Ina Fried

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RIM CEOs Insist Outsiders Don’t Get It, but Are We Really the Ones Confused?

Despite falling short of an already lowered revenue forecast and chopping guidance for the second time this year, Research In Motion’s two co-CEOs are maintaining their inexplicable optimism.

Jim Balsillie and Mike Lazaridis insisted again on Thursday that the company is well positioned in ways that those outside of Waterloo just don’t appreciate.

“RIM has taken a unique path and the reason why we do things might not always be obvious from the outside,” Lazaridis said on a conference call with investors.

But just what are we missing?

The company conceded that it is struggling in the market with a lineup consisting largely of products that have been on the market for a year or more. Meanwhile, RIM also acknowledged that its next crop of devices has been slower in coming to market and that they will largely miss the back-to-school push by many carriers. Even these new devices will be running OS 7 — a rather evolutionary update to the BlackBerry operating system that doesn’t address some of the biggest shortcomings of the devices.

And by the time the new BlackBerry phones do show up in significant numbers, they will quickly be competing against iPhones running a drastically improved iOS 5 as well as against ever faster and cheaper Android phones and a second generation of Windows Phones.

That’s not to mention the ever-widening gap on the application front as developers flock to Android and iOS, while many are waiting to see which other platform is worth their development time and resources. RIM’s developer problem is exacerbated by the fact that the company has said its future is with the QNX-based operating system, while its base and even its next-generation phones are founded on the current BlackBerry operating system.

Also puzzling was the contention that Research In Motion is largely through its tough transition.

The company has yet to ship any BlackBerry 7 devices, which is itself just an interim step until the it can shift to the completely different QNX operating system that powers the PlayBook tablet. The PlayBook, meanwhile, still lacks a promised email client and other features and is sold only as a Wi-Fi model, with the 4G versions now delayed until fall.

The disconnect between RIM and the world, of course, is not a new phenomenon.

It was apparent when Lazaridis spoke last year at our D:Dive Into Mobile conference. At the time, he noted RIM’s fast growth, particularly in emerging markets, and suggested that business was going gangbusters, while attendees and others pointed to the growing technological gap between the BlackBerry and its rivals.

At the time, RIM’s optimism reminded me of the pre-iPhone period when Microsoft touted the strength of Windows Mobile. Although it was widely criticized as clunky and difficult to use, Microsoft was still seeing decent growth and corporate adoption. But the writing was on the wall.

As, of course, it was for RIM as well. In April, the market reality finally caught up with RIM, with the company warning that sales and earnings would fall short of expectations as consumers started eschewing the BlackBerry in greater numbers, particularly in North America. But, even with the massive warning, RIM officials shrugged it off as a blip and insisted the company was still capable of delivering an audacious earnings goal of $7.50 per share.

On Thursday, RIM acknowledged that the slowness it began to see last quarter has continued and admitted that full-year earnings will fall far short of its goal.

Still, the company insists it is well positioned and that business will turn around in the second half of the year. The company also resisted calls to change its corporate structure and the execs insisted they are the right men for the job of leading RIM.

“Jim and I have the perfect balance to make the hard decisions,” Lazaridis said. “This is fun. … We’re changing the world.”

Of course, some might say that it is the world that is changing and RIM is the one that doesn’t get it.


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