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Bianca Bosker

RIM's New CEO Thorsten Heins Says No 'Drastic Change Needed' To Revive Company

Posted: 01/23/12 04:33 PM ET  |  Updated: 02/06/12 05:53 AM ET

New Rim Ceo Thorsten Heins
New RIM CEO Thorsten Heins.

Sure, Research in Motion's stock price has plummeted, its market share is dwindling, and its offerings are an afterthought. But that doesn't mean anything major needs to change.

That was the optimistic message from Research in Motion's newly appointed chief executive Thorsten Heins, who on Monday replaced the beleaguered BlackBerry-maker's co-executives Jim Basillie and Mike Laziridis at the helm of the company. In his first conference call as CEO, Heins suggested it would be business as usual at RIM -- which experts say is the last thing the company needs.

Though RIM shareholders had previously called for a "substantial corporate governance change" following a 75 percent drop in the company's share price and eroding market share, experts question whether RIM veteran Heins can deliver the jumpstart the company so desperately needs.

The past decade has seen RIM's fortunes rise and fall, with little sign of a turnaround. The company's BlackBerry devices, which found devoted fans in the Oval office, boardrooms and high school hallways, ushered in the age of constant connectedness and helped give rise to the smartphone market. Yet recently, RIM's offerings have failed to keep pace with their rivals', as companies such as Apple and Samsung boast smartphones and tablets with more apps, more advanced features, more polished software and, in some cases, more affordable pricetags.

Heins is a RIM insider who has spent four years at the company as a lieutenant to Basillie and Laziridis, most recently in the role of chief operating officer overseeing sales, hardware and software. Analysts say they fear that Heins' standing relationship with the company's former co-CEOs may limit his ability to pursue a bold new strategy for the company.

"Looking at where he's come from -- they've appointed someone internally, as opposed to an outsider -- the danger is that Heins carries on business as usual and carries on in the old bosses' footsteps, which may not bring about the change they need to turn things around," said Nick Dillon, an analyst at the research firm Ovum.

Wall Street analysts also cast doubt on Heins' qualifications, arguing that the executive, who spent more than two decades at German tech company Siemens prior to joining RIM in 2007 and rose the ranks to be chief technology officer, does not have sufficient experience in consumer tech to formulate a robust vision for the company's future.

"CEO Heins, while a seasoned network executive, has never been a public company CEO, and lacks deep consumer marketing and software experience," wrote RBC in an analyst report, according to the Wall Street Journal.

Others echoed this stance.

"He has some supply chain experience, which we've also cited as ideal for RIM, but we think they need someone with deep consumer expertise and it's not clear that they quite have that," said Shaw Wu, an analyst with brokerage firm Sterne Agee. "They need someone with a consumer electronics background and the fact of the matter is that they are a consumer company, whether they like it or not."

During a conference call Monday, Heins offered few signs he would deliver the sweeping reforms some experts say are necessary to help RIM reverse its sinking sales. From January 2011 to November 2011, RIM saw its share of U.S. smartphone market decline to 16.6 percent, down from 30.4 percent a year ago, while in the same period Apple's share inched up 4 percent to 28.7 percent and Android increased its share from 31.2 to 46.9 percent.

Heins said his plan to reinvigorate RIM's growth will focus on better marketing and more efficient product development processes, though Heins later noted that his intent to scale the company was "not a seismic change." The company appears to have pinned its hopes for wooing consumers away from Apple and Android on a yet-to-be-hired chief marketing officer, who will assume responsibility for pushing RIM products and soliciting consumer feedback to shape the company's devices.

"We need to be more marketing driven and we need to be more consumer oriented because this is where a lot of the growth is coming from," Heins said. "I want us to focus more on the consumer and on consumer marketing."

More ambitious approaches, such as reorganizing the company, received little airtime in Heins' first conference call as CEO. He was noncommittal with regard to a suggestion that RIM might license its forthcoming BlackBerry 10 software to other device makers, noting simply, "It's not my focus." He also emphasized that he "will not in any way split [RIM] into different businesses."

"I don't think there is some drastic change needed," Heins said. "We are evolving. We're evolving our strategy, we're evolving our tactics, our processes."

"Drastic change" is just what the doctor ordered, some experts counter.

"Mr. Heins said they're going to stick with the existing strategy and I'm not sure that that's the right move. There's a lot of investor doubt," Wu said. "There's definitely concern over the existing strategy."

To date, RIM's current approach has yielded products such as the BlackBerry PlayBook, which suffered from glitchy software, a dearth of apps and, though pitched as the perfect tablet for busy business executives, shipped without email software. Sales have been anemic and RIM lost $485 million on unsold PlayBook units. RIM's BlackBerry 10 software, which Heins said boasts a "whole new architecture," has suffered delays and is not likely to be released until late this year, meaning RIM's rebirth could be delayed at least until then.

While refining its marketing messages and internal product development processes are important for RIM's future, analysts argue that to stay relevant and stem its competitors' advances, the company must first and foremost reinvigorate its product line and deliver innovative devices that stand apart from their rivals.

"From a technological point of view, they are lagging behind the competition. They're the only company running a first generation smartphone platform," Dillon said. "While competitors like Apple and Google have come in with modern operating systems, they're stuck on old technology, so the main priority from a tech point of view is to get out this BlackBerry 10 platform, which is due increasingly late this year. That's just to get them level though."

Some experts drew parallels between RIM and Nokia, another handset maker that has struggled to maintain its footing and swapped out its CEO in September 2010. Nokia, however, tapped an outsider, former Microsoft executive Stephen Elop, to helm the company, and Elop promptly made waves by scraping Nokia's in-house software in favor of Microsoft's Windows Phone mobile operating system. While Nokia's move to align itself with Microsoft has yet to yield large gains in marketshare, several new smartphones born out of the alliance were darlings of the recent Consumer Electronics Show, the world's largest consumer tech tradeshow.

Michael Gartenberg, an analyst at tech research firm Gartner, argued that RIM needs to move away from the status quo and make a splash with products and new designs that will help the firm break out of its rut.

"No one is saying RIM's hardware is bad or that their products are not good, but it's become an issue of solid but boring," Gartenberg said. "How many visions of the BlackBerry Bold can we see and still get excited about at a time when devices are changing forms and shapes and getting new functionalities?"

Take a look at the slideshow (below) to see RIM's 7 biggest setbacks over the past year.

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  • Blackberry PlayBook Flops, Prices Slashed

    The PlayBook tablet, which was the BlackBerry maker's answer to the iPad, went on sale in April 2011. Since then, <a href="" target="_hplink">RIM has lost $485 million</a> on unsold units. At the beginning of January, <a href="" target="_hplink">RIM slashed the price of all models</a> of its tablet to $299. The special pricing will last until February 4. PlayBooks, which come in 16, 32 and 64 gigabyte models, typically retail for $499, $599 and $699, respectively, <a href="$299-for-all-models/" target="_hplink">according to CNET</a>. In November, RIM temporarily <a href="" target="_hplink">slashed the price</a> of the 16GB version of the tablet to $199 at certain retail locations.

  • Network Outages

    In October, BlackBerry <a href="" target="_hplink">suffered an outage that affected</a> many of its then 70-million worldwide users, leaving some of its customers in Asia, Europe, Latin American and Africa without service for as many as three days. Some users in the U.S. were affected, but not for as long a period.

  • Drunk Execs Disrupt International Flight

    In December, two RIM executives were fired after a flight they were on was forced to be diverted because the pair's "drunken rowdiness," <a href="" target="_hplink">the AP reports</a>.

  • BlackBerry 10 Platform Delayed

    Research in Motion announced in December 2011 that its highly anticipated BlackBerry 10 platform won't be available until the end of 2012. <a href="" target="_hplink">According to the AP</a>, the company claims the holdup is because the chipset needed for the phones running the platform won't be available until the middle of this year.

  • Stock Slides In 2011

    In 2011, <a href="" target="_hplink">RIM's stock</a> dropped <a href="" target="_hplink">a massive 75 percent</a>.

  • Falling U.S. Market Share

    In less than a year, RIM's share of the U.S. smartphone market <a href="" target="_hplink">dropped by almost 50 percent</a>, from <a href="" target="_hplink">30.4 percent</a> in January 2011 to <a href="" target="_hplink">16.6 percent</a> in November 2011. In 2009, <a href="" target="_hplink">RIM controlled 44 percent</a> of the US smartphone market. (Pictured above is the HTC Desire HD Android, which runs on Google's much more popular Android platform.)

  • Investors Urge Company Sell Itself

    A nearly 75 percent drop in stock price in 2011 did not please investors. At the end of 2011, Jaguar Financial Corp, <a href="" target="_hplink">one of the largest investors</a> in RIM, called "for substantial corporate governance change and for a sale of RIM, whether as a whole or as separate parts." Vic Alboini, the chief executive of Jaguar Financial, <a href="" target="_hplink">told the BBC earlier this month</a> that RIM has "lost it." "The party is over, we believe, in terms of trying to design that cool, tech savvy smartphone," he said. "Microsoft has over $50 billion in cash, RIM has $1.5 billion. There is no way they'll be able to compete."

  • Exploding BlackBerry

    The family of 11-year-old Kian McCreath of Coventry, U.K., gave RIM some of its worst publicity in 2012, telling the media the boy was burned and left with permanent scarring when his BlackBerry Curve 9320 exploded. Although cell phones that are left to charge too long are known to explode, for RIM the news represented a horrible publicity disaster that came just weeks ahead of the launch of its BlackBerry 10.