Why RIM is cutting 2,000 jobs

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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 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, Samsung and even beleaguered Nokia 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

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