RIM’s research spending exposed

Canadian firm, RIM spent $1.35 billion on research and development in 2011 alone, according to a report by the Wall Street Journal.

These figures equate to a tripling of research and development expenditure by RIM since 2008. In that same three-year period, sales of RIM’s BlackBerry units did rise, although this has been blamed upon a general increase in interest across the smartphone market.

In fact, BlackBerry’s smartphone market share dropped 3.4% in 2010, from 19.7% to 16.3%; a reflection of the high-levels of choice now offered to smartphone consumers.

Writing for the Wall Street Journal, Martin Peers suggests that RIM should have a long hard look at their allocation of resources if they are to regain the initiative in the smartphone market and excel in the tablet market:

“Here’s a radical solution to help Research in Motion [RIM] recapture momentum: a cutback in research-and-development spending,” Peers writes. “After all, there’s little apparent connection between R&D expenditures and successful product launches. Apple, for instance, has come up with new products like the iPhone and the iPad despite spending less on R&D over the entire past decade than Microsoft did in fiscal 2010 alone”.

Peers further questioned the sense in spending such astronomical figures on research and development, by asking where the money was going to. RIM’s new PlayBook tablet does run a new operating system but, as Peers points out, this came about through an acquisition rather than an internal development.

The PlayBook is launched in the US and Canada on April 19th. A successful launch is vital to the future of RIM, who may be forced to make some serious internal changes if the release turns sour.

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