Featured: Could A Switch to Android be RIM's Only Way Out?

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RIM isn't just against the ropes right now, they're down on one knee.

Device shipments are down, margins are down and announced today, headcount is going down. As I listened in to the earnings conference call yesterday I was almost taken back to a point in time where my now grown son had to admit to something that he had done wrong. I listened as RIM co-CEO's Lazaridis and Balsillie provided a full allocution of their shortcomings as co-leaders of RIM.

The most telling admission was when co-CEO Mike Lazaridis admitted that RIM was caught with their pants down because because they failed to see that consumer preference had switched to superphones; devices with faster processors, big touch screens and more memory and storage. All things that RIM still doesn't offer in a compelling device four years after the iPhone introduction and three years after Android stormed the party.

Further, Balsillie all but apologized for the fact that RIM shipped the Playbook before key software like email, calendar, contacts and Blackberry Messenger were ready. He essentially explained that given the iPad's success and the onslaught of Android tablets that they felt the need to get something, anything to market in the tablet space. It was a tacit admission that the Playbook was less than half baked at release and it was stunning to hear live from one of the co-CEO's of RIM.

It's not over yet for Rim

There was also a lot of talk about the upcoming Blackberry OS 7 and the Qnx OS that powers the Playbook. BB OS 7 comes in the fourth quarter of this year and Qnx comes to phones in Q1 of 2012. You read that right, this fall RIM will be selling brand new phones running the brand new OS 7 and then will turn around this winter and will start selling brand new phones running the brand new Qnx OS for superphones.

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The logic behind the dual OS strategy almost makes sense; OS 7 will be run on the crappy hardware that RIM sells today and Qnx will only be offered on high end superphone models that will be introduced at the same time. Sound like a mess? It actually gets worse, because RIM will still have OS 6 powered devices in the sales channel when OS 7 hits. Few if any of these OS 6 or 7 models will be upgradeable to the next OS up the chain, they'll be saddled with their current abandonware OS in true RIM fashion. But it almost makes sense.

This triumvirate OS strategy will leave developers holding the fragmentation bag. Blackberry OS is widely regarded as the most difficult to program for, but that's not enough hurt for RIM to lay on what developers they have left. An app will have to be written to run on OS 5 / 6, OS 7, QNX on the phone AND Qnx on the Playbook if a dev wants to reach the entire Blackberry audience. And did I mention that the real SDK for Qnx is going to be Adobe Air? For reals.

Where to next for Rim's BlackBerry?

What the hell should RIM do? Should they stay the course, try to ride out the storm until Qnx and OS 7 take hold and hope for a much better second half of 2012?  I've already looked at the reasons why a Google buyout won't work, should RIM just sit back and hope that Microsoft would want them for their BES and patents? Should they pull a Nokia and abandon this hot mess of fragmentation and switch sides?

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A buyout isn't coming. Again, Google won't do it. Microsoft would be willing to wait it out and buy the company at auction to pay for only the bits that they want. MS seems to be pretty happy with WinPhone 7, though we don't know how it's selling yet. It's not likely that they would be interested in much more than BES and patents.

I know what you're thinking, what about Apple? Well, they might be a bidder in the bankruptcy auction for patents, but that's it. The iPhone is the only iconic handset in existence today and dumbing it down by throwing in a bunch or RIM this or Blackberry that is something that will never, ever happen.

There just aren't too many other companies that could come up with the billions that it would take to do a deal. Even if there were, the new owners of the sinking ship would be faced with all of the same questions about what to do with which OS.

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What about switching teams? will it work for Rim?

If Rim were to throw it all out and start over with a new OS Android would be the choice. RIM has already announced that the Playbook and Qnx powered phones will run Android apps, so a switch to Android would at least be a familiar change for their developers. But would it work?

Here are my three reasons that a switch to Android would never,ever work for RIM:

  1. Hardcore Blackberry users would never buy in. Android is hated amongst this most loyal group of consumer Blackberry users, nearly as much as the iPhone is. In the consumer space the hardcore users are pretty much all that RIM has left as the casual smartphone buyer isn't picking the Blackberry. Pissing off this group would be suicide.
  2. Corporate IT would never buy in. Security and Android are mutually unaware of one another when compared to the Blackberry. The corporate world doesn't stick with the Blackberry because they love the device and the OS, they stick with it because they love the control and security that the two offer in combination. No deal on Android running on Blackberry phones. Pissing off this group would be suicide.
  3. Investors would NEVER buy in. Investors are already calling for one, if not both of the CEO's to step down and let someone else have a chance at the controls. Throwing in the towel on OS 7, Qnx and the devices that they will power would mean walking away from hundreds and hundreds of millions of dollars that have been invested in development to this point. The stock would sink to terminal dumper status and the shareholder lawsuits would tear this company apart. Pissing off this group would be suicide.

RIM, for better or worse is stuck right where they are. Gross mismanagement and a total failure to adapt their products to what consumers actually want in a timely fashion have left the once great market leader out in the cold. It's time to tie a knot in the end of the rope and try to hold on for dear life. Or maybe just until 2012.

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Update: The hits just keep coming fro RIM.RIM's 6th largest investor, Jarislowsky Fraser Ltd. has stated their intention to dump all 10.2 million shares of RIM stock that they hold. CEO Stephen Jarislowsky telling Bloomberg that "Steve Jobs is a much better marketer than RIM," Jarislowsky added. "We are on the way out. The stake has been reduced by more than 50% or even more."

The stock is off over 21% as I write this at 3:45. A change is coming for RIM, but it will be leadership before OS.