CrackBerry withdrawal: Research in Motion cuts 11 percent of its workforce

Tina Nguyen Contributor
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Though government insiders in DC can’t unglue their thumbs from their “CrackBerries,” the smartphone manufacturer Research in Motion (RIM) is quickly losing that loyalty. Citing falling profits and weak sales, the company announced today that it would cut 2,000 jobs, roughly 11% of its workforce. These cuts will leave the company with 17,000 employees.

This comes after RIM posted disappointing results from its first fiscal quarter, bringing in 30% less revenue than originally predicted. Once the dominant force in the smartphone market, the maker of the BlackBerry has faced increasing competition from Apple’s iPhone and Google’s Android platform.  In the past year alone, the BlackBerry has fallen from 21% to 14% of overall market share.

Market analysts point to RIM’s hesitation in moving into the tablet market, as well as its competitive disadvantage against the app-heavy iPhone and Android.  The company’s first foray into the tablet market earlier this year, an email-less Playbook, confused tech enthusiasts and bombed commercially. The BlackBerry’s major selling point for years has been its highly secure email system, yet the Playbook could only connect to email through a physical connection to a smartphone.

In addition, RIM has been slow to adapt to the world of smartphone apps.   Though RIM has the highest revenue per app, the volume of competing Apps overwhelms any possible gained advantage:  Apple has over 500,000 apps and Android carries nearly 240,000, while the BlackBerry App World only carries 38,753 apps.

Traditionally the weapon of choice for government employees, BlackBerries are being abandoned by the federal workforce in huge numbers.  A June story in The Washington Post illustrated the increase of iPhones, iPads, and Androids in the Blackberry-dominated federal government, as workers found that consumer technologies consistently performed better than what the federal government often provided.

The Post cited Charlie Wolf, an analyst for the investment bank Needham & Co., as calling the BlackBerry a  “one-trick pony.” (Feds to shut down 800 data centers by 2012)

“The one trick was their secure messaging platform,” he said. “[RIM’s] management has yet to understand that the world has changed. They didn’t understand that it was a software game going forward.”

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