Finally, RIM Co-CEOs Step Aside

Photo credit: Mike Cassese/Reuters

After two years of steady market-share losses and persistent rumors about the company's pending demise, the cofounders who ran Research In Motion (RIM) into the ground are finally stepping aside. Jim Balsillie and Mike Lazaridis, who previously served as RIM's co-CEOs and co-chairmen, have ceded control of the company to Thorsten Heins, who was until this past weekend a co-COO.

"There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership," Mr. Lazaridis said in a prepared statement. "Jim and I went to the Board and told them that we thought that time was now ... The company is entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond. Jim, the Board and I all agreed that leader should be Thorsten Heins."

That time of growth is, of course, long behind RIM. In the past two years, the company has watched helplessly as its share of the smartphone market has fallen from almost 50 percent to just 9 percent in the most recent quarter. This time period has been marked by strong gains for Google's Android (which now dominates the market), Apple's iPhone (which is a strong number two), and a series of flailing and failing attempts by RIM to catch up.

The troubles began in 2007 when Apple launched its innovative iPhone. At the time, RIM didn't think the iPhone would damage its business and actually claimed that phone's success would drive awareness of its business segment, increasing its popularity. But the release of Apple's App Store a year later—the amazing success of which was surprising even to Apple—was another setback, as was the subsequent rise of Android, which swept aside even Apple.

RIM slowly responded with its own lackluster, multi-touch smartphones, but these products served only to confuse customers since RIM, over time, offered a complex line of products—some were touch-based, some were keyboard-based, and some offered both. RIM sells different versions of its products on every carrier, and a 2011 tablet entry, the PlayBook, has bombed. RIM now sells this device at less than cost.

With new leadership, there's always the chance that RIM can turn things around. After all, the smartphone market is growing dramatically, and even a much smaller share of the overall future market could lead to higher revenues and growth. Unfortunately, it appears that Mr. Heins is going to take RIM down the same rabbit hole that Balsillie and Lazaridis previously dug. He's not planning a major change in strategy.

That means that RIM is still banking on its much-delayed BlackBerry 10 OS, which won't ship alongside next-generation devices until late in the year. And it means that RIM will continue selling the lackluster PlayBook while also slowly trying to improve that device's software. 

"We are still very, very convinced that this was the right path to go," Heins told The New York Times on Sunday. "Now, were there bumps in the road? Sure, but with the kind of growth we had it is not uncommon to hit bumps in the road."

RIM's troubles are much more than a "bump in the road." And with Balsillie and Lazaridis still taking active roles in the company—Balsillie as a director and Lazaridis as vice chairman and head of an "innovation committee"—it's pretty clear that not much has changed at all. In fact, there's some evidence that this change was facilitated simply to calm understandably irritated shareholders, which have watched the value of RIM plummet by over 75 percent in the past year alone.

I previously predicted that RIM would cease to exist or at least cease to be relevant if it didn't make meaningful changes this year. This leadership overhaul seems, on the surface, to meet that need. But the closer the moves are examined, the less dramatic they seem. RIM will need to do more than this to succeed in the future. A lot more.

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