Having squandered most of the competitive advantages it once enjoyed, Research In Motion is now caught in a downward spiral that is painful to watch. Strategic missteps and a profound failure to understand the consumer market have whittled RIMs market cap to less than $15 billion from $83 billion in just a few years. Yet the companys comedy-of-errors management insists RIM is poised to regain its leadership position.

Which is a familiar scenario to tech industry historians. As Needham analyst Charlie Wolf observes, there are precedents for Research In Motions quick and brutal deterioration: Digital Equipment and Wang.

Over the past 30 years, seemingly impregnable technology companies misread or ignored a disruptive event to eventually disappear, Wolf writes today in a note to clients. Think Digital Equipment. The company’s management dismissed the personal computer as a fad only to be buried by it. Compaq acquired the company for pennies on the dollar in 1998. Wang was guilty of the same mistake. The personal computer quickly made the company’s word processors obsolete. Could the same thing happen to RIM?

Its certainly beginning to look that way. RIMs share of the worldwide smartphone market is in decline, as is year-over-year growth in BlackBerry shipments. And the companys penchant for shipping unfinished products or poorly conceived ones isnt helping matters. The PlayBook. The Storm. The Torch. These devices havent reversed RIMs deteriorating position in the consumer market, theyve accelerated its deterioration.

RIM does not know how to design user interfaces for consumer-oriented smartphones. Despite its assertions to the contrary, what’s a greater sin is that management apparently has no appreciation of this fact, Wolf says, adding later that the company is borderline dysfunctional starting from the top. Which leaves RIM, if not in the same precarious position that ultimately felled DEC and Wang, at least headed toward it unless the company can somehow regain relevance in the smartphone space.

Says Wolf, RIM is not dead. BlackBerry has a lock on the business market where its communications and messaging capabilities still represent the gold standard. But unless the company cracks the code in the consumer market, RIM’s likely to become a shadow of its former self.

Similar Posts:

Share