form.

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After getting off to a solid start, sales of RIM’s smartphones that run on BlackBerry OS 7 are beginning to slow. This is according to a report issued by Canaccord Genuinity, citing industry checks.

Canaccord Genuinity analyst T. Michael Walkley says that sales of the Canadian smartphone giant’s recently released mobile OS platform have been poorer than Research In Motion had hoped. The BlackBerry OS 7 phones were meant as a stop-gap between RIM’s dated OS 6 mobile OS platform and the company’s next-generation BlackBerry BBX devices.

Pressure from all directions

Instead OS 7 has gotten off to a sputtering start as increased competition from Apple with their iPhone, and Android, led by the Galaxy Nexus, has resulted in RIM’s market share nose-diving, particularly in North America. ‘With the launch of the iPhone 4S, increasingly price-competitive Android smartphones, improving Windows smartphones, and the launch of the Amazon Kindle Fire tablet, we anticipate increasing competition across all tiers of RIM’s products in [calendar year] 2012,’ said Walkley.

He added that ‘while our September/October checks indicated solid sales of new BlackBerry OS 7 models, especially the Bold 9000 series as an upgrade enterprise sale, our recent checks indicate slowing sales trends post the launch of the iPhone 4S and price reductions of the iPhone 4 and 3GS.’

BBX a short-term curse

While the BlackBerry BBX platform is positioned as RIM’s potential saviour, the platform will also lead to a further slowdown in sales of Research In Motion’s current products. Canaccord Genuinity analyst T. Michael Walkley expects the next generation RIM OS to arrive in the middle of 2012, which he predicts will lead to a sales slowdown across the board each quarter up until then. Not ideal for Research In Motion, but the slowdown could have been even more dramatic if the company didn’t have something in the pipeline.

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Research In Motion’s woes are well documented, with the company’s sales fast declining, too. The sales decline is primarily off of a weakened position in North America, but RIM’s sales are flourishing in other regions.

US market share capitulating

‘RIM’s market share has fallen below 10 per cent for the first time and the current outlook for it in the U.S. is certainly bleak,’ Canalys analyst Tim Shepherd wrote in his report [via PCWorld]. He continued, saying that: ‘RIM must deliver a competitive high-end 4G smartphone in early 2012.’ The recommendation, especially the requirement of 4G, is vague but true – whatever handset Research In Motion does deliver next year, it has to be a very big deal.

Elsewhere in the report, he noted that the company’s shipment in North America plummeted 58 per cent year-on-year – a colossal drop, however you look at it. In the process, the company went from selling one in every four smartphones to just shy of one in every 10 smartphones in the region, with North American market share falling from 24 per cent in Q3 2010 to 9 per cent in Q4 2011.

Other markets flourishing

The company’s operations outside of North America grew by nearly as much as they fell in North America. Shepherd says that ‘the picture for RIM in other parts of the world is clearly positive,’ asserting that the company shipments grew more than 50 per cent year-on-year in Europe, Africa, the Middle East and Asia Pacific. Interestingly he attributed much of this growth in BlackBerry sales in those regions to the popularity of the BlackBerry Messenger service. That puts into perspective how the recently released BBM Music service could be crucial for RIM, while shining a spotlight on how much of a threat third-party messaging apps like WhatsApp could be to RIM’s business.

Bad press hurts US

Shepherd asserted that much of Research In Motion’s woes in the US are due to continually ‘unfavourable press’ in the region. Whatever the cause, RIM has a problem on its hands and would do well to figure out how to mitigate the decline in North America, while accelerating its impressive BlackBerry sale elsewhere around the world.

Photo: RIM

RIM investor confidence is at an all-time low, with the company’s market valuation as per share price dipping below its book value. Analysts are calling the company a ‘wounded puppy’ and this is, arguably, the most significant sign that faith in RIM’s ability to mount a comeback is diminishing fast.

Book value? Market value? What does it mean?

When a company is valued at less than its book value, it effectively means that it is worth less than the value of all of its properties, patents, and assets less liabilities. In short, this means that if a company were to acquire RIM at its current stock price, it could then sell all the sellable properties the company has and turn a profit.

This is significant for many reasons. Firstly, it symbolises that investors believe that the company’s intellectual property, and products are worth nothing. Speaking to Bloomberg Kingwest & Co analyst Richard Fogler said: ‘The market, at book value, seems to be saying not only is RIM going to not get bigger in the future, but it’s actually going to shrink,’ He explains that: ‘Everyone’s frightened of what’s going to keep happening tomorrow.’ He had equity in RIM until the third quarter of this year.

Now what?

For Research In Motion, a lot of soul searching has to happen. The company had an opportunity to oust its leadership at the AGM this year, but they chose to keep the co-CEOs in place.  In many ways, this makes this dire corporate position as much the fault of the RIM investor as it does the fault of RIM’s management and leadership. Some investors have tried to initiate change, but have had no success thus far.

All that can dig them out of this hole is amazing products, and whether they will arrive in time remains to be seen. Whether the RIM investor(s) will stick around long enough to not make the company even more vulnerable to acquisition remains to be seen.

Photo: Florian SEROUSSI / Flickr

Research In Motion’s BBM Music service has gone live, the company announced in a blog post today. The service is currently available for BlackBerry users who reside in the US, the UK and Australia.

What the service really is

The BBM Music service is much smarter than initially thought. When we – and the rest of the media – first began reporting it, we were under the impression that users could send and receive just 50 songs per month between them and their BBM contacts, but the offering is significantly more refined than that.

‘First, let’s clarify one misconception: with a BBM Music Premium subscription, you can access far more than 50 songs,’ writes Carolyn H, RIM’s community manager. ‘To start your BBM Music profile, you can choose up to 50 songs from the millions in our catalog. But, that’s just the beginning! Add more music to your library by adding friends and get access to your BBM friends’ music profile songs. The more BBM friends with BBM Music Premium subscriptions you have, the more songs you can share! And the sharing goes both ways. Your BBM friends with BBM Music Premium subscriptions will have access to your profile music too, and can access it anytime.’

Smart model

What the service does is incentivise engaging with the BBM platform more – a smart competitive advantage over competing services – and serve as a social music discovery tool.

Whether BBM users, who are accustomed to receiving the full BIS service for a flat fee, will be prepared to shell out an extra $5 per month for the service remains to be seen, but the incentive is certainly there. This is easily one of the most innovative services to come out of Research In Motion in recent times, and I think there’s a good chance BlackBerry customers will lap it up.

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Beleaguered mobile devices giant Research In Motion had more bad news yesterday, announcing that the long-awaited BlackBerry Playbook OS 2.0 update would be delayed to next year February. Not only that, some features that customers have long been looking forward to will not arrive in time.

OS delay

David Smith, who is senior vice president for the Playbook, announced the news in a blog post. ‘As much as we’d love to have it in your hands today, we’ve made the difficult decision to wait to launch BlackBerry PlayBook OS 2.0 until we are confident we have fully met the expectations of our developers, enterprise customers and end-users,’ he wrote.

BBM delayed beyond OS delay

What’s more, one of Research In Motion’s big selling points, the BlackBerry Messenger chat platform, will still not be ready even by the time February rolls around. Smith says that they ‘decided to defer the inclusion of the BBM application to a subsequent BlackBerry PlayBook OS release’. He did not specify when that would be, but he cites building a seamless BBM solution for the BlackBerry tablet as the reason for the delay.

Customers growing impatient

Reports have suggested that RIM’s customers have grown impatient with the company’s recent failings, and its slowness in responding to the rapid changes in the smartphone market. Enterprise research company EMA had the most damning report, forecasting that 30 per cent of the company’s enterprise customers would switch to other platforms in 2012.

Smith suggests BlackBerry Playbook OS 2.0 will be worth the wait, saying that it will ‘deliver a great experience’ for RIM customers. ‘The software update will add advanced integrated email, calendar and contact apps, a new video store, as well as new functionality that will allow your BlackBerry smartphone and BlackBerry PlayBook to work together even better.’ All well and good, but will the benefits of waiting any longer outweigh the extra pressure this BlackBerry tablet operating system delay applies on the Canadian smartphone giant?

All we can do is check back in February.

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When the BlackBerry Blackout happened recently – where users around the world went without BlackBerry Internet Services for three days in some regions – we asked whether it would lead to customer defection in the long term (as in when their contracts ran out). According to a new report, mass customer defection has already begun.

Shots bouncing off the RIM

Enterprise Management Associates reports that some 30 per cent of ‘large scale’ BlackBerry customers planned to jump ship in 2012. That’s nearly one third of enterprise scale customers who happen to be Research In Motion’s bread and butter. What’s more EMA’s research found that only 14 per cent of RIM’s customers were actually happy with the smartphones they had, a fraction of the 44 per cent of iPhone users who were content with their handsets.

Scary times

On these extreme findings, EMA research director Steve Brasen says: ‘We expected to see some market share loss by RIM, but these results were far more dramatic than we could have anticipated.’ He added that: ‘Both enterprises and employees indicated they were broadly abandoning BlackBerry devices for primarily Android and iOS platforms – and this data was collected before the recent BlackBerry service failures, which can be expected to even further accelerate migration.’ Scary.

Perhaps what was most worrying for Research In Motion is the fact that Brasen’s team had conducted the research before the BlackBerry Blackout only further emphasised the Canadian smartphone giant’s problems.

What’s next?

Research In Motion recently unveiled their BBX platform – their next generation mobile OS that was a hybrid of both Blackberry OS and QNX – that was aimed at smartphones, tablet PCs, and embedded devices like car radios.

The company without a doubt hopes this could rejuvenate RIM, especially as Android, iOS and arguably Windows Phone 7 have been out-innovating them. Moreover, it will be interesting to see just how detrimental the BlackBerry Blackout proves to be.

Photo: The GameWay / Flickr

At Research In Motion’s Developer’s Conference, the company unveiled BBX – its new platform for smartphones, tablet PCs, and ‘embedded devices’. It’s basically the best elements of BlackBerry mobile OS 7 built atop the QNX mobile operating system that’s present in the BlackBerry Playbook.

What does the platform have?

In the press release unveiling the BBX platform, the company explains that: ‘The BBX platform will include BBX-OS, and will support BlackBerry cloud services and development environments for both HTML5 and native developers. BBX will also support applications developed using any of the tools available today for the BlackBerry PlayBook – including Native SDK, Adobe AIR/Flash and WebWorks/HTML5, as well as the BlackBerry Runtime for Android Apps – on future BBX-based tablets and smartphones.’

The company says that while HTML5 will work well, the way to get the absolute most out of the platform would be to develop natively on the new platform.

That which shall not be spoken

In a statement in the press release, RIM co-CEO Mike Lazaridis explains that: ‘At DevCon today, we’re giving developers the tools they need to build richer applications and we’re providing direction on how to best develop their smartphone and tablet apps as the BlackBerry and QNX platforms converge into our next generation BBX platform.’ This was preceded by the claim that BlackBerry’s application eco-system is one of the most profitable in the world for developers, which is interesting considering most think RIM is missing a beat with third-party mobile OS relationships.

Research In Motion did its absolute best to ignore the recent BlackBerry blackout that plagued the platform for a few days, as well as limiting what it had to say about competitors Apple and Google.

I was hoping that a prototype of the so-called ‘BlackBerry QNX superphones’ would be shown – BBX now – but there was no such luck. Given Apple’s massive opening weekend for the iPhone 4S, coupled with Google’s impressive showing in unveiling Android 4.0, the Canadian-based smartphone giant has a lot of work to do if it is to stay in striking distance of its competitors. Perhaps the BBX platform represents the groundwork being laid.

Photo: the justified sinner / Flickr

After days of the BlackBerry Blackout, as well as silence from the company’s leadership, RIM has announced that all BlackBerry services had been restored, as well as having their co-CEO Mike Lazaridis making a video apology to users for the recent blackout.

Too silent for too long

In the video, which was posted to BlackBerry’s official YouTube channel, Lazaridis says: ‘You expect better from us and I expect better for us. It is too soon to say that this issue is fully resolved but let me give you more detail on what is happening.’ Suffice to say silence from the company’s CEOs, instead trotting out their CTO David Yach to deal with all the pressure, was concerning.

Speaking on overcoming the BlackBerry Blackout specifically, Lazaridis said: ‘We are now approaching normal BlackBerry service levels in Europe, the Middle East and Africa.’ He continued, saying: ‘We continue to monitor the system closely and working hard to stabilise the system. We expect to see some instability problems as the system comes back to normal levels everywhere.’

Instability, still?

What Research In Motion’s leadership has done by remaining silent throughout this ordeal is applied even more pressure on themselves to resolve the problem instantly. So for Lazaridis to say that users should have to deal with instability problems requires some nerve. RIM co-CEO Mike Lazaridis assures users that the team is working hard to restore service to regular levels, as well as remaining committed to re-establishing users’ trust in the company, too.

Too little too late?

In a year of setbacks for Research In Motion, many have wondered if the BlackBerry Blackout would prove to be the death knell for the beleaguered company. Only once details regarding a compensation plan for affected BlackBerry users is ironed out, coupled with assessing the full damage done to the company’s image and the customer trust in it will be able to say if this is as a big of a deal as it has been made to be so far.