RIM Tries to Sell Customers on Defunct Operating System, Bleeds Money

RIM logoBlackBerry 10 gleams in new articles and slide shows put on by Waterloo, Ontario-based phonemaker Research in Motion. Long a star of the phone world, RIM helped define what is today called a "smartphone". But the company has fallen on hard times.

BlackBerry 10 -- or BB10, in shorthand -- offers seemingly everything RIM needs to recoup. It offers a stylish new interface built on RIM's acquired QNX operating system. And it comes on gorgeous LTE-enabled handhelds like the leaked "London".

But BB10 will not arrive until Q3 2012 at the soonest, a delay that has many wondering whether it will be too little, too late when it does finally arrive. For now RIM is selling what it's already conceded is, in effect, a defunct operating system -- BlackBerry 7 (BB7). After examining operating costs and inventory costs, Peter Misek, an analyst at investment banking firm Jefferies, found that RIM is spent 4 percent more per handset than it took in, in 2011.

The report is a dire sign for RIM, who is expected to perform its third inventory write-off for Q2 2012, which will be reported on September 1. Meanwhile Mr. Misek tells Reuters in an interview that RIM is pumping increasing amounts of cash into advertising and price cuts, in a bid to get customers to buy its effectively defunct BB7 devices. PlayBook tablets currently retail for less than half their original MSRP.

He adds, "The other key thing from this is that it's not likely to get better anytime soon, because until BB 10 devices are out they're going to have to keep cutting prices."

RIM has cancelled all future financial forecasts after posting its first loss in years in Q4 2011. That loss led to Jim Balsillie -- longtime board chairman and co-CEO -- to be dismissed from his board position, just months after he and his fellow co-CEO Mike Lazaridis were fired from the chief executive spot.

New chief executive Thorsten Heins has said he is considering transforming RIM into a licensed services company or selling RIM's assets to allow investors to recoup a portion of their recent losses. The Canadian government has green lit a potential sale of RIM, but any such purchase would likely have to pass the scrutiny of the U.S. Department of Defense, a heavy BlackBerry user.

A coalition of rappers and ex-convicts including Dr. Nono Pearson and famed cocaine dealer "Freeway" Ricky Ross recently offered a bizarre offer to buy RIM for ~$1B USD. The offer was met with skepticism, which was amplified by the coalition's Geocities-looking homepage and the fact that the coalitions recent charity drive, which aimed to raise "millions" had thus far raised only $5, according to the webpage.

Source: DailyTech

Tags: BlackBerry, RIM, smartphones, tablets

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