BlackBerry 10 main priority, will shift focus to mobile computing later: Thorsten Heins, RIM
RIM’s CEO Thorsten Heins was in India last month and leading business newspaper got some time to chat up with him, we think this is a must read – the way forward for BlackBerry is a rocky road, but with leaders like Heins at the helm of things, the hurdles can be crossed, that’s what we believe. Heins’ honesty and frankness about his company is a clear indicator that RIM has learnt it’s lesson the hard way – they are on the path to recovery, keep faith Team BlackBerry!
You can read the entire interview here. Or read on…
Do you think that RIM now has THE product around which the turnaround story can be scripted?
It’s not only about having a product but having the right platform to grow the company profitably. That’s why we took the hard way. Everybody advised me to embrace Android . I don’t know how many emails I get saying ‘why don’t you put BlackBerry services on Android?’ I am so happy I didn’t . Look at the Android camp now. Frankly, this all goes back to Mike Lazaridis’ innovation because he built a very successful architecture and platform. RIM is not just a smartphone provider. We have devices, we have networks, we have a management system for these devices. It’s all part of BlackBerry solutions. If I provide BlackBerry solutions to my customer base, I can’t cut my leg and come up with something that everybody else has. Then there would be no differentiation any more.
At what stage are we today in RIM’s turnaround?
We still have significant regions of growth, like the Asia-Pacific and Latin America. We are leaders in South Africa. So turnaround, I would mostly say, is in North America, which moved very quickly to 4G LTE. It also led the innovation in touch devices. We were busy building our global portfolio. Within five years, we got from $5bn to $20bn revenue. But we were a bit caught in those developments. So marketshare in US was heavily deteriorating and it’s likely to deteriorate . This will not change till we get BlackBerry 10 out of our door in North America. From a company perspective, given the financial results, you can make the point that we need to turn around the company from the profitability perspective.
So what’s the plan?
That decision was made 18 months ago when we looked at our current BlackBerry platform and operating system. The question was figuring out where the future lay and what’s the next wave of innovation. We truly believe that we are at the next inflection point in the mobile industry. I have been in the mobile industry for 27 years and we have all gone from analog to digital. While GSM was a huge success , we moved on to EDGE. We went to 3G and now we have 4G, already implemented in US. The industry will move from mobile communication, where we are today, to mobile computing. This is not your mobile phone anymore (holding his phone), this is your mobile computing device.
Think about this from an enterprise perspective. I have my device on my hip, no desktop, no laptop and services are being played down from the cloud. The future is mobile computing; smart phones and tablets are just elements of it. The industry is on the verge of a whole new paradigm. It’s fascinating and energizing. That’s a decision we took 18 months ago to build a new platform. Our new BlackBerry 10 devices will not have a smartphone platform but a mobile computing platform. That’s why we chose the hard way, build Blackberry ground-up . We wanted to innovate for the next 10 years.
How will RIM benefit from the inflection you were talking about?
I think the inflection point is really very obvious. Today, what are you going to do with these new devices? Everybody is using browsing and all these elements on it. The power that these devices have…think about this in the context of BlackBerry…across platforms device management. Take it to the next level. Think about cross platform mobile computing end point management. Think about machine to machine. Think about connected cars. Every time they need to communicate with each other, I can manage those end points. That’s the first step.
Second, I have the only global secure network connecting 630 carriers worldwide, securely and reliably. So all the data traffic that these mobile computing end points, and that could be smartphones, would have to exchange could run on BlackBerry network. Third, after-services . I run specific BlackBerry services and applications . Fourth, I can build my own hardware if I choose so. So I’m not in one segment only. I offer the full solution from management to transport to security to device. I think the challenge will be to find the focus and not do everything. While others are struggling to find what next, we know what where we want to go. We will continue to play in smartphone category but will lead in innovation in the mobile computing space. That’s our future and that’s where I am taking the company.
When you took over, what were the key factors on which you were betting RIM’s recovery?
BlackBerry has a foothold in enterprise. That’s something else nobody in the mobility arena has. Others just provide devices. That’s very valuable. That’s why new platform is very important. If you see enterprises four years from now, they’ll be totally different. I have my predictions of what will happen to computing elements of certain enterprises . It will help CIOs to reduce their costs and be way more productive. If you move to mobile personal computing power, think about what it means for CIOs, specifically for global companies. We’re still in 92% of Fortune 500 companies. That’s the first thing.
The second thing is that you cannot separate consumer and professional personalities . Every consumer also has a professional aspiration. So you have to serve both, which is why we’ve built this new device. You have to be ‘consumerish’ – so you had to have table stakes in browsing, media, entertainment, gaming. But you also have to have an element that serves the purpose of being connected, being able to take immediate action and being secure.
RIM has been undergoing restructuring, how much of that is done and how much left?
Across all different measures that we have, we’re roughly at 45:55. The restructuring has a lot of elements to it. Firstly, there’s the reduction in headcount. We’ve grown so fast that when I joined, there were 6,000 people and 3 years later, there were 21,000. What typically happens to companies that are so successful globally is that any problem you have, you throw people at it. We’re cutting that back by 5,000 people and we’re half way through this.
The other element is that we have dramatically reduced and optimized our global manufacturing network. Having several partners , 14 sites manufacturing 60 million units made no sense. So we have brought in efficiencies in our production network. That’s a huge contribution. Since we grew so fast, we had all functions -call centres, IT hub- run by ourselves. So we’re thinking about outsourcing some of those functions because then we can then participate in economies of scale. So we’re half way through. By end of February, we want to have a billion-dollar cost saving.
Apple, Samsung, HTC, and to some extent, Nokia, have been hogging the limelight with streams of new smartphones . But you’ve postponed your launch by a quarter. Don’t you think it would be the case of missing the bus in the hyper-competitive handset category?
What is my option? If I throw in a premature product, what do you think will happen to my company? We will get beaten up because we will not be able to deliver the quality our customers expect. Second, we have BlackBerry 7 out there and thanks to the job that these guys (points to team members) are doing in those regions , I would say we’re doing okay. So it’s not that I’m in a hurry. Thirdly, when we shifted BB 10 by one quarter to first quarter of 2013, the carriers were very supportive. They said there was so much noise in Q4, iPhone 5, Windows 8. Apple has its own unique positioning. They have a close, proprietary, very intuitive and successful system. You have to respect that. Others are riding the horse on an open platform and they have to figure out how to differentiate. It’s going to be tough. I have my own platform, my own patents. I can differentiate myself.
On hindsight, what were the major mistakes that BlackBerry committed?
I always get asked that question. Let’s be respectful , right? BB was founded by Michael Lazaridis and he worked with his friend Jim Balsillie. They took a company from a doughnut shop to a $20 billion company. It was an excellent recipe-messaging , smartphone-and the company grew dramatically. I think what happened is we got de-focused a bit. We went global , we had to serve various regions, our portfolio grew. We faced a point where we didn’t have a close eye on enterprise, when the Bring Your Own Device (BYOD) transition happened. We own the mistakes we’ve made.
For you personally, what was the most difficult thing-strategy , execution, people?
The most difficult part for me was actually the change in management style and culture. We needed a wake-up call. We needed to tell ourselves that we needed to change how we worked. We grew dramatically fast, right? So the first assessment I did was look at my management layers and I saw way too many management layers. That needed to be cut. That was difficult because you have to let people go who have contributed to the company. The other difficult element was really pushing BB 10 to the finishing line. We’re asking people to work day and night, no vacation, and that’s tough. You have to push them and talk to them all the time. Communication is so important . The strategy was rather clear, frankly. This was not a big deal. I underestimated the amount of change the company would probably need. That took me 6-8 weeks of analytics, good look into the different businesses and the entire system, but I think when you cover that, you get that result.
What are the top three priorities for you?
BB10. BB10. BB10. (laughs) BB 10 tops my priorities. We committed to the first quarter 2013 and that’s what we stick our guns to. Second priority is to invest in enterprise. I really want to take enterprise into mobile computing. Third priority is to build a lean, mean, fun-to-work-with company.
RIM has so much riding on this one platform. What if BB 10 doesn’t work?
Sorry? (laughs and pretends not to have heard the question).
What if BB10 doesn’t work?
I have duties as the CEO of the company to the shareholders. I’m not working with my own money. It is the shareholders’ money. So the company has to be prepared for whatever the case may be. That’s why we’ve hired those investment bankers. We look at the company, we look at the value of the company and we look at any strategic options we could pursue. That’s the Plan B.
You took over from the founders of RIM at a very messy time, when the marketshare was dipping , investors were getting vocal and the buzz had shifted to Apple and Samsung. How difficult was the transition for you personally?
I was really excited to become CEO of an iconic company. It sends shivers down your spine. Second, it is difficult as much as exciting. The leadership team is really well bonded. I wouldn’t have been that confident if I didn’t have this team beside me. I see the future. It’s really difficult if you don’t see light at the end of the tunnel . But the light at the end of the tunnel is pretty bright now as we approach the finishing line of BB 10.
Don’t you ever get scared about your legacy because either you’ll be like Lou Gertsner who made the elephant dance at IBM or the person under who’s command the ship went under?
No, I’m not scared. You look forward and you learn. That’s why I told this company I never ever want to have a static system again. Where we do not constantly question our own value, are we still on track? The recipe we had, we took that recipe to market for too long. We got caught with that. Okay. Mistake made, understood. Solution , go to new platform, go to mobile computing , make sure the correction is set up in a way that this does not happen to us again. And then I don’t look into it because the past is the past. I have to look at the future of the company, for our customers and that’s what I’m doing.
Will you take the battle to tablets too or focus on smartphones for a while?
All Playbooks that are out there today are all upgradable to BB 10. We will have to adapt BB 10 to Playbook (Blackberry tablet) and when that is ready, you’ll have one platform across the smartphone and across the tablet-a single mobile computing platform. I want to have a value proposition on top of the hardware of the tablet that attracts people and makes them pay for services.