Former RIM boss sought strategy shift before he quit

Former Research In Motion co-chief executive Jim Balsillie sought to reinvent the BlackBerry smartphone maker with a radical shift in strategy before he stepped down, two sources with knowledge of his plans said.

Balsillie hoped to allow major wireless companies in North America and Europe to provide service for non-BlackBerry devices routed through RIM’s proprietary network, a major break with the BlackBerry-only strategy pursued by RIM since its inception.

The plan would have let the carriers use the RIM network to offer inexpensive data plans, limited to social media and instant messaging, to entice low-tier customers to upgrade from no-frills phones to smartphones.

But the talks with carriers led to discord at the highest levels of the troubled Canadian company, and Balsillie resigned as a director soon after he stepped down as co-CEO. His former partner at the helm, Mike Lazaridis, still has an active role.

The veto leaves RIM’s focus squarely on a new generation of BlackBerry gadgets it promises will wow consumers. The devices will have to do just that, analysts say, to arrest the precipitous decline in market share suffered by RIM, the company that virtually invented mobile email more than a decade ago.

Balsillie’s plan may have heralded a broader strategic move by RIM to define its high-margin network services,  which bring in around $1 billion a quarter, as a business that’¢s distinct from building and marketing the BlackBerry. That hardware business may have lost money last year.

Carriers may have seen value in the plan, which would have encouraged lower-value talk-and-text customers to upgrade to entry-level smartphone plans, with access limited to Twitter, Facebook, messaging and other social media platforms.

The package would have included RIM’s BlackBerry Messenger application, a powerful tool that has kept many BlackBerry users faithful even as flashier gadgets from Apple and running Google’s Android software beckon.

That said, the arrangement would have relied on RIM’s private network, which crashed painfully last year, adding a layer of risk that some carriers might have shied away from.

The RIM network is integrated with cellular networks across the world. Managed from a string of data centers, RIM encrypts and compresses massive amounts of data it then pushes out to BlackBerry devices. It charges carriers a monthly subscription fee per user for the service.

The system allows the BlackBerry,and in theory other devices, to gobble up much less bandwidth. So routing non-BlackBerry traffic through RIM’s servers would help carriers by easing strain on their networks.

RIM took a first step toward establishing the network as a standalone operation late last year with its Mobile Fusion software that gives corporate and government customers the option of linking iPhones and Android devices to their existing BlackBerry management systems.

But that does not offer outsiders the unique technology that encrypts data and pushes it out to the BlackBerry.

 

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