Circling the Drain, RIM Lays Off 11 Percent of Workforce

BlackBerry maker Research In Motion (RIM) announced this morning that it will reduce its workforce by approximately 2,000 employees in an effort to cut costs as the market for its smartphones dries up amidst heavy competition. That cut represents about 11 percent of RIM's total workforce, and the company will have approximately 17,000 employees when the cuts are completed.

"RIM's cost optimization program is focused on eliminating redundancies and reallocating resources to focus on areas that offer the highest growth opportunities and alignment with RIM's strategic objectives," a statement from the company reads. "The workforce reduction is believed to be a prudent and necessary step for the long-term success of the company and it follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone."

Before the iPhone, RIM dominated the North American smartphone market, just as Nokia did worldwide. But both firms were caught flat-footed by the success of the multi-touch smartphone and the copycat Android devices, which perform more like portable computers than phones. During this time, RIM has moved particularly slowly, and recent initiatives such as touch-based BlackBerry phones and the iPad-like PlayBook tablet haven't been successful.

And like Nokia, RIM is betting its future on a new mobile platform that it is slowly moving toward. In RIM's case, that's a new BlackBerry OS based on QNX. (Nokia is dropping its Symbian OS over time and migrating to Microsoft's Windows Phone OS.) But the first QNX device from RIM, the PlayBook tablet, was poorly reviewed because of many missing features, and it has sold poorly. So poorly, in fact, that RIM has had to reportedly slash already poor sales projections for the device. A rumor that RIM was cancelling the PlayBook was quickly denounced, however.

The RIM job cuts come after a disastrous financial quarter during which the company announced that its next year profits would be 30 percent below previous expectations. Not coincidentally, analysts have repeatedly called for the ouster of RIM's dual CEOs, Jim Balsillie and Mike Laziridis, and a new strategy. So far, the dual CEOs aren't going anywhere. But RIM did announce that COO Don Morrison, who's been on a medical leave for months, will now retire after more than 10 years with the company. In a typical RIM move, he'll be replaced by dual COOs.

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