Hard-pressed smartphone maker Research In Motion announced this Wednesday that they have begun restructuring by laying off employees, a move that is expected to continue for a year and save the company around $1 billion in 2012 and 2013 alone.
RIM stated earlier in the year that there would be a sizable amount of layoffs this year, but nobody could guess as to how many they had in mind. Last week, the Canadian company decided to begin the planned layoffs as part of a capital-saving program. They went on to say that there might be more layoffs in the future, depending on how things go.
Although RIM refused to give out specifics, it’s been speculated that several thousand employees will be let go as a part of this program. A month ago, RIM had over 16,000 employees, down from over 18,000 that they had last year.
BlackBerry used to be the smartphone for all types of professionals, but with recent competition, they have been floundering. In hopes of rekindling the dominance they once held over the smartphone market, RIM is releasing their best operating system yet, BlackBerry 10, later this year. This move is intended to fight the growing popularity of Androids and iPhones.
Professional economists expect RIM to lay off over a third of their total employees by the end of the year. The reason for so many layoffs is because RIM has entirely too many costs and not enough revenue, and when BlackBerry 10 is released, they need to be willing to adapt to consumer’s demands. After all, BlackBerry 10 is somewhat of a last ditch effort to regain supremacy—if it fails miserably, the company will likely fail as well.
The layoffs will be given to those who work with dated BlackBerry phones and operating systems. Although this is bad news for anybody with an old BlackBerry device, RIM has no choice if they want to remain successful.
Although RIM made smartphones that were, at one time, the corporate communications solution, modern businesses have begun shying away from issuing BlackBerry smartphones to employees. Instead, companies are encouraging employees to bring their own phones to work, typically either iPhones or Androids, by providing them with connective infrastructure. This trend has been catching on recently, and has put a lot of pressure on RIM to adapt.
Although RIM has a program in place to cut costs and a new line of phones coming out, the future of the company is still anybody’s guess. Although RIM has $2 billion dollars in capital, they will likely need to use a lot of that to introduce the next line of phones after BlackBerry 10. With billions in cash, though, it is unlikely that RIM will go bankrupt in the short term.
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