Research In Motion needs to modernize its organization by splitting the company into two standalone businesses: Blackberry Network and RIM Smart Devices, RBC analysts said Thursday. Though the move would not be without risk, "each business can pursue independent growth strategies and may unlock up to 75-100 percent more shareholder value," RBC analysts Mike Abramsky and Paul Treiber advised investors.
RIM recently told the company's shareholders that it intends to launch seven smartphones running the BlackBerry 7 OS later this year. Thereafter, the BlackBerry maker will transition to the QNX mobile 
OS it acquired last year, which in theory would enable RIM to better compete with Apple's iOS and Google's Android platform. However, some investors are skeptical.
"Recent mis-execution exposes RIM's challenges of switching platforms and transitioning to a consumer technology company," Abramsky and Treiber observed. "Splitting RIM's two distinct businesses -- BlackBerry [Network] and RIM Smart Devices -- may allow each to more quickly expand and innovate, would separate each business from different market forces, and could make each more attractive to potential acquirers," they wrote in an investor note.
Risky Business
Abramsky and Treiber admit that there would be risks involved in splitting up RIM at a time when the BlackBerry maker's overall market standing is highly vulnerable. On the other hand, the risks of sticking with the status quo could be even higher, RBC's analysts believe.
As a standalone business, RIM's Blackberry Network would be able to target a 400 million unit multidevice market -- including phones and tablets running Android and Windows Phone 7 -- by offering "affordable, efficient, cross-platform mobile push messaging, social networking, cloud and business data services and software," Abramsky and Treiber wrote.
Though RIM has strengths in devices, networking and hardware engineering, the mobile device market has shifted from hardware to software, and from network needs to the consumer experience, RBC's analysts explained. Splitting out the RIM Smart Devices business would enable the company to "prioritize new consumer experiences above traditional network priorities [as well as] accelerate innovation and developer/content relationships," Abramsky and Treiber wrote.
Transitional Issues
BlackBerry Network is a strong asset for RIM, and the company has to figure out quickly how to evolve and broaden its usage scenarios, noted Al Hilwa, director of applications development software at IDC. (continued...)
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