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RIM To Step Up Enterprise Focus, But Remain In Consumer

Waterloo, Ontario – Research In Motion (RIM)
will make a “stronger investment” in the enterprise market and in “high-end
aspirational devices” but won’t abandon the consumer market or the “mass
market,” said president/CEO Thorsten Heins.

The recently
appointed CEO also said the company will “incentivize” sales of existing
BlackBerry 7 devices until BlackBerry 10 devices become available in the second

Heins made the
comments after announcing RIM’s first quarterly net loss in memory. The company
posted a $125 million net loss in its fiscal fourth quarter compared with a
year ago net income of $934 million. Fourth-quarter revenues fell 25 percent
from the year ago to $4.2 billion.

 For the fiscal year ending March 3, revenues
fell 7.4 percent to $18.4 billion, and net income fell 66 percent to $1.16

“We plan to
refocus on the enterprise business and capitalize on its leading position in
this segment,” Heins said. “RIM was late” in targeting the
“bring-your-own-device” [BYOD] trend in which enterprises let consumers connect
their own devices to the corporate network, and as a result, RIM suffered “a
significant slowing in its enterprise subscriber growth rate,” he said. “I am
committed to reclaiming lost market share in this space.”

To compete in the
BYOD segment, RIM must create “a compelling consumer offering,” Heins
explained, and to do so, the company will “build on our strengths to go after
targeted consumer segments and will seek partnerships to deliver those consumer
features and content that are not central to the BlackBerry value proposition,
for example media-consumption applications.” It’s critical to have “those
consumer table stakes on the device,” he said, but there’s no need to develop
the applications internally.

The company is also considering joint
ventures and licensing programs to compete in devices, services and solutions
as it beefs up its enterprise investment, he said.

 With revenues falling in a highly competitive
market, “We can’t do everything ourselves,” he said. “There are many companies
still looking at ways to participate” in the growing mobile market, he
explained. “We believe that by broadening our scope in terms of how we will
proceed with BlackBerry 10 and beyond, there may be opportunities to leverage
the power of BlackBerry technologies with what new partners can bring to the

 In the mass-market device segment,
partnerships could include outsourcing the production of in-house designs or
licensing BlackBerry’s OSs, he said. “I want to be in the mass market,” Heins
stated, but the company is evaluating the right business model to do so.

other comments, Heins said the launch of the first BlackBerry 10 OS phones are
on target for the second half, enabling the company to address its lack of 4G
LTE and high-end consumer handsets. Until then, however, the company needs to
generate revenues and subscriber growth, so the company will “incentivize”
sales of BlackBerry 7 devices to entice feature phone users to upgrade to a
smartphone and users of older BlackBerrys to update their models, Heins said.

Likewise, the
company will launch entry-level service tiers to also persuade feature phone
buyers to buy a smartphone. The services have been deployed “with a few
carriers,” he said, but he did not say if they were U.S. or international

 In other comments, the company said U.S. sales
fell in the fourth quarter and accounted for only 17 percent of RIM revenues,
down from 20 percent in the third quarter.

 And Heins acknowledged that after only 10
weeks on the job as CEO, his perspective on the company’s problems “is now
pretty different” after making statements only days after being elevated to the
position that dramatic changes weren’t necessary.