RIM Axing up to 40% of Workforce to Focus on BlackBerry 10

4 minute read
Chris Knight avatar

It seems only a few years ago that every person in a suit was using a BlackBerry, typing away with their thumbs. Now, can the company survive to see BB10 reach those loyal suits as massive cuts loom and executives leave.

Wielding the Axe

New CEO Thorsten Heins seems to have finally grasped the scale of RIM's problems and is planning to chop up to 40% of the company workforce, up to 6,000 posts (with 2,000 to go in the next few days), over the next few months. In what is being termed a "reframing" of the company, whatever the end result, RIM will certainly look very different when it comes out the end of this dark tunnel.

Reports suggest that legal, marketing, sales, operations, and HR will bear the brunt of the cuts, with the company putting all its focus into BB10 and new devices in a last-chance saloon gambit, as discussed earlier in the month at the company's developer conference. That event showed off a focus on HTML 5 web apps to bolster the dwindling interest in bespoke apps.

UPDATE: RIM suspended its shares today (Wednesday), before announcing that it is suffering an operating loss. That leaves it with around $2 billion plus in cash plus whatever debt it can cling on to, to finish development of, and launch BlackBerry 10. That's a very tall order and one ZDNet seems to think unlikely, given the numbers.

According to Reuters reports, RIM has hired several banking firms to perform a strategic review of the company. With the BlackBerry maker likely to report an operating loss, things are getting worse, faster. The review could recommend the company is focuses on BB10 (its current path) is broken up, focuses on software or another solution.

Leaving by the Back Door

These changes will be announced internally and to investors soon, but the company's top brass are already heading for the exits. RIM's Chief Legal Officer and Head of Global Sales have retired and left respectively in the last few days. They are heading directly into new roles with other companies, but the thousands of workers to be made redundant probably won't be so lucky.

This could be due to their opposition to Heins' new strategy or merely getting out before they face the chop. Bloomberg is also reporting the company has built up massive hardware stocks, valued at around $1 billion due to poor sales, that it will have writedown. Expect huge sales to get rid of the stock as RIM clears the way for BB 10 devices.

Learning Opportunities

A Terminal Decline?

Can BlackBerry hold on to its big corporate customers that are keeping the company afloat? If they start abandoning the platform, as some have in favor of Android and iPhone, then the company will stand little chance of a resurgence. To highlight this, analysts at Asymco have put together a chart showing where mobile companies hit terminal decline.


It shows those who have failed in the mobile space have been acquired, and the speed of failure is accelerating as Apple and Android continue to dominate. Nokia looks to be next on the list, with a possible total purchase by Microsoft still possible and struggling LG also starting to look vulnerable.

With Samsung's new Galaxy phone launching now, and Apple prepping for the iPhone 5, it is hard to see what BlackBerry can do to stem the losses and reinvent its way to success. Especially when morale is at rock bottom, as happens at any company undergoing internal strife and remaining workers worrying about their future.

This also serves as a warning to even the most successful of smartphone players, that failing to keep ahead, keep up, or going down the wrong track for just one product cycle can damage, cripple and destroy a company.