Could Manufacturing Partner Split Herald New Dawn for RIM?

RIM has suffered another blow to its faltering fortunes after one of its main manufacturing partners has pulled out of a long-term agreement, announcing that it will cease production of BlackBerry devices by the end of the year.

Celestica, a worldwide manufacturing company based in Toronto, is one of the main producers of the BlackBerry Bold and Curve models but will stop production of these handsets over the coming months. What isn’t yet clear is whether this decision has been made by Celestica, RIM or by mutual agreement.

Following a period of misfortune and falling profits, RIM has embarked on some sweeping cost-cutting initiatives recently, with the company declaring that it intends to reduce its operating costs by $1b this year. The firm also announced that it is to reduce its workforce by 10%, making around 2000 people redundant.

However, the split with Celestica doesn’t leave the company completely high and dry. RIM works with at least three other manufacturing partners, Flextronics International, Jabil Circuit and Quanta Computer, with each of them producing various parts of the BlackBerry range. Rather than being the business disaster the end of the Celestica deal may initially sound, the move could well be a drastic step that forms part of RIM’s plan to take a more streamlined approach to its business.

With the company planning to release its all new BB10 operating system later this year, there is evidence that the company is moving toward a revamp which will see its expansive range scaled down, possibly taking heed of the “quality over quantity” adage often trotted out by industry analysts. Consolidating the BlackBerry manufacturing process could prove be a very effective move that will reduce costs and help to get the firm back on its feet.

RIM has kicked out its former CEOs, Jim Balsillie and Mike Lazaridis, replacing them with Thorsten Heins and tasking him with turning the company’s fortunes around. Heins was the man who took to the stage at BlackBerry World 2012 and showed off some of the features of BB10, impressing many of those in attendance.

That operating system is decreed by many as exactly what RIM needs to be pinning its hopes on, as even with all the streamlining in the world, it’s unlikely to turn its fortunes round if the new OS doesn’t perform. What we have seen of BB10 is impressive though, with much being made of its intuitive keyboard and revolutionary time-shift camera function.

However, by the time the new OS emerges it is possible that there will be a new version of iOS on the market which could have surpassed whatever it is that RIM is planning. App developers have also been given a large window of opportunity to copy BB10’s impressive features due to them being demonstrated so long ahead of release.

This operational restructure could turn out to be a pivotal moment for RIM and one that heralds a new dawn for a revamped company to reclaim its place as a leader in the smartphone world. Equally, it could be another whimper in the company’s eventual decline. Either way, the Canadian firm remains on shaky ground, with BB10’s performance likely to be the deciding factor in its fortunes.

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