The company’s angst, I believe, stems fundamentally from the fact that Apple and other vendors have come to understand that increasingly mobile phones are a consumer purchase decision, and not a corporate one.  And when people can choose, they choose the products they fetishize.  And no one has captured the consumer market’s imagination like Apple, with the iPhone and iPad.  But you, dear reader, already know all of this.

I firmly believe that any turnaround involves deep pain and difficult choices, and I have not seen any sincere effort by the co-CEOs (and now co-COOs) of RIM to make these decisions and brace for the sting.  In fact, judging by their actions it’s not even clear that Messers Balsillie and Lazaridis actually agree with the prevailing notion that there actually is anything wrong with their company.  These layoffs and strategic pronouncements feel mostly like lip service.

At any rate, in the unlikely event that I were to suddenly become the CEO of RIM, a company that is about 1,300 times larger than my own modest startup, here is what I would do:

1. Split the company in two.
   RIM is really the composite of two companies — network and messaging services for carriers and consumers, and smartphones which we users decreasingly hold in our hands.  For the majority of RIM’s lifecycle these two components were strategically and inextricably bound — cool devices with unique features drove demand for the services carriers needed to obtain in order to be able to fulfill that demand, and thus sell more devices — however now that RIM’s infiltration of the carrier market is largely ubiquitous that delta into the mobile network needs to be taken in two directions.  The devices and the network services are now loosely coupled, and the need to tie them together feels more like an albatross.  In order to progress on both fronts these cannot be constrained by the need to support the other’s objectives.
2. Kill the Playbook.
   I’m really not sure why anyone would enter a race not intending to take a stab at winning it.  We have lived with the PlayBook for months now and it still doesn’t have an email client — akin to BMW selling a car without an accelerator pedal.   It is clear to all that aside from the potential for limited enterprise and government sales there is very little chance for the Playbook market to expand.  It has no raison d’etre; no killer app; no je ne sais quoi.  Apparently RIM doesn’t sais quoi either, as the Product Manager for the Playbook and the one of company’s VPs of Marketing have just quit — not a good sign.  As far as branding and marketing is concerned, the Playbook is an attention and messaging sinkhole; and it almost certainly has distracted R&D, preventing RIM from building an iPhone competitor that we could get behind.
3. Focus on 3rd-party developers.
   It would be impossible to deny that much of the demand for iOS is driven by the myriad things that one can do with an iPhone or iPad.  In fact, the iPhone is actually quite a terrible telephonic device, with a bad chipset choice and terrible RF engineering, and it’s consistently suffered supply chain problems as Apple struggles to keep up with demand.  None of these issues matters.  Most iPhone apps suck.  But they suck a lot more on Blackberries, where they exist there at all.  Developers have to run a gauntlet of a horrifically bad developer ecosystem, fragmentation (the need to have multiple versions of each app) that reminds most of us of J2ME, a distribution system which is spotty, and even an enterprise policy shield which allows IT managers to lock down phones and prevent apps from being installed.  If I see an iPhone in someone’s hand I know I can get the ONE version of our app onto it.  If I see a Blackberry in someone’s hand the odds of that user being able to get and run our app may be as low as 3 in 10.
4. Understand that BlackBerry Messenger, and messaging, is the company’s strategic future and open it up to other platforms.
   RIM fears cross-platform messaging apps like Kik and WhatsApp enough to take steps toward actively blocking them.  However nothing could possibly be more powerful, or useful, than a cross-platform BlackBerry Messenger network.  This could subsume the lowly phone number as a primary identifier for communications, and subvert the wireless carriers in a way that Apple has actually been executing on much more poorly than you’d expect.  As part of this strategy I would help the company understand that messaging is not simply “WHAT R U DOING LOL” messages flying back and forth, but also includes Push Notifications for apps, call setup requests, and social networking.  As part of this strategy I would acquire Urban Airship, a modestly-funded private company that could be bought for <$100M and would become a catalyst for radical change within RIM, again leveraging the company’s delta into carriers.  Messaging is the one thing RIM has going for it that is hugely viral, and they’ve got a massive critical mass to build upon in the existing BlackBerry market that they simply need to unlock.
5. Stop dicking around with cheap plastic phones, and own the keyboard.
   One area in which Apple has exhibited significant leadership is the use of real materials, such as glass and metal, in their devices.  This gives them a stronger and indeed perennial feel, while the plastic on most BBs tends to fade in colour and begins to look tired and damaged within a few short months.  Everything about the BlackBerry needs to feel solid — including the keys.  Speaking of which, the domain of the keyboard is an area that the iPhone is unlikely ever to tread upon.  Use this to differentiate the BB and shame Apple.  There are many many users (among them women with long fingernails) who will NOT give up their keyboard for a touch screen, and a generation of teens who have known text messaging as their primary means of communication for more than a decade.  The focus on the keyboard is one of RIM’s core strengths.

I’ve purposefully attempted to avoid reading others’ prescriptions for RIM so I apologize in advance if any of these represents overlap.

I’ve been a shoulder to cry on for colleagues from Telus and Cisco often enough to not want to witness the death of what may well be the last great Canadian telecom company.  Even as recently as 5 years ago, RIM was lauded for its culture of innovation and relentless aggression.  However, the current wave of layoffs and strategic pronouncements are nothing more than hackneyed Wall Street pandering — a movie we’ve seen before at other declining giants that have never recovered — and these moves have already killed that culture.  I have seen what this kind of short-term management thinking and denial can do to a company’s culture, nurturing an internal environment where lifers sandbag their turf and the company’s former wunderkind rest and vest.  Neither behaviour is conducive to the kind of thinking or the can-do attitude that gets companies turned around quickly.  And really, who would want to be CEO and lead that sort of army into battle?  Not me.

Nortel hits the skids

Om has a piece today written by Venture Capitalist Allan Leinwand asking whether Canada should bail out Nortel.  He asks:  “But is preserving the country’s technological heritage reason enough to spend millions in taxpayers dollars?”

I think that the answer to the question is contained within the question.  There is no such thing as technological heritage … only a technology’s future.  Once a company has ceased to innovate with effectiveness, market forces must be allowed to run their course.

Nortel, whose turnaround CEO Mike Zafirovsky appears to be a bit of a jet-setter, was a global source of technical innovation for most of the last century, peaking in the 1980s.  Its DMS line of switches grew to become the dominant means by which incumbent local exchange carriers rolled out circuit-switched voice networks; and the means by which long-distance companies expanded their reach globally. 

This gave the company a lot of cash to throw around, chasing R&D with aplomb, but it wasn’t spent wisely and efforts to embrace IP were insincere and too little too late.  What Nortel failed to see coming was the enormous destruction of value that would occur when Voice became just another application on IP networks — and the opportunity to build massively expanded value by building new applications over that infrastructure.  Even as recently as a few years ago Nortel has been tremendously innovative, however their solutions have failed to reach into the marketplace as they were targeted at a single customer group — the incumbents — who themselves are flailing and sputtering.

They also have a broken corporate culture.  This happens when organizations get fat and lazy … and political.  I watched that culture attach itself, like a parasite, to Cisco in the late 1990s as we were hiring entire teams from Nortel and moving them to North Carolina and San Jose.

The issue of a bailout should be (but isn’t, since the Canadian taxpayer is already subsidizing the company’s operations to the tune of $30M) irrelevant:  Nortel has strong market and asset value still and should not need it.  The company suffers from the burden of expectations, both of the marketplace and of irrational shareholders; and from the criminal efforts of loathsome executives who tried to feed that beast rather than confront reality.

When AOL’s executives realized they had an overvalued asset with little-to-no real growth prospects, they limpet-mined themselves onto a depressed company with unrealized value.  That’s what Nortel could have / should have done several times in the past 15 years, but didn’t.

The chalice of innovation in telecommunications in Canada has passed on to RIM (neither of whose founders ever worked for Nortel — a rarity in the technology industry in Canada!).  Is the company wobbling simply as a casualty of the current economic cycle, or because of a deeper cancer and an endless stream of financial scandals?  Would $30M in investment be better spent on Nortel or on RIM, in the long term?

My guidance is: embrace the bankruptcy.  It’s an opportunity to restructure the business, re-orient the strategy, clear out the dead wood, and reset irrational expectations.  Nortel could yet again be an invigorating business, but shoring up the business that it is today is no way to get there.  In the meantime, Nortel has served its purpose in stimulating innovation in Canada and acting as an apprenticeship program for our country’s technology leaders.  Let it run its natural course.

Thursday January 24, 3:26 pm Eastern Time

Press Release SOURCE: Nextel Communications

Nextel, RIM and Motorola Agree To Produce Voice-enabled Handheld

RESTON, Va., WATERLOO, ON & SCHAUMBURG, Ill.–(BUSINESS WIRE)–

Jan. 24, 2002–

New Wireless Handheld Will Combine the Power of Blackberry With

Nextel’s Voice and Packet Data Network

Nextel Communications, Inc. (NASDAQ:NXTL – news), Research In Motion Limited (RIM) (NASDAQ:RIMM – news; TSE:RIM – news), and Motorola, Inc. (NYSE:MOT – news) today announced an agreement to develop a new Nextel/BlackBerry(TM)handheld with both voice and data capabilities.

This Personal Data Assistant (PDA) style form factor handheld will operate on Nextel’s national network using Motorola’s iDEN®integrated digital wireless network technology.

To facilitate this effort, Motorola and RIM have signed a licensing agreement allowing specific iDEN and RIM technologies to be incorporated into certain devices from each company.

RIM’s award-winning BlackBerry wireless email solution will be integrated with Nextel’s digital cellular, Nextel Direct Connect® digital two-way radio service, text and numeric paging, and Nextel Wireless Web online services, which were recently rated number one by Cahner’s In-Stat/MDR in customer satisfaction. The device will also support Java(TM) 2 Micro Edition (J2ME(TM)) applications.

“The combined Nextel/BlackBerry device will provide an additional platform on which businesses can create meaningful and cost effective applications for their mobile employees,” said Tim Donahue, Nextel’s president and chief executive officer. “The wireless email capabilities of this exclusive device will complement our Direct Connect and packet data services, and serve as a powerful new business tool for our customers.”

“RIM and Nextel have both developed unique wireless solutions for corporate customers,” said Mike Lazaridis, president and co-CEO at Research In Motion. “This new integrated offering, together with our mutual commitment to Java-based wireless applications, will provide an innovative and attractive proposition for our business customers and development community.”

“Motorola’s iDEN technology gives Nextel the power to offer wireless voice, data and application services in a single device,” said Bill Werner, corporate vice president of Motorola and general manager of the iDEN Subscriber Group. “Our agreement with RIM will allow Nextel to leverage the advanced capabilities of their nationwide iDEN network to offer customers the choice of a messaging centric device in addition to an existing array of voice centric Java-enabled handsets.”

More than 13,000 organizations across North America already use BlackBerry to provide wireless email capabilities through an “always-on” connection, and RIM recently began marketing BlackBerry to customers in Europe. The Nextel/ BlackBerry offering will include advanced Java(TM)-based wireless handhelds, desktop tools, enterprise server software, and end-to-end security.

It will also operate fully on the Nextel National Network, the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States.

RIM and Nextel have signed a multi-year supply agreement for BlackBerry Wireless Handhelds with associated software and service. The new Nextel BlackBerry product is scheduled for release sometime in the fourth quarter of this year. Further details of the agreement were not disclosed.

Nextel leads the industry in providing business customers with wireless data solutions that increase the productivity of the mobile workforce.

Customers within key vertical industry segments such as financial and information services, manufacturing and distribution, and many others will find the unique combination of native J2ME support, data security, messaging, and application management services a powerful platform for mobilizing corporate data and applications residing behind company firewalls.

About Research In Motion

Research In Motion Limited is a leading designer, manufacturer and marketer of innovative wireless solutions for the mobile communications market. Through development and integration of hardware, software and services, RIM provides solutions for seamless access to time-sensitive information including email, messaging, Internet and intranet-based applications.

RIM technology also enables a broad array of third party developers and manufacturers around the world to enhance their products and services with wireless connectivity. RIM’s portfolio of award-winning products includes the RIM Wireless Handheld(TM) product line, the BlackBerry(TM) wireless email solution, embedded radio-modems and software development tools.

Founded in 1984 and based in Waterloo, Ontario RIM operates offices in Canada, the United States and England. RIM is listed on the Nasdaq Stock Market (Nasdaq:RIMM – news) and the Toronto Stock Exchange (TSE:RIM – news). For more information, visit www.rim.net. Investors may contact investor_relations [at] rim [dot] net. Customers may contact info [at] rim [dot] net.

About Nextel

Nextel Communications, Inc., based in Reston, Va., is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Nextel and Nextel Partners Inc., currently serve 195 of the top 200 U.S. markets.

Through recent market launches, Nextel and Nextel Partners service is available today in areas of the U.S. where approximately 230 million people live or work. In addition, through NII Holdings, Inc., wireless services are provided outside of Nextel’s domestic markets, primarily in selected Latin American markets. For more information visit www.nextel.com.

About Motorola

Motorola, Inc. (NYSE:MOT – news) is a global leader in providing integrated communications solutions and embedded electronic solutions. Sales in 2001 were $30 billion. Today, more than 10 million iDEN handsets are in service in North America.

iDEN handsets combine the capabilities of a digital wireless phone with “always on” Internet access, text pager, and two-way radio to enable users to instantly communicate with one or hundreds of individuals at the push of a button. For further information, visit www.motorola.com/iden.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995. A number of the matters and subject areas discussed in this press release that are not historical or current facts deal with potential future circumstances and developments. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from actual future experience involving any one or more of such matters and subject areas. We have attempted to identify, in context, certain of the factors that we currently believe may cause actual future experience and results to differ from current expectations regarding the relevant matter or subject area. Such risks and uncertainties include the successful performance of new technologies and devices, timely development and delivery of these new technologies and devices, economic conditions in currently existing and targeted markets, competitive conditions, market acceptance of these services and devices, technological changes, access to sufficient capital to meet operating and financing needs and those that are described from time to time in reports filed with the SEC by Research In Motion Limited, Nextel and Motorola, including each of their annual reports on Form 10-K and their subsequent quarterly filings on Form 10-Q. This press release speaks only as of its date, and Nextel, Research In Motion Limited and Motorola each expressly disclaims any duty to update the information herein.

Nextel, the Nextel logo, and Nextel Direct Connect are trademarks and/or service marks of Nextel Communications, Inc. Research In Motion, RIM and BlackBerry are trademarks of Research In Motion Limited. Research In Motion and RIM are registered with the U.S. Patent and Trademark Office and may be pending or registered in other countries.

MOTOROLA, the Stylized M Logo and iDEN are registered in the U.S. Patent & Trademark Office.

Java and all Java-based marks are trademarks or registered trademarks of Sun Microsystems, Inc. in the U.S. and other countries.

Is the growth spurned by sizzling markets and a trigger-happy investment public coming to an end? The sell-off continues at an accelerated pace, apparently sparked by the convenient excuse of another judgement against Microsoft.

One way to track the health of the technology industry is to watch the Big 7 (below). Undeniably most of the churn has happened at the bottom of the food chain — this is where most Canadian companies, like Sierra Wireless and RIM, live.

The biggest slaughter I spotted in the US (not an exhaustive search) among well-known companies was Exodus, who dropped to $96/share from $180 a couple of weeks ago. Yikes! PALM is trending toward a close at $34 today. Pity those people who bought at $165! I sold a while ago in the upper 50s.

Anyway, the Big 7 have weathered the storm pretty well, overall. Cisco is still smelling like a peach (yay!) and AOL is barely hanging on. Overall, though, an 88% total Cap reduction among the Top 7 isn’t all that bad… it’s really Microsoft that’s dragging down the average. Notice the precarious position of Yahoo! (yikes).

Mar. 22 April 4 Percentage Company Market Cap Market Cap of Prev.