TORONTO - A brand strategy adviser hired by Research In Motion at the peak of the company's success says the BlackBerry maker was locked in an identity crisis that left it struggling to map out its future.
Matthew Kelly, managing director at Toronto-based firm Level5, said in a recent interview that RIM was preparing to wage a battle against Apple's iPhone device, an effort that seemed to be distracting the company from other market challenges.
"I didn't get the sense they were taking Android as (seriously) as they needed to," he said, who was previously chief marketing officer at Yum Brands Inc., owner of the Pizza Hut, Taco Bell and KFC chains.
Kelly was part of a team brought on by RIM executives in late 2009 to help the company manage its brand reputation with enterprise customers and government organizations, which are big business.
When he came on board, shares of RIM had already tumbled 50 per cent from their highs of $148 in 2008, and since then have dropped even further to close at $10.68 on Friday at the Toronto Stock Exchange.
RIM shares took a beating this week after the Waterloo, Ont.-based company announced Tuesday it hired two outside firms to advise on its troubled business and financial performance .The company also projected an operating loss in the current quarter and warned it will cut staff throughout the year.
Kelly said when he entered the picture, the company was already showing signs that it was losing its lustre. The BlackBerry name had been so powerful that devotees nicknamed their phones "Crackberrys" but by then, even some loyals were debating whether they'd switch devices.
RIM was trying to hold on to its reputation, which Kelly concedes was "stodgy, conservative and old-fashioned," all while making a second effort to take steam out of the iPhone, which had been gaining sales momentum in recent quarters.
"They did lots of promotion with the guys from the Black Eyed Peas trying to be cool, and we told them that cool ... was not an attribute that they were going to displace Apple from at all," Kelly said.
"I'm not sure they quite ever got that."
Meanwhile, analysts were criticizing RIM for its lack of new products on the market or any that were particularly innovative.
Kelly said that Level 5 advised RIM to reposition itself in the marketplace by gravitating away from boasting about its reliable platform and other technical features.
"You can't be just the reliable platform that's ultra secure," he said.
The brand strategy adviser stopped working with RIM early last year.
In the fall, the BlackBerry network suffered its biggest outage, knocking users around the globe off their Internet and messaging services for days, which was considered a major blow to one of RIM's proudest claims as a trustworthy network.
Since January, RIM has launched efforts to turn itself around, hiring a new chief executive, while other executives in sales and operations have exited in recent weeks.
Two veterans from the mobile computing industry have joined the company — Kristian Tear, formerly of Sony Mobile Communications, as chief operating officer, and Frank Boulben, the former executive vice-president of strategy, marketing and sales for LightSquared, as chief marketing officer.
Kelly said RIM still needs to prove it is relevant in today's market. Later this year the company will debut a new slate of BlackBerry devices and its BlackBerry 10 operating system.
"I don't think they've found themselves yet," he said.
"They're all over the map and quite frankly haven't landed on what they stand for in 2012."
But Kelly noted that other prominent technology companies have been in this situation before, in particular Apple Inc. which once teetered on bankruptcy before making its major comeback.
"I don't think it's end of days for RIM, but to borrow an analogy from baseball, it's bottom of the ninth and they have two out," he said.
Level 5 is headed by David Kincaid, who previously worked as chief marketing officer at Corus Entertainment (TSX:CJR.B) and also worked on Labatt's "Out of the Blue" campaign.
Market Share Eroding
RIM experienced trouble competing in the U.S. smartphone market in early 2011 and <a href="http://www.huffingtonpost.com/2011/06/03/rim-market-share_n_871129.html?ir=Canada" target="_hplink">dropped from second place to third</a>, as Google's Android and Apple's iPhone gathered steam. The company's shares decreased 40 per cent in value since February,<a href="http://www.huffingtonpost.com/2011/06/03/rim-market-share_n_871129.html?ir=Canada" target="_hplink"> Reuters reported in June</a>.
When facing leaner times in July, the struggling tech company <a href="http://www.huffingtonpost.ca/2011/07/25/rim-to-cut-2000-jobs_n_908392.html" target="_hplink">announced its plan to cut 11 per cent of its workforce</a>, or about 2,000 employees, in an attempt to scale back.
To add insult to injury, millions of BlackBerry users around the world <a href="http://www.huffingtonpost.com/2011/10/12/blackberry-outage-rim_n_1006691.html?ir=Canada" target="_hplink">experienced network outages</a>, resulting in messaging and browsing delays in October 2011. Co-CEO Mike Lazaridis <a href="http://www.huffingtonpost.ca/2011/10/13/rim-blackberry-outage_n_1008424.html" target="_hplink">posted an apology to YouTube</a> promising improvements to the system.
Following disappointing PlayBook sales resulting in <a href="http://www.huffingtonpost.ca/2011/12/02/rim-playbook-485-million-charge_n_1125380.html" target="_hplink">huge profit losses</a>, RIM <a href="http://www.huffingtonpost.com/2011/11/28/blackberry-playbook-best-buy_n_1116532.html?ir=Canada" target="_hplink">slashed its tablet prices down to $199</a>, which prompted a major pre-Christmas rush. However, customers became outraged when Best Buy, unable to keep up with demand, <a href="http://www.huffingtonpost.com/2011/11/28/blackberry-playbook-best-buy_n_1116532.html?ir=Canada" target="_hplink">reportedly cancelled existing orders and removed the PlayBook from its website</a> when it ran out of stock. In early January, RIM <a href="http://www.huffingtonpost.com/2012/01/03/blackberry-playbook-price-rim_n_1181167.html?ir=Canada" target="_hplink">put its struggling PlayBook tablet on sale</a> again in the U.S. for $299.
Mere days before RIM named Thorsten Heins as its new CEO, Samsung <a href="http://www.huffingtonpost.com/2012/01/17/samsung-rim-buyout_n_1210958.html?ir=Canada" target="_hplink">denied rumours</a> that it planned to purchase RIM or license its operating system, causing RIM shares to dip.
May was not a kind month to RIM. Soon after the<a href="http://www.huffingtonpost.ca/2012/05/28/karima-bawa-research-in-motion_n_1550984.html" target="_hplink"> departure of the company's chief legal officer</a>, Karima Bawa, the company announced that it would hiring two financial firms to advise on the company's financial performance.
If the announcement of the necessary outside help wasn't bad enough, numerous reports surfaced regarding RIM's massive layoffs during the end of May. The cuts were estimated at laying off <a href="http://www.ottawacitizen.com/business/layoffs+could+many+employees/6689699/story.html" target="_hplink">anywhere from 2000 - 6000 workers.</a>