RIM Downgraded Amid BlackBerry Breakup Reports

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Another day, another dose of unsettling news surrounding embattled BlackBerry maker Research in Motion (RIM).

Over the weekend, ominous rumblings began to circulate. RIM is splitting in two, according to a report in the The Sunday Times. The company is reportedly preparing to spin off its hardware business from its services unit and considering selling its handset unit to a larger technology company like Microsoft.

Following news of a fresh round of layoffs, it seems a plausible idea. The Canadian company has not disclosed how many have lost their jobs — or soon will — but reports have placed the number at 2,000. Last year, the company shed 2,000 employees, roughly 10 percent of its workforce at the time.

The company has yet to officially confirm or deny the breakup report, but a Globe and Mail article casts some doubt on it. Insiders have dismissed the breakup rumor as “a silly fantasy,” says the news outlet.

While still a relatively familiar, if dwindling, sight in corporate offices, BlackBerry’s share of the mobile operating system and device markets has nosedived. In tablets, a fast-growing category, Blackberry is barely a blip on the radar.

According to a recent forecast from IDC, Blackberry will account for just one percent of the tablet market this year, dropping from an already meager 1.7 percent in 2011. For comparison’s sake, Apple’s iOS is expected to account for 62.5 of the tablet market in 2012 while Google’s Android mobile OS is will capture 36.5 percent.

RIM also faces tough competition for its upcoming BlackBerry 10 mobile platform and devices that support it. Apart from a $10,000 guarantee that RIM is making to developers of approved apps and some unique touches like a Time Machine-like image capture capability, BlackBerry 10 has yet to capture the industry’s attention like its rivals.

Apple’s iPad meanwhile has been steadily making inroads into the enterprise computing market, thanks, in part, to blockbuster sales and an iOS app ecosystem with a wealth of both business and consumer offerings.

And this fall, Microsoft joins the fray with Windows 8/RT. Last week the software giant showed off both ARM and Intel versions of Surface, a Microsoft-branded tablet that the company plans to manufacture and sell. So far, Surface has been met with cautious enthusiasm, thanks to a widescreen form factor, a svelte and polished design that incorporates a kickstand and innovative screen covers that double as physical keyboards with built-in touchpads.

Adding to RIM’s woes today, Morgan Stanley weighed in on the company’s future, downgrading the stock to underweight. In his recommendation, Ehud Gelblum, an analyst for the financial firm concluded, “The only way RIM remains a viable entity is at a fraction of its current size, a transformation that erases much of its earnings power.”

Pedro Hernandez is a contributing editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals. Follow him on Twitter @ecoINSITE.