Nearly $700 million profit per quarter and they're laying off staff? Seems strange unless they're expecting things to get much worse.
Well, they were betting heavily on the PlayBook not only being successful but also having a "halo" effect.
Clearly the PlayBook must appear to them now to have a very limited future.
They were also betting heavily on QNX/Flash/whatever to be their new Android or iOS for a whole new range of tablets and phones, but this must also probably not have gone according to their expectations.
Bottom line? They tried to pull a Google "monkey-see-monkey-do" photocopy job of Apple... In a fraction of the time... but are running into a whole host of problems, some of which we'll only learn about later in the year.
Also, by so infuriatingly forcing you to tether the PlayBook with a BlackBerry to get any kind of significant functionality, they have locked both platforms together in a death spiral.
Ironically, RIM's corporate base is an issue, because that makes everything look rosy until new technologies reach a critical mass and corporates then migrate to that in droves. We've seen it before with virtualisation, commoditisation of servers and storage, etc. Brands with a stronghold in corporate IT laugh of the new guys as fads or consumer drivel, ignoring the writing on the wall... Until it's too late. We've seen it with Sun Microsystems, PeopleSoft, etc.
Finally, remember that RIM has had a good boost in sales due to the explosion in all kinds of social use of BlackBerries outside of their core market (teenaged girls and so on). So they've floated on the "rising tide" of consumer interest but as everyone knows, consumers, particularly younger consumers, can be fickle. Once the tide shifts, you might find yourself on the rocks.
There was an article on Asymco a while ago that basically said that there had never been a case of a handset maker recovering once they'd lost profitibility - if they're right then RIM is in a far better position. In the case of Moto their profits aren't rising because of increased market-share, but thanks to aggressive cost cutting and their market switching from dumbphones to smartphones. The phrase 'dead-cat bounce' springs to mind.
Yes but eventually mummy & daddy will take a deep breath and turn off the life-support machine. S-E is particularly bad for Sony because it damages their brand by association with failure. At some point they will either sell it or merge it into yet another handset maker - Nokia perhaps, since misery loves company.
I certainly wouldn't argue with that, but I think they can continue to serve their core market of enterprise users with a promise of security and attention to enterprise needs. Apple doesn't really play to enterprise, it's a consumer oriented firm deep in its bones - and android is terrifying to enterprise users. RIMs biggest threat in its core market is probably from WP7 - since Microsoft does understand enterprise users, even if the relationship between them is an abusive one - enterprise customers feel safe with Microsoft even as it slaps them around, shouts at them and tells them it's all their fault.
As for Android, I don't expect it to ever totally dominate the mobile market, because Google just don't need it to. Once MS are beaten back and the mobile market is a safe place for Google driven search, maps, mail and sundry services the chocolate factory will shift resources to fighting Microsoft on another front. Google have no financial interest in making Android compete with iOS at the high-end, and at current rates none of the Android handset makers will have the financial strength to do it.
Hey! You stole my post! How do I report this? OK... I'll just go ahead and agree 100% as I always do
They held on to record sales and profits a lot longer than I expected. I hope, for their sake, thy have something really great in the works.
So far, it looks they have managers running the innovation, not designers. Their innovations ("let's add Android apps") are typical manager-like innovations, they spring from economical argument ("there are a lot of Android apps"). Though that may work a bit, real innovation directed at user experience is required above all and there they seem to lack the capabilities to perform.
Your quote is verbatim what people said about Apple in 1995. People said I was crazy to buy their computers.
RIM have to worry and react, but to say they are finished seems premature.
I'll will at least agree with See Flat's ascertain that maybe now is the time to buy RIM stock? I bought ALL of my Apple stock back in 1995 just after Apple was given 90 days of life by so-called experts. That makes my cost basis per share under $10 a share!
Gee, why not go for a nice, round figure like 2 million, RIM?
Well, their call is a legal document. They have to tell the truth, but not all of it, as we could see by their refusing to give sell through numbers when asked.
There was an article on Asymco a while ago that basically said that there had never been a case of a handset maker recovering once they'd lost profitibility - if they're right then RIM is in a far better position. In the case of Moto their profits aren't rising because of increased market-share, but thanks to aggressive cost cutting and their market switching from dumbphones to smartphones. The phrase 'dead-cat bounce' springs to mind.
That's certainly possible, but their top line phones aren't cheap. But RIM is under a lot of pressure now, and there's a lot of doubt that they can survive it. Possibly getting rid of their co-CEOs' and four COOs', though one just left, would help. These guys are living in a fantasy land.
Quote:
Yes but eventually mummy & daddy will take a deep breath and turn off the life-support machine. S-E is particularly bad for Sony because it damages their brand by association with failure. At some point they will either sell it or merge it into yet another handset maker - Nokia perhaps, since misery loves company.
I keep thinking that too, but it's been said for almost ten years now, and they're still here.
Quote:
I certainly wouldn't argue with that, but I think they can continue to serve their core market of enterprise users with a promise of security and attention to enterprise needs. Apple doesn't really play to enterprise, it's a consumer oriented firm deep in its bones - and android is terrifying to enterprise users. RIMs biggest threat in its core market is probably from WP7 - since Microsoft does understand enterprise users, even if the relationship between them is an abusive one - enterprise customers feel safe with Microsoft even as it slaps them around, shouts at them and tells them it's all their fault.
Three years ago, I would have agreed about Apple and the enterprise, but not now. apple has added more enterprise features each upgrade. They just added another security feature, and no doubt more enterprise friendly features we don't know about yet. Even Apples' computer sales have risen hundreds of percent in the enterprise and government the is year, with no sign it will stop rising.
MSs' phone OS sales are now dismal, and I certainly don't agree that it will rise to 20% in 2015. That's really far out speculation.
Quote:
As for Android, I don't expect it to ever totally dominate the mobile market, because Google just don't need it to. Once MS are beaten back and the mobile market is a safe place for Google driven search, maps, mail and sundry services the chocolate factory will shift resources to fighting Microsoft on another front. Google have no financial interest in making Android compete with iOS at the high-end, and at current rates none of the Android handset makers will have the financial strength to do it.
I hope not, but it looks as though they're going to continue increasing marketshare all over.
There was another Asymco article a while back (which I unfortunately can't seem to summon up) which addressed the idea of eroding ASP as being a harbinger of doom. This was a year or so ago, and he was using RIM as an example.
If I recall correctly, the premise was that manufacturers facing loss of market share would attempt to prop up same by cutting prices, and in the short term that often worked. Thus, you would get rosy quarterly reports showing robust growth and even steady or rising profits. However, since price cutting doesn't address underlying structural reasons for eroding market share, this strategy could lead to a death spiral wherein multiple rounds of price cuts eventually stop working, at which point market share and profitability both fall off a cliff. (I don't think I'm doing the argument justice, if anyone remembers that post and knows how to find it a link would be great).
At any rate, RIM's eroding ASP suggests exactly this scenario-- they're growing their non-USA market by selling relatively cheap devices to teenagers who like the messaging function, which allows them to sort of pretend that they're still getting it done. Sort of like Nokia's oft cited vast market share of cheap phones was supposed to buffer them from the hard times right up to the point they dumped Symbian for WP 7.
it's such a shame that people will be laid off partially due to RIM executives' inability to adapt. as much as i like iOS devices and applaud Apple for so some neat things they have accomplished, news of many non-executive folks at RIM losing the jobs as rather sad.
There was another Asymco article a while back (which I unfortunately can't seem to summon up) which addressed the idea of eroding ASP as being a harbinger of doom. This was a year or so ago, and he was using RIM as an example.
If I recall correctly, the premise was that manufacturers facing loss of market share would attempt to prop up same by cutting prices, and in the short term that often worked. Thus, you would get rosy quarterly reports showing robust growth and even steady or rising profits. However, since price cutting doesn't address underlying structural reasons for eroding market share, this strategy could lead to a death spiral wherein multiple rounds of price cuts eventually stop working, at which point market share and profitability both fall off a cliff. (I don't think I'm doing the argument justice, if anyone remembers that post and knows how to find it a link would be great).
At any rate, RIM's eroding ASP suggests exactly this scenario-- they're growing their non-USA market by selling relatively cheap devices to teenagers who like the messaging function, which allows them to sort of pretend that they're still getting it done. Sort of like Nokia's oft cited vast market share of cheap phones was supposed to buffer them from the hard times right up to the point they dumped Symbian for WP 7.
I remember that article. It was very good. And it is right as well.
Here's an article about RIM, I know it's hard, but try to read it before looking at the date. Look familiar?
it's such a shame that people will be laid off partially due to RIM executives' inability to adapt. as much as i like iOS devices and applaud Apple for so some neat things they have accomplished, news of many non-executive folks at RIM losing the jobs as rather sad.
That's always the way it works.
But, this isn't nearly as bad as what happened at Warner some time ago, possibly two decades ago, I don't remember exactly.
Warner announced layoffs, though they didn't say exactly why. Then old man Warner and his son raised their salaries by $600 million, worth much more in today's dollars. They were forced to rescind the layoffs and to drop their raises. now that was blatant!
Yes, I know exactly what you are talking about. It also talked about their rate of growth of *new* users which was troubling. Looks like it's all coming true. This is going to be a bad year for RIM.
Quote:
Originally Posted by addabox
There was another Asymco article a while back (which I unfortunately can't seem to summon up) which addressed the idea of eroding ASP as being a harbinger of doom. This was a year or so ago, and he was using RIM as an example.
If I recall correctly, the premise was that manufacturers facing loss of market share would attempt to prop up same by cutting prices, and in the short term that often worked. Thus, you would get rosy quarterly reports showing robust growth and even steady or rising profits. However, since price cutting doesn't address underlying structural reasons for eroding market share, this strategy could lead to a death spiral wherein multiple rounds of price cuts eventually stop working, at which point market share and profitability both fall off a cliff. (I don't think I'm doing the argument justice, if anyone remembers that post and knows how to find it a link would be great).
At any rate, RIM's eroding ASP suggests exactly this scenario-- they're growing their non-USA market by selling relatively cheap devices to teenagers who like the messaging function, which allows them to sort of pretend that they're still getting it done. Sort of like Nokia's oft cited vast market share of cheap phones was supposed to buffer them from the hard times right up to the point they dumped Symbian for WP 7.
This is the article I think addabox and I are thinking about. An essential read in any case, with updates on their latest announcement. Tells you everything you need to know. I originally found it through Gruber, and Gruber again sprung to mind and I was able to find it. Written by Michael Mace.
This is the article I think addabox and I are thinking about. An essential read in any case, with updates on their latest announcement. Tells you everything you need to know. I originally found it through Gruber, and Gruber again sprung to mind and I was able to find it. Written by Michael Mace.
Awesome, that's it for sure. Don't know how I got the idea that is was a Horace Dediu piece, other than the fact that he's one of the few that does this kind of analysis.
So everything he's describing as the first disturbing signs of a trend a little less than a year ago have come true. They're pretty clearly deep into the death spiral phase of things-- ever lower margins chasing an ever shrinking pool of potential new subscribers which can't offset people leaving the platform.
Even worse, they've now publicly bet the farm on a future OS that may not get here for another year, so expect defections to accelerate. At least Nokia's collapse is tied to a partner with some name recognition and a generally well reviewed (if still incomplete) product. RIM's QNX phones, if and when they appear, are completely unknown quantities (other than the Playbook, which isn't exactly generating good will and doesn't tell us much about what RIM can do with a much more constrained operating environment).
" The company blamed new product introductions and delays for its weak earnings"
Well, there are 2 proper reasons.
1st, RIM got ahead of the game in the business sector, they became the phone of choice for business men and women. Unfortunately they got complacent, didn't bother developing and let other companies catch them up. Even when companies did catch them and start to surpass RIM, they sat back and let it happen. A few good ideas will do you no good at all.
Comments
Nearly $700 million profit per quarter and they're laying off staff? Seems strange unless they're expecting things to get much worse.
Well, they were betting heavily on the PlayBook not only being successful but also having a "halo" effect.
Clearly the PlayBook must appear to them now to have a very limited future.
They were also betting heavily on QNX/Flash/whatever to be their new Android or iOS for a whole new range of tablets and phones, but this must also probably not have gone according to their expectations.
Bottom line? They tried to pull a Google "monkey-see-monkey-do" photocopy job of Apple... In a fraction of the time... but are running into a whole host of problems, some of which we'll only learn about later in the year.
Also, by so infuriatingly forcing you to tether the PlayBook with a BlackBerry to get any kind of significant functionality, they have locked both platforms together in a death spiral.
Ironically, RIM's corporate base is an issue, because that makes everything look rosy until new technologies reach a critical mass and corporates then migrate to that in droves. We've seen it before with virtualisation, commoditisation of servers and storage, etc. Brands with a stronghold in corporate IT laugh of the new guys as fads or consumer drivel, ignoring the writing on the wall... Until it's too late. We've seen it with Sun Microsystems, PeopleSoft, etc.
Finally, remember that RIM has had a good boost in sales due to the explosion in all kinds of social use of BlackBerries outside of their core market (teenaged girls and so on). So they've floated on the "rising tide" of consumer interest but as everyone knows, consumers, particularly younger consumers, can be fickle. Once the tide shifts, you might find yourself on the rocks.
There was an article on Asymco a while ago that basically said that there had never been a case of a handset maker recovering once they'd lost profitibility - if they're right then RIM is in a far better position. In the case of Moto their profits aren't rising because of increased market-share, but thanks to aggressive cost cutting and their market switching from dumbphones to smartphones. The phrase 'dead-cat bounce' springs to mind.
Yes but eventually mummy & daddy will take a deep breath and turn off the life-support machine. S-E is particularly bad for Sony because it damages their brand by association with failure. At some point they will either sell it or merge it into yet another handset maker - Nokia perhaps, since misery loves company.
I certainly wouldn't argue with that, but I think they can continue to serve their core market of enterprise users with a promise of security and attention to enterprise needs. Apple doesn't really play to enterprise, it's a consumer oriented firm deep in its bones - and android is terrifying to enterprise users. RIMs biggest threat in its core market is probably from WP7 - since Microsoft does understand enterprise users, even if the relationship between them is an abusive one - enterprise customers feel safe with Microsoft even as it slaps them around, shouts at them and tells them it's all their fault.
As for Android, I don't expect it to ever totally dominate the mobile market, because Google just don't need it to. Once MS are beaten back and the mobile market is a safe place for Google driven search, maps, mail and sundry services the chocolate factory will shift resources to fighting Microsoft on another front. Google have no financial interest in making Android compete with iOS at the high-end, and at current rates none of the Android handset makers will have the financial strength to do it.
Hey! You stole my post! How do I report this? OK... I'll just go ahead and agree 100% as I always do
Buy a blackberry? Suits?
http://mattrichman.tumblr.com/post/6...asp-in-q1-2012
They held on to record sales and profits a lot longer than I expected. I hope, for their sake, thy have something really great in the works.
So far, it looks they have managers running the innovation, not designers. Their innovations ("let's add Android apps") are typical manager-like innovations, they spring from economical argument ("there are a lot of Android apps"). Though that may work a bit, real innovation directed at user experience is required above all and there they seem to lack the capabilities to perform.
I wish my toilet was earning 640 million
Your quote is verbatim what people said about Apple in 1995. People said I was crazy to buy their computers.
RIM have to worry and react, but to say they are finished seems premature.
I'll will at least agree with See Flat's ascertain that maybe now is the time to buy RIM stock? I bought ALL of my Apple stock back in 1995 just after Apple was given 90 days of life by so-called experts. That makes my cost basis per share under $10 a share!
500,000 v. 400,000 shipments.
Gee, why not go for a nice, round figure like 2 million, RIM?
Well, their call is a legal document. They have to tell the truth, but not all of it, as we could see by their refusing to give sell through numbers when asked.
There was an article on Asymco a while ago that basically said that there had never been a case of a handset maker recovering once they'd lost profitibility - if they're right then RIM is in a far better position. In the case of Moto their profits aren't rising because of increased market-share, but thanks to aggressive cost cutting and their market switching from dumbphones to smartphones. The phrase 'dead-cat bounce' springs to mind.
That's certainly possible, but their top line phones aren't cheap. But RIM is under a lot of pressure now, and there's a lot of doubt that they can survive it. Possibly getting rid of their co-CEOs' and four COOs', though one just left, would help. These guys are living in a fantasy land.
Yes but eventually mummy & daddy will take a deep breath and turn off the life-support machine. S-E is particularly bad for Sony because it damages their brand by association with failure. At some point they will either sell it or merge it into yet another handset maker - Nokia perhaps, since misery loves company.
I keep thinking that too, but it's been said for almost ten years now, and they're still here.
I certainly wouldn't argue with that, but I think they can continue to serve their core market of enterprise users with a promise of security and attention to enterprise needs. Apple doesn't really play to enterprise, it's a consumer oriented firm deep in its bones - and android is terrifying to enterprise users. RIMs biggest threat in its core market is probably from WP7 - since Microsoft does understand enterprise users, even if the relationship between them is an abusive one - enterprise customers feel safe with Microsoft even as it slaps them around, shouts at them and tells them it's all their fault.
Three years ago, I would have agreed about Apple and the enterprise, but not now. apple has added more enterprise features each upgrade. They just added another security feature, and no doubt more enterprise friendly features we don't know about yet. Even Apples' computer sales have risen hundreds of percent in the enterprise and government the is year, with no sign it will stop rising.
MSs' phone OS sales are now dismal, and I certainly don't agree that it will rise to 20% in 2015. That's really far out speculation.
As for Android, I don't expect it to ever totally dominate the mobile market, because Google just don't need it to. Once MS are beaten back and the mobile market is a safe place for Google driven search, maps, mail and sundry services the chocolate factory will shift resources to fighting Microsoft on another front. Google have no financial interest in making Android compete with iOS at the high-end, and at current rates none of the Android handset makers will have the financial strength to do it.
I hope not, but it looks as though they're going to continue increasing marketshare all over.
If I recall correctly, the premise was that manufacturers facing loss of market share would attempt to prop up same by cutting prices, and in the short term that often worked. Thus, you would get rosy quarterly reports showing robust growth and even steady or rising profits. However, since price cutting doesn't address underlying structural reasons for eroding market share, this strategy could lead to a death spiral wherein multiple rounds of price cuts eventually stop working, at which point market share and profitability both fall off a cliff. (I don't think I'm doing the argument justice, if anyone remembers that post and knows how to find it a link would be great).
At any rate, RIM's eroding ASP suggests exactly this scenario-- they're growing their non-USA market by selling relatively cheap devices to teenagers who like the messaging function, which allows them to sort of pretend that they're still getting it done. Sort of like Nokia's oft cited vast market share of cheap phones was supposed to buffer them from the hard times right up to the point they dumped Symbian for WP 7.
There was another Asymco article a while back (which I unfortunately can't seem to summon up) which addressed the idea of eroding ASP as being a harbinger of doom. This was a year or so ago, and he was using RIM as an example.
If I recall correctly, the premise was that manufacturers facing loss of market share would attempt to prop up same by cutting prices, and in the short term that often worked. Thus, you would get rosy quarterly reports showing robust growth and even steady or rising profits. However, since price cutting doesn't address underlying structural reasons for eroding market share, this strategy could lead to a death spiral wherein multiple rounds of price cuts eventually stop working, at which point market share and profitability both fall off a cliff. (I don't think I'm doing the argument justice, if anyone remembers that post and knows how to find it a link would be great).
At any rate, RIM's eroding ASP suggests exactly this scenario-- they're growing their non-USA market by selling relatively cheap devices to teenagers who like the messaging function, which allows them to sort of pretend that they're still getting it done. Sort of like Nokia's oft cited vast market share of cheap phones was supposed to buffer them from the hard times right up to the point they dumped Symbian for WP 7.
I remember that article. It was very good. And it is right as well.
Here's an article about RIM, I know it's hard, but try to read it before looking at the date. Look familiar?
http://online.barrons.com/article/SB...178039307.html
it's such a shame that people will be laid off partially due to RIM executives' inability to adapt. as much as i like iOS devices and applaud Apple for so some neat things they have accomplished, news of many non-executive folks at RIM losing the jobs as rather sad.
That's always the way it works.
But, this isn't nearly as bad as what happened at Warner some time ago, possibly two decades ago, I don't remember exactly.
Warner announced layoffs, though they didn't say exactly why. Then old man Warner and his son raised their salaries by $600 million, worth much more in today's dollars. They were forced to rescind the layoffs and to drop their raises. now that was blatant!
There was another Asymco article a while back (which I unfortunately can't seem to summon up) which addressed the idea of eroding ASP as being a harbinger of doom. This was a year or so ago, and he was using RIM as an example.
If I recall correctly, the premise was that manufacturers facing loss of market share would attempt to prop up same by cutting prices, and in the short term that often worked. Thus, you would get rosy quarterly reports showing robust growth and even steady or rising profits. However, since price cutting doesn't address underlying structural reasons for eroding market share, this strategy could lead to a death spiral wherein multiple rounds of price cuts eventually stop working, at which point market share and profitability both fall off a cliff. (I don't think I'm doing the argument justice, if anyone remembers that post and knows how to find it a link would be great).
At any rate, RIM's eroding ASP suggests exactly this scenario-- they're growing their non-USA market by selling relatively cheap devices to teenagers who like the messaging function, which allows them to sort of pretend that they're still getting it done. Sort of like Nokia's oft cited vast market share of cheap phones was supposed to buffer them from the hard times right up to the point they dumped Symbian for WP 7.
http://mobileopportunity.blogspot.co...berry-and.html
This is the article I think addabox and I are thinking about. An essential read in any case, with updates on their latest announcement. Tells you everything you need to know. I originally found it through Gruber, and Gruber again sprung to mind and I was able to find it. Written by Michael Mace.
http://mobileopportunity.blogspot.co...berry-and.html
Awesome, that's it for sure. Don't know how I got the idea that is was a Horace Dediu piece, other than the fact that he's one of the few that does this kind of analysis.
So everything he's describing as the first disturbing signs of a trend a little less than a year ago have come true. They're pretty clearly deep into the death spiral phase of things-- ever lower margins chasing an ever shrinking pool of potential new subscribers which can't offset people leaving the platform.
Even worse, they've now publicly bet the farm on a future OS that may not get here for another year, so expect defections to accelerate. At least Nokia's collapse is tied to a partner with some name recognition and a generally well reviewed (if still incomplete) product. RIM's QNX phones, if and when they appear, are completely unknown quantities (other than the Playbook, which isn't exactly generating good will and doesn't tell us much about what RIM can do with a much more constrained operating environment).
Well, there are 2 proper reasons.
1st, RIM got ahead of the game in the business sector, they became the phone of choice for business men and women. Unfortunately they got complacent, didn't bother developing and let other companies catch them up. Even when companies did catch them and start to surpass RIM, they sat back and let it happen. A few good ideas will do you no good at all.
2nd, iPhone. Self explanatory really.