Come on RIM…..er Blackberry!

A product delay crushed Blackberry shares last week. We point towards one variable that the company must bolster if it is to regain a solid long term standing in the smartphone market.

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In a previous post the fact that the company formerly known as RIM was much more than a faceless corporation to many Canadians was alluded to.  It is a home grown success story and something that we tend to be emotionally tied.  Last week’s highly publicized product launch was set to signify the dawn of a new era.  Exciting stuff – who doesn’t love a comeback!  The company’s name has even been changed to Blackberry (TSX:BB,NASDAQ:BBRY) to represent this transformation.  Unfortunately, what we got far more resembled the same old RIM than some energized giant ready to reclaim its position atop the smartphone pile.

The reviews are in and generally favourable for the new Blackberry device and operating system.  The issue is that after spending huge amounts of time, effort, and money to “launch” this new product at the end of January, it isn’t even going to be available in the U.S. (where RIM still generates 22% of its sales) until March!  And perhaps worse, the QWERTY version, the one with the physical keyboard that users so love, isn’t available anywhere until April.  This delay is nothing short of astonishing!  Clearly, investors were taken aback by this news as RIM shares plunged by almost 17% over the days following the launch.

The company’s CEO, Thorsten Heins, was quoted as saying that “It’s all about execution.  We better get this right”.  Creating a buzz without having a product available for sale is not good execution in my mind.  When the new Blackberry hits U.S. shelves in March, any stir that last week’s festivities, or the Superbowl commercial for that matter, caused will be long forgotten.

It’s difficult to find a more important variable than reputation in the business world.  Blackberry’s has been severely damaged largely due to past management’s tendency to over promise and under deliver.  The company had telegraphed this launch for some time and because of its past tendencies, faced a lose/lose decision.  Launch on the scheduled date with no product, or postpone the launch until the product is available.  The market’s level of patience for either decision was decimated many moons ago.

Even if the new device is a superior product, for Blackberry to be successful in the long term, the company must regain some semblance of its past reputation.  Given the product delay in the U.S., this pursuit has gotten off on the wrong foot.  With strike one on the board, time will tell where the rest of the pitches fall.  Safe to say, we Canadians will be tuned in!

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Fool contributor Iain Butler does not own shares in any of the companies mentioned in this post at this time.  The Motley Fool has no positions in the stocks mentioned above.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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