A piece in the Globe and Mail tries to paint a picture for RIM that indicates that a comeback is possible. The headline says that the “comeback trail is well-worn”, but the article provides a single example of a meaningful comeback and turnaround, Apple. It tries to list Motorola as having made a comeback, but the problem is that it is far too soon to tell if Motorola (now part of Google) can reclaim it’s past glory. It is nowhere near it yet. Yes, it is true Apple came back from the brink. But it did so by more-or-less completely changing direction. Almost all of the tiny number of technology rebirths meant substantial changes in direction.
Apple Puts Computers In Back Seat
When Steve Jobs was brought back to Apple in 1997, Apple was a company in very serious trouble. Steve’s return signalled a new beginning. The turnaround started with the computer technology, but it didn’t really take off until Apple moved into a completely new market: MP3 players. Until then, Apple was on course to remain a reasonably viable computer manufacturer, but with a tiny niche market that had limited growth prospects. The iPod business basically injected new life into the Mac business, by providing people with a small step into the world of Apple. Even the iPod wasn’t overly dominant until an important piece to the puzzle was added, in the form of iTunes. Up until then, it was more-or-less just another MP3 player, albeit a nice one to use. The device was expensive, and when compared feature-by-feature, was adequate but not outstanding. The introduction of cheap, legal content changed that, and made the iPod far more desirable to consumers.
So, our first voyage on the “come-back trail” actually didn’t follow the expected path at all. They took a left turn at Albuquerque and went in a new direction. Apple did not do “more of the same”. But what about other examples? Let’s face it, the field is thin. Few companies go right to the brink in the tech world and come back stronger. The only other real example is IBM.
The Near-death And Rebirth of Big Blue
By the early 1990’s, IBM was in trouble. Mainframe revenues were dropped as companies were sending them back. UNIX servers and workstations had taken off, and IBM wasn’t at the party. PC sales had levelled off, and they had minimal presence in the services business. Trying to avoid the first layoffs in corporate history, people were reassigned to sales, the theory being that more salespeople would mean more sales and more revenue. It didn’t work, and cutbacks were inevitable. Then IBM took a radical step: for the first time in the company’s history, they brought in an outsider to be CEO. Lou Gerstner arrived, and it was obvious things would be different by the way he dressed. He didn’t show up in the traditional “blue suit and white shirt”. He arrived at work his first day in khakis and a flannel casual shirt.
IBM made a turnaround, and in a big way. Underperforming divisions were sold or cut. The company refocused their efforts, and the RS/6000 family of UNIX-based servers (running IBM’s version of UNIX, AIX) hit the streets, and provided a credible alternative to HP and Sun. Palmisano took over from Gerstner, and IBM continued to evolve. They bought PWC and dramatically increased their services business. They refocused how servers were designed, built and supported, and started to move technologies like virtualization across all their platforms. They sold of the PC business. They made huge commitments to open technologies like Java and Linux. All this from one of the most closed and “not invented here” corporations to have existed. IBM was turned around, but it took a nearly-complete makeover of the company to make it happen. The IBM of today bears little resemblance to the IBM that Gerstner inherited back in 1993. About all that didn’t change was the logo.
Otherwise, Comebacks Are Rare
The technology landscape is littered with the remains of once-great companies that have disappeared, either through attrition or acquisition. DEC was the leader in minicomputers. Compaq was once the top dog in PC’s. Palm owned the PDA space for a time. Tandem was one of the biggest players in the fault-tolerant computing space. 3COM was once the premier supplier of network gear. US Robotics represented the standard for modems. Sun Microsystems fought a neck-and-neck duel with HP and Apollo in the UNIX server space. DEC, Compaq, Tandem, Palm and 3COM have all disappeared into the bowels of HP. Sun diminished, and is now part of Oracle. The list of similar companies could fill pages.
Resurgence in technology is rare. Contrary to what the Globe and Mail article would have you believe, it almost never happens. That isn’t to say companies don’t try. Palm tried repeatedly to capture past glory, first as part of 3COM, then back on their own, before becoming part of HP. It didn’t help. The world moved on, and there wasn’t a place for yet another mobile operating system and mobile computing platform. DEC was in some trouble when HP bought them, but their glory days were done. All that was left was the logo and a few pieces of technology (most of which are no longer around in their original form).
The few times companies make it back from the brink, they do it by effectively remaking the company. At best, they retain some of the corporate image. Apple remade itself with the iPod. That in turn helped boost the Mac, but Apple’s biggest successes have come with the iPod, the iPhone, the iPad and iTunes behind all of them. Yes, the Mac is doing well, capturing marketshare and growing in both units and revenue. But that only happened because of the various iDevices that got people to think about Apple again. The most telling indicator of where computers fit in Apple’s bigger picture: the company dropped the “Computer” part of “Apple Computer” back in 2007. While the Mac still mattered, it wasn’t front and centre for the company any more.
So yes, a resurgence for RIM is certainly possible. But not while they continue down the path they are currently following. Doing “more of the same, just harder” won’t fix the problem. If RIM wants to survive, it needs a near-complete makeover, not just adjustments here and there.