RIM To Step Up Enterprise Focus, But Remain In Consumer

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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 half.

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 billion.

"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 table."

 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.

 In 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 carriers.

 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.


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