RIM Explores Microsoft Alliance, Other Radical Moves

Reuters has reported, citing three sources familiar with the situation, that Research In Motion Ltd. is strongly considering, among other things, forming an alliance with Microsoft as a way to stave off RIM's further losses.

According to the unnamed sources, there is high pressure on RIM's board to explore other options to prolong the survival of the company. Among them is to abandon their proprietary OS and switch over to Windows Phone 8, via a partnership similar to the one Microsoft created with Nokia.

RIM's troubles need little detailing, but the Canadian-founded creator of the BlackBerry announced this week it would be slashing another 5,000 jobs--in addition to 2,000 job cuts recently announced--which is around 35% of its remaining employees. The company is also delaying the release of the BlackBerry 10 phone into some time in the first quarter of 2013.

Other described possibilities for RIM include Microsoft buying a stake in RIM outright; Microsoft buying up RIM's portfolio of wireless patents; or RIM selling its proprietary network, around which the BlackBerry technology revolves, to a buyer who could then open it up to other smartphone makers as a for-pay service.

Most any of these scenarios would spell the end of RIM as a company, and would almost certainly involve the separation of the company's handset business from its actual network and carrier hardware.

Allying with Microsoft may be more useful than it might seem at first. BlackBerry devices are widely used in organizations that run Microsoft Exchange. There's long been tight integration between those devices and Microsoft's messaging platform, so having RIM as a close strategic partner makes sense if only from the point of view of supporting one of Microsoft's biggest auxiliary hardware partners.

Former RIM CEO Jim Balsille had proposed a similarly radical path during his tenure at the company. He was allegedly engaged in talks with a number of different wireless carriers to allow the use of non-BlackBerry devices on their network, as a revenue-raising method--in essence, turning RIM into a services company rather than just a smartphone-product company. His ideas were not well-received by RIM's board.

Little has been seen in public of BlackBerry 10. What few pieces that were shown off--mainly at BlackBerry World 2012, back in May--were fleeting, although RIM CEO Thorsten Heins claims many third-party developers have lined up support for the new system. InformationWeek's Eric Zeman noted that most of the apps demoed were not business-grade apps. For instance, the e-mail and messaging clients and browser were not shown.

Wall Street has been uniformly pessimistic about the company. RIM's stock has touched a 10-year low, and analyst firm Morgan Stanley stated it only believed RIM could survive as a company "a fraction of its current size." RBC Capital and J.P. Morgan were brought on board to help RIM determine what to do next. It might come as no surprise if we learned one of their suggestions was an alliance with Microsoft.