CNET published the scoop Thursday morning on a potential Research In Motion (RIMM) plan to move ahead with plans to offer a BlackBerry music service:
At a time when Research in Motion needs to sex itself up, the Canadian smartphone maker is in talks with the four largest record companies about launching a new music service to run on top of BlackBerry Messenger, the company's instant-messenger service, multiple sources told CNET.
RIM has signed a deal with at least one of the top four record companies and is close to signing at least two others, the sources said, adding that RIM could launch a test version of the service within the next few weeks.
Details about how RIM's new music service would work are few and a RIM spokesperson was not immediately available for comment.
Consider what RIM is doing little more than an extension of its ongoing case study in sub-par management. The drum I have been beating about Amazon.com (NASDAQ:AMZN)'s foray into audio, video and the tablet market serves as the ideal contrast to RIM's continued ineptitude. Clearly, RIM management is stubborn.
During his failed attempt to bring an NHL franchise to Southern Ontario, co-CEO Jim Balsillie proved that he operates like a bull in a china store. While Balsille might be able to make amends with the legions of hockey people he offended, he won't get that chance against the stiffest competition in the business -- Apple (NASDAQ:AAPL).
In a Seeking Alpha article, I chronicled the hapless attempts by Balsillie to talk down Apple. There's no other way to say it: The man made a complete fool of himself. If you consider the things he said about Apple and look at what happened in the aftermath, it's really that clearcut. And instead of learning from his mistakes, Balsillie appears to be setting RIM on a course to repeat them.
At Amazon, I venture there's a quiet respect for Apple that likely goes both ways. That's how top dogs treat one another. A student of the game, Balsille should have learned these unwritten rules from watching hockey's warriors battle. While Amazon does what it does in a more than logical bid to drive business to its e-commerce core, RIM is now chasing the winners it once chided, all the while losing focus on its supposedly strong core business.
If RIM is all about superior products from technical and security standpoints, and Apple is all about making gadgets that people merely kill time with, why not focus on your apparent strength? It's clear that Balsille realized he misread the industry years ago and took his company off of the edge of a cliff. Feeble attempts to make good simply will not work in tech like they do in sports.
RIM needs to find a way to innovate with its few remaining strengths in mind, just like Amazon does with its many growing and formidable strengths. Granted, it's easier for Amazon because the company operates from a position of strength, not hysterical dysfunction and disarray.
As bearish as I am on RIM, it's not the time to short the stock outright. That said, don't let any upward movement in the stock price fool you. Trade it if you must and book profits the second you see them. This thing has further to fall. As revenues and profits continue to erode, the stock will eventually breach $20 per share.
Clearly Balsille is too stubborn to step aside. He's probably too stubborn to sell out. And, as an aside, RIM is not Potash (NYSE:POT). Rather, it's become a national embarrassment. I doubt the Canadian government will put up much of a fight to keep it.
RIM swaggers with a bravado that says once we finally get around to putting out new phones, consumers and enterprise will reverse course and buy them. And if we add music to those phones, people will listen. It does not work that way. Once you've been outsmarted and out-innovated, you don't just come back from the dead using somebody else's idea, particularly when it's Apple's.