Blog Post

Why RIM is cutting 2,000 jobs

On Monday Research In Motion announced details of job cuts, reducing its employee count by 2,000 positions. The cuts account for just over 10 percent of RIM’s (s rimm) overall workforce, which after the staff reductions will number 17,000 people. Although RIM pointed out a forthcoming “cost optimization program” last month, the layoffs are another example of how slowly RIM is transitioning away from its legacy business to better compete in the smartphone and tablet market.

RIM’s workforce has ballooned since 2006, indicating on the surface that it’s keeping pace with the fast-growing mobile-device segment. Unfortunately, sales of BlackBerry phones aren’t. Companies such as Apple,(s aapl) Samsung and even beleaguered Nokia (s nok) all sell more smartphones than RIM, and the company only makes smartphones — with the exception of the new PlayBook tablet, which has some pros but more cons to some and doesn’t appear to be selling well. Here is the company’s positioning on the job cuts:

RIM today provided further details on its cost optimization program, which is focused on eliminating redundancies and reallocating resources to focus on areas that offer the highest growth opportunities and alignment with RIM’s strategic objectives.  The workforce reduction is believed to be a prudent and necessary step for the long term success of the company and it follows an extended period of rapid growth within the company whereby the workforce had nearly quadrupled in the last five years alone.

The entire situation reemphasizes that RIM has been too slow to change in a market that’s moving fast. The BlackBerry Storm, an attempt at an all-touchscreen device, was met with fanfare in 2008, but it never materialized as a solid competitor to Apple’s iPhone. Last year’s BlackBerry Torch was more evolution than revolution.

And the company’s plan to run future phones on a QNX-powered platform makes sense, but RIM bought QNX in April of 2010 and there are still no handsets announced for the new operating system. Instead, new Bold handsets are the latest offerings announced; they appear delayed and will run a new version of BlackBerry OS, not QNX. They’re also not expected to be upgradable to QNX either.

It wasn’t that long ago when the words “smartphone” and “BlackBerry” were synonymous to many. The times have changed drastically, but RIM has only changed marginally.

Image courtesy of Flickr user Robert_Elder

13 Responses to “Why RIM is cutting 2,000 jobs”

  1. John Harrington, Jr.

    BlackBerry’s failure to get with the times (e.g., meet the demands of the app-enabled smartphone revolution) is directly impacting the workflows enterprise IT has grown accustomed to. Fiberlink recently conducted a webinar to explain the best practices for managing mobile devices in a post-BlackBerry world. View the recording or slides from the presentation here:

  2. kathiq

    Or, they could embrace wp7 with black berry apps and messenger integrated to differentiate from other WP7 vendors.This could make more sense to enterprise customers who are its core base of users.

    Using the same strategy for playbook with win8 would work too…as windows is already a strong player in enterprise desktops and a win 8 tablet with enterprise popular BBM and BB apps integrated would be very useful.Also other win8 vendors are less likely to produce tablets running win8 compared to laptops,so a BB win8tablet having these features could have a huge market opportunity.

    They need to forget abt QNX,because it is no longer the battle of OSes but about ecosystems.

  3. Krista Whitwell Addie

    RIM could shake up the market – but not easily. They have to think a mile away from the box and go back to their roots as an email/business tool. think 6 inch phone with touch screen and qwerty keyboard ( maybe flexible ???)

    Really they just need to INVENT. They have/had the user base…..

  4. Travis

    Everyone saw this coming, but surprised there hasn’t been more of a shake up at the top. I don’t know that the co-CEO situation really helps in the quick transition department, particularly when the co-CEOs in question are responsible for RIM being in the position they are in. They failed to realize the impact of the smartphone evolution when the iPhone was introduced in 2007. Spent a year and a half coming up with an inadequate answer (Storm) and have yet to introduce a truly competitive OS. All this along with the consumerization of IT we’re hearing about, RIM is not in a good spot. Given the choice, not a lot of users are picking Blackberry.

    I feel bad for the employees being let go. I’m sure many of them are great people with great skills and ideas. Its unfortunate that the leadership couldn’t react fast enough to prevent this decline.

  5. Suppose QNX is released with 5 phones next week. Will that make them #1, #2 or #3 even? I doubt that at this point.

    In an imaginary time line I would expect their CTO to explore the following:
    1. A special RIM Android OS flavor (like Moto / Sense) for business. And their business Apps on top. Dedicated for the business user.
    2. What markets and audiences QNX can do best and stick with it only there. Maybe the consumer market.
    3. Present a dual solution marketing as mentioned above. Execute by March next year. Before the next generation of Android is out. Build on top of IceCream.

    Just my thoughts if it was in my hands.

  6. I use to be a diehard blackberry user from May of 06 until June that was all that I used. And then I got my hands in this HTC Sensation and haven’t looked back the overall email experience isn’t as good but my principle email acct is a gmail acct and the android phone obviously has better integration with gmail and overall phone experience is better for me.

    • That rumor was reported by BGR and quickly refuted by RIM. Regardless, launching the PlayBook without a native email client isn’t looking like a smart decision; without a BlackBerry handset you’re left with email via browser and that makes the product look incomplete to many potential customers.

      • Jim Freeman

        Given RIM’s historic status as THE corporate mobile email (Outlook) solution, no native email client doesn’t “look” incomplete, it “is” incomplete.