Analysts, Service Providers Question Whether Heins Will Turn RIM Around


Research In Motion (RIM) announced Sunday that former co-COO Thorsten Heins is stepping up to serve as the company’s new CEO, but some analysts and service providers are wondering whether the leadership change will be enough to pull RIM out of its nosedive.

The move was part a succession plan crafted by the company’s previous co-CEOs, Mike Lazaridis and Jim Balsillie, who will continue to serve as members of the board and have expressed nothing but confidence in the company’s new leading man.

"I agree this is the right time to pass the baton to new leadership, and I have complete confidence in Thorsten, the management team and the company," Balsillie said in a statement.

As news of the executive shake-up continues to spread, however, it’s become clear that not everyone shares in Balsillie’s optimism. In fact, many financial analysts and service providers are already calling into question Heins’ ability to revive the struggling BlackBerry brand.

During a conference call Monday, Heins, who has been with RIM since 2007, admitted that the company faced its fair share of growing pains over the years. "Like all companies that scale and that grow globally, you know, you hit a few bumps in the road here and there, but it is key that we learn from those mistakes," Heins said.

"Those mistakes" have seemingly led to a rapid loss in enterprise market share to rivals Apple and Google, an insignificant U.S. consumer footprint, and, most recently, rumors of a potential buy-out that have been spreading on the web like wild fires. The new CEO has already unveiled a hand full of initiatives to reverse these trends.

Heins first stressedthe importance of growing RIM’s consumer customer base in the U.S.. BlackBerry devices have traditionally thrived in enterprise or corporate environments, Heins explained, but have yet to see this same success in U.S. consumer segments.

"We need to be more marketing-driven, we need to be more consumer-oriented because this is where a lot of our growth is coming from that is essential in the U.S," he said. As its first "marketing-driven" step, RIM is actively seeking a new Chief Marketing Officer (CMO) to more spark more communication with its U.S. consumer markets and more closely follow consumer mobile trends. Heins said he hopes to fill the new position "ASAP."

Ultimately, though, the new RIM front man stressed the need for process evolution, rather than a major overhaul of current strategy. "I don’t think that there is some drastic change needed. We are evolving, we are evolving our strategy, we our evolving our tactics, our processes," said Heins.

At the end of the call, the new CEO told listeners that RIM is not undergoing a "seismic change."

It’s this downplay of the word "change" that has led a number of market analysts, financial firms, and service providers to question whether the company’s future may have been more safely placed within the hands of a RIM new-comer, rather than a four-year company vet.

"We view this as a good first step in the right direction, as the board of directors finally appears to be
doing what a board should always do, which is to make sure the CEO is effectively doing his or her job leading the strategic direction of the company," wrote financial services giant Morgan Stanley in a report responding to RIM’s executive shift.
"However, we do not believe this move is enough, especially as Heins is an internal hire and not an independent fresh voice."

Market analyst Yankee Group expressed a similar concern Monday. "If Heins simply continues what RIM has been doing to date, he will fail to turn the company around," the group said in a statement. To be successful, Heins can not execute on RIM’s current strategy. Instead, he needs to prompt more direct customer marketing, through which the company can clearly articulate the value of the BlackBerry brand, and drive products to market more quickly, the report said.

Tim Shea, CEO of Alpha NetSolutions, a Millbury, Mass.-based managed service provider also feels RIM may have had a better shot at recovery had it tapped an external leader. "Well, after seeing his videos up on the RIM YouTube site, I get the impression he’s already been there too long. He’s been there four years already, I believe," Shea told CRN. "He still sees RIM as a market leader, when they’re obviously not. He’s got a big job to do, and I don’t see anything in his resume – Siemens? How does that help? – that says he can do it. He certainly hasn’t done it before."

RIM shares Monday morning were more than 4% percent higher after the news of Mr. Heins' appointment broke, the Wall Street Journal reported. After RIM’s conference call and Heins’ surprisingly small emphasis on change, however, shares dropped back down to $1.13, or about 7%, at $15.87, the Journal said.

In addition to a more consumer-based marketing strategy and RIM process evolution, Heins identified the company’s new BlackBerry 10 OS as a potential source of growth. The OS is expected to launch in February, and it is hoped to spur the development of a more robust application ecosystem. The new CEO also said he would consider licensing the software to other vendors, should it be successful.

Steven Kantorowitz, President of CelPro Associates, a New York-based BlackBerry service provider and systems integrator, agreed that RIM’s release of its new BlackBerry 10 OS is an important one. While RIM’s foothold in the enterprise markets is still strong, the new OS really needs to capture the market’s attention.

"RIM’s enterprise customer has always been their bread and butter. This is where he has to focus his creative spirit. They will have to stop being everything to everybody. They need to own the enterprise market and emphasize the security of their Network Operations Center (NOC)," Kantorowitz said. "BlackBerry 10 must be better than anything on the market. RIM has great products that have trailed Apple and that needs to stop. RIM must create a buzz about their products."