Research In Motion (RIM), the makers of BlackBerry smartphones, announced that it is reducing its global workforce by approximately 2,000 employees.
Following the completion of the workforce reduction, RIM’s global workforce is expected to be approximately 17,000 people.
The cost cutting efforts are unlikely to impact emerging telecom markets such as India, Brazil, China, Africa and the Middle East as the smartphone major’s main presence is in developed markets.
Also, few of the RIM’s new smartphones are targeted at the youth market in emerging countries. Any significant reduction in sales workforce in emerging telecom markets will have a telling impact on its future revenues. RIM operates offices in North America, Europe, Asia Pacific and Latin America.
The new cost reduction initiatives are happening at a time when RIM’s revenue for the first quarter of fiscal 2012 was $4.9 billion, was down 12 percent from $5.6 billion in the previous quarter and up 16 perent from $4.2 billion in the same quarter of last year.
The revenue breakdown for the quarter was approximately 78 percent for hardware revenue, 20 percent for service and 2 percent for software and other revenue. During the quarter, RIM shipped approximately 13.2 million BlackBerry handheld devices and approximately 500,000 BlackBerry Playbook tablets.
The company also announced management changes. Thorsten Heins will be taking on the expanded role of COO, Product and Sales.
All product engineering functions, including hardware and software teams, will be consolidated under Thorsten’s direction. This consolidation of product engineering functions is likely to produce efficiencies and help accelerate new product launches.
Patrick Spence will be the new managing director, Global Sales and Regional Marketing. Patrick will report to Thorsten Heins and will work with Thorsten to couple the execution of product development and regional business operations around the world, enable faster local execution tailored to local market needs and support the needs of RIM’s valued operator and distribution partners.
Robin Bienfait is maintaining her responsibilities as CIO, including BlackBerry Operations, Customer Service and Corporate IT functions, and also taking on responsibility for the Enterprise Business Unit focused on delivering customer service and extending RIM’s leadership in the enterprise sector.
David Yach, in his role as CTO, Software, will focus on current and future software platforms, as well as the surrounding developer and application ecosystem.
Jim Rowan is taking on the expanded role of COO, Operations and will continue to be responsible for manufacturing, global supply chain and repair services. As part of the streamlining effort and drive towards greater operational efficiencies, he will also now oversee the Organizational Development and Facilities Management functions.
Brian Bidulka, RIM’s CFO, is working together with Jim Rowan in overseeing the Cost Optimization Program which is underway.
Like Nokia, RIM seems to be crippled by a corporate and management structure that promotes bureaucratic confusion rather than brave new ideas. Nokia’s marketshare in the smartphone category has fallen to 25.5 percent from 39 percent last year.
Nokia is losing out to Android-based products in the market. To curb further decline in the marketshare, Nokia has announced price-cuts across range of smartphones.
RIM is at risk of becoming a mid- to low-end player in a smartphone market, with Apple’s iPhone and Google’s Android leading the way. Apple is profitable in the developed markets such as the US. In countries like Brazil, Mexico and Argentina, there’s no way that they can get substantial market share because of the import duties adding to the cost of the phone.
By Abhilasha Sharma
editor@telecomlead.com
