Canadian company Research In Motion, maker of BlackBerry smartphones and PlayBook tablets, is preparing to lay off between 2,000 and 6,000 employees beginning next month. The company has already taken steps to shrink its global supply base. With these moves, RIM hopes to cut costs by up to $1 billion this year.
RIM lost $125 million during 4Q2011, reflecting that its BlackBerry phones have been steadily losing market share to iOS and Android smartphones. IDC reports that BlackBerry had just 6.4% of the smartphone market in 1Q2012, down from 13.6% a year ago.
Adding to RIM’s predicament: emerging market carriers worldwide are embracing the iPhone and low-cost Android devices, bowing to local demand. Even in Canada, RIM is losing market share to Apple’s iPhone. RIM’s share of the Canadian smartphone market has fallen from 42% to 33% in the last year, with Apple’s iPhone at 30%. Currently, sales of iPhones are outpacing sales for Blackberry phones for the first time.
Meanwhile, RIM's Nasdaq-listed shares continue to fall, having lost 70% of their value this year. It is not likely that RIM will be able to recover. The industry is already rife with rumors that RIM is a prime acquisition target.
So what should businesses do if they have committed to Blackberry phones for their employees? The smart move would be to adopt the "Bring Your Own Device" model, whereby employees use their personal devices for work.
Although IT support for personal devices may create additional back-end costs, companies that want to compete for market share will need to compete for talent as well, which means they'll need to accommodate devices of all kinds anyway. RIM's misfortune is simply a key indicator that times are changing. Time to adapt or fall by the wayside.