The technology sector is a merciless market and there are few "fade into the sunset" stories. Instead, whenever and wherever there is success, a horde of rivals soon follow with the express intention of taking what you do best, doing it a little (or a lot) better and driving you out of business. The rise of Research In Motion (Nasdaq:RIMM) was unexpected and remarkable, virtually tethering a whole generation of workers to their jobs in a way never quite achieved before, but the fall has been just as remarkable. (For related reading, see Blackberry Continues Its Downward Motion.)

TUTORIAL: Stock-Picking Strategies

With the market having moved on from specialized one-function devices to do-everything smartphones, can Research In Motion adapt to and overcome the new competitive realities?

What Went Wrong
Like Palm before it and so many technology incumbents in general, Research In Motion rested on its laurels. Though the Blackberry had become a virtual must-have within any large organization, the company failed to think much outside of that narrowly-focused business market. It seems that management failed to grasp the importance of functions and features like music playback, Internet access, cameras and so on. So, while RIM dutifully continued to turn out slightly improved versions of older models, they were out-engineered and out-maneuvered by Apple (Nasdaq:AAPL) and the introduction of virtual do-everything devices.

Making matters worse, RIM has been slow to accept its shortcomings – particularly the extent to which it does (or does not) understand its customers' wants and needs. Where Apple has become famous for anticipating customer tastes, and Samsung adept at following, RIM has come off as quite a bit more clueless. Recent devices out of RIM have been panned as clunky, feature-poor and generally not what the market wants. The recent PlayBook tablet is perhaps the best example – though few companies outside of Apple, Samsung, Amazon (Nasdaq:AMZN) or Barnes & Noble (NYSE:BKS) have had much success with tablet-type devices, the PlayBook has been a near-disaster.

But that is not all that has bedeviled RIM. There have been inexcusable operational and execution errors as well. Service outages have earned the company ample bad publicity (and customer ire), and the dual CEO structure seems to be a sluggish, bureaucratic response to an industry that typically thrives on fast decision-making and clear visions from leadership. (To learn more about effective CEO leadership, read Top Qualities Of An Effective CEO.)

Can RIM Be Saved?
Is it all over for Research In Motion? Not necessarily. For starters, RIM still serves a growth industry. Although the overall phone market is not growing all that rapidly, smartphones are still well less than half of the phone market. Consequently, a good lineup of products could not only capture shares, but grow the smartphone market further.

Ironically, RIM may also be helped by one of the aspects of technology that led to its undoing. Apart from Apple, there is very little customer loyalty in technology. So long as a company doesn't put products out that are so bad as to destroy the brand name, users are happy to try something new if the price and feature set are right. In other words, RIM could be just one generation away from being relevant and competitive again.

Last and not least, turnarounds don't necessarily take all that long in this sector. Apple famously designed the iPhone virtually from scratch over 30 months and for approximately $150 million. Subsequent iterations have taken much less time to develop, and it is not as though RIM would have to start from scratch. Even granting that IP limits what RIM can do, with over $1 billion in cash on the balance sheet, development costs should not be a limiting factor.

What RIM Must Do
Perhaps it's counterintuitive, but if RIM wants a future, it has to forget the past. It needs to abandon legacy platforms and products that are no longer self-sustaining, and it needs to realize that it is now on the outside looking in when it comes to the industry leaders. Also, a healthy dose of humility must come – realizing that they have lost touch with their customers and fallen into the habit of telling consumers what they want instead of asking them.

It would also seem that the dual CEO structure has done the company no particular favors. As the oft-repeated joke about there being no statues erected to committees may suggest, real leadership does not come out of a consensus. RIM needs a single visionary leader with the ability to think ahead of the curve, the willingness to demand the almost-impossible and the full support of the board of directors. Said differently, there is little reason to believe that RIM can play the Samsung or HTC game of following design leaders but compensating with efficient execution, so RIM has to attempt to regain leadership in technology and design. (For related reading, see A Primer On Investing In The Tech Industry.)

The Bottom Line
With over $1 billion in cash on the books, Research In Motion will have many more shots on goal before the company is in serious risk of going away entirely. Although RIM does not have Nokia's (NYSE:NOK) remarkable world-wide share, the company does still have a foothold in the market and a brand that customers recognize.

Still, time is wasting and RIM's opportunity to rebound will not live forever. If the company can realize that past successes no longer mean anything to tomorrow's buyers and go back to the drawing board with fresh ideas, a comeback could be in the cards. Should RIM continue on its same stubborn path, though, it is likely to find itself too far behind the likes of Apple or Samsung to ever really be a growth story again. (Learn about Technology Sector Funds to get exposure to the sector as a whole.)