RIM's biggest problem: Always seeking a device home run

RIM's biggest problem: Always seeking a device home run

Summary: Why are analysts skeptical about RIM's prospects? Here's a look at past RIM proclamations and how they turned out.

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Research in Motion is like a home run hitter in the twilight of his career---the big hits dissipate and the strikeouts pile up, but the bravado of the days past remains.

The smartphone's latest quarter was a disappointment again and the biggest takeaway is that RIM watchers have to hold their collective breath for the company to deliver a real hit. At this point, few analysts actually believe co-CEOs Jim Balsillie and Mike Lazaridis when they say RIM can ship 13.5 million to 14.5 million devices in the third quarter, up from 10.6 million in the second.

Why? RIM is arguing that its second quarter was a mere blip because it only had three weeks of BlackBerry 7 devices for the three months ending Aug. 31. Then again, RIM is basing its miraculous recovery on three weeks of data. As for the PlayBook, RIM is going to cut prices, update the QNX platform and advertise to drive demand. JMP Securities analyst Alex Gauna said that RIM's grand PlayBook plan could be "a colossal waste of resources given the shortcomings of the device."

Looking forward, it's instructive to understand how folks got to this point with RIM. The co-CEOs talk, but the believability is gone. Until RIM hits a grand slam the perception that the company talks too much and can't back it up will continue. Here's a look at Balsillie's statements on earnings conference calls over the last two years and what actually happened:

Sept. 15, 2011:

We've already seen a meaningful increase in sell-through and decreased churn in North American carriers who've launched BB7 handsets. And we have plans to more than double the number of models available in the US and increase the number of channels selling the products, which should further improve our position in the US. So this gives us a lot of confidence, coupled with the reviews and the competitive performance that this product has got a tremendous amount of runway and is going to serve us extremely well.

Outcome: TBD.

July 16, 2011:

RIM launched the PlayBook in Q1 in consumer electronics channels throughout the US, including Best Buy, Staples, Office Depot and many others, and we were pleased to ship approximately 500,000 units in the first quarter. PlayBook delivers on its promise of power, affordability and uncompromised web, and the user experience continues to improve as we add more and more applications and content services to the platform...The PlayBook is a significant product launch for RIM, not only because of the growth opportunity it provides but because it is the first BlackBerry tablet and the first BlackBerry device to feature the powerful QNX-based OS that will also become the core of future BlackBerry super phones.

Outcome: RIM only shipped 200,000 PlayBooks in the August quarter.

April 28, 2011:

We're calling BlackBerry 6.1, 7.0, BlackBerry 7.0 because it's such an upgrade from 6.0. And it's a huge upgrade for us. There's liquid graphics, there's a hugely enhanced browser and web browsing experience, there's a new, smooth and fluid touch screen, graphics acceleration for gaming and faster hardware and higher memory and improved battery life...the PlayBook is really quite frankly magical for the consumer and the enterprise. And we are supremely excited about our long term position.

You're going to see some very powerful stuff, as you should expect, at BlackBerry World next week in tablets, in SmartPhones, in consumer and enterprise that collectively shows what we're doing. And we're very, very busy at advancing this platform.

Outcome: BlackBerry World yielded delays and things like Android compatibility with the PlayBook are due in October. Balsillie said RIM could hit about $7.50 a share in earnings for the fiscal year. Today analysts are expecting $4.91 a share in earnings and RIM had to cut its guidance.

Dec. 16, 2010:

We have real differentiation and we have real opportunities for expansion of the business in a whole bunch of ways. Just the pent-up interest in the PlayBook is really overwhelming. And then the whole aspect of carrier billing and value-added services, you're just going to see a litany of things happening in that area, both for the BlackBerry PlayBook and BlackBerry smartphones over the year...This is not a time to be penny wise, pound foolish when you're really grabbing position in this rapidly expanding space.

Outcome: RIM has 4.7 percent of the tablet market, according to IDC. For the second quarter, RIM had 11.6 percent of the smartphone market, down from 17.4 percent in the same quarter a year ago.

Sept. 16, 2010:

Since the Torch launched, sell-through run rates have more than tripled in AT&T retail stores and Torch contributed to the best month ever for BlackBerry smartphones with Best Buy in August. In fact, based on sell-through in the first three weeks after launch in AT&T, Torch is the most successful GSM BlackBerry smartphone launch in RIM's history. So far adoption of Torch in the United States has been largely dominated by consumer and prosumer sales....During Q2 we introduced BlackBerry 6, which delivers a redesigned user experience, including visually fluid interface, rich web browsing, and an engaging multi-media application portfolio.

Outcome: BlackBerry 6 OS talk quickly yielded to BlackBerry 7 chatter. The Torch was cut to $99 at AT&T to generate sales.

June 24, 2010:

App World 2.0 users will also enjoy more functionality in the App World website enabling them to create an App World account, purchase content from the store, and sync content with their BlackBerry smartphone via a side-loaded connection. The concept of BlackBerry Super Apps continues to drive excitement in the BlackBerry developer community. We have been working closely with the developer community to help them understand how they can take advantage of the unique BlackBerry APIs and services and to challenge them to create innovative, addictive, and highly engaging Apps that can become an important part of their users' lives.

Outcome: App World trails Android and the iOS marketplaces by a wide margin. Microsoft's Windows Phone 7 store is also strong. BlackBerry continues to trail in apps and is trying to create an Android player as well as its own ecosystem.

March 31, 2010:

I love our road map for this year. You'll just have to stay tuned. We brought on a lot of development capability, a lot of platform extension. This is a -- this is a really -- quite frankly, enhancing gain in what you can do with the specialized devices and enhanced platform capabilities B2B and B2C. Our alignment with the carriers has never been better. Our ecosystem has never been better and all I can say is stay tuned. You're going to see some stuff by the call this time next quarter, you will see some stuff in the Fall. If you saw the road map you would be blown away.

Outcome: RIM has promised us continually that we'll be blown away by the roadmap. Back in early 2010, it was the Torch and BlackBerry OS 6. Today, it's superphones.

Dec. 17, 2009:

We have very special and distinct strategies with Verizon. We think it creates a lot of opportunity, the space is expanding. We think the richness of what we avail is clear. We think the alignment with them is clear. But the reality of it is there is a lot of turbulence in the ecosystem right now. There is a lot of turbulence in the channel. You just see this by the changes in strategies, the extensions in strategies.

Outcome: Verizon doubled down on Android over the following two years.

Related:

Topics: Hardware, Mobile OS, Mobility, BlackBerry, Security, Tablets

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13 comments
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  • No, the biggest problem is this.

    The biggest problem is lack of innovation and lack of developer support. Exactly what Nokia has been facing. Not unexpectedly, RIM has chosen to respond the same way, by burying their collective heads in the sand.
    kraterz
    • Actually, Nokia responded by adopting WP7 OS. RIM is doing something else

      @kraterz
      they're going the opposite direction and sticking with their own OS.
      they should go WP7 or Android at this stage of the game.
      William Farrell
  • RIM is the EX Girlfriend

    RIM's is like the EX-girl you dumped for the hot new girl. The carriers love Android as it sells data plans that make them money, the second sales slow they will be looking for someone new. RIM is fixing up and is definitely the jilted EX. The carriers realize they will not be able to keep growth with just iPhone / Android. Eventually you run out of people that will spend the money required.

    RIM has 6-12 months left to execute the rest of the transition from Blackberry OS. OS 7 devices are decent, the best Blackberry models yet. Are they better then the latest iPhone or dual core Android? No but not everyone is in the market for that. The mobile marketplace is very large and RIM is still serving the needs of the huge portion that want a device mostly used for communication. (Phone, TXT, email). Sure there is a growing Apps centric mindset but it's not like RIM has no Apps. I wish they marketed better some of their positives.

    I'm sick of Tech blogs that seem to be day trader focused. The price of RIM's stock and it's expected growth while important to RIM the company means little to the average consumer and tech gadget fan. I have never heard a conversation in BestBuy about different brands and one person goes, "Well I'm unsure about Blackberry due to their declining EPS".

    The HP firesale proves people are interested in a low cost tablet. What that price is (no one can sustain selling tablets at $99). is what RIM is exploring. $249-299 sounds decent for a 7" model since the perception of larger screen = better value. If I was at RIM I would get the NDK out ASAP and slash costs to developers. Split the profit sharing 80/20, 90/10. We all know TAT is actively working on the NDK and some nice tools will be made to ease Playbook development, they also bought Tiny Hippos. RIM needs to start showing some of their cards and show their EX (the carriers) they can still turn heads.
    MobileAdmin
    • yeah people stopped caring about stock prices in 2000

      @MobileAdmin
      otaddy
    • RE: RIM's biggest problem: Always seeking a device home run

      @MobileAdmin

      If Android, a OS given away on a phone, for free, with haircuts, can't find people with money, what can BB offer?
      dhmccoy
      • RE: RIM's biggest problem: Always seeking a device home run

        @dhmccoy

        The free OS only helps HTC, Samsung etc as they don't have to account for that cost per device. Considering the patent suits against Android there might soon be no free lunch from that perspectives.

        The carriers only care about selling data plans and related services. They couldn't care about device hardware.
        MobileAdmin
    • RE: RIM's biggest problem: Always seeking a device home run

      @MobileAdmin

      If a free phone + data plan costs equals can't find customers because "eventually, you run out of people that will spend the money required" then how is RIM in a better spot when they have the same data plan costs PLUS the cost of the device.

      RIM is still at a disadvantage. That's item one.

      Item two: Carriers absolute care about the cost of the device. That price comes from their bottom line which is why smartphones termination fees are higher than feature phone termination fees. It is a reflection of the higher prices of the devices.

      Finally, I don't disagree with you with respect to the lawsuits, but I think don't think RIM is in any position to benefit. There are burning through cash, don't have enough compelling devices in the pipeline, have orphaned their entire current line up for QNX and can't move tablets.
      dhmccoy
    • RE: RIM's biggest problem: Always seeking a device home run

      @MobileAdmin Here's something not based on day trading - RIM was the best at one time especially when all it had to really compete with was Windows Mobile. Now there is the iOS, Android, and WP7 based devices out there that have flown by RIM and their offerings in the consumer market and they are also making their way into the enterprise. RIM needs to come up with something head turning and sustainable soon or they'll go the way of Windows Mobile and Symbian.
      athynz
  • RE: RIM's biggest problem: Always seeking a device home run

    I can't believe this,I just got a $ 829.99 iP??d2 for only $ 103.37 and my mom got a $ 1498.99 HDTV for only $ 251.92, they are both coming with USPS tomorrow. I would be an id!ot to ever pay full ret??il pr??c??s at plac??s like W??lm??rt or B??stbuy. I sold a 37" HDTV to my boss for $ 600 that I only paid $ 78.24 for. I use http://goo.gl/6mwfR
    terrymccoy354
  • Our next song is by an artist who hasn't had a hit since 1983

    This is what got Motorola's handset business in trouble: they became dependent on "hit products" like the original RAZR and ended up getting passed by slow-and-steady Korean "turtles" who just kept plugging away.

    It ended up costing the CEO his job and it got the handset business spun out into a separate company, which Google appears to want to buy.
    Robert Hahn
  • The view from the OUTSIDE

    RIM would be served well to invite a bunch of non-Blackberry users to try their latest product and tell them what they think...and listen! Ordinary consumer folks. I don't usually hear them excitedly rave about how awesome Blackberry is. In a world of graphic user interfaces (GUIs), just about every review I've read of RIM's latest and greatest -- OS 7 -- say that it's "text intensive" (reference to the plethora of contextual menus, rather than exploiting the GUI). That's pretty fundamental stuff that RIM is missing.
    SteveMak
  • RIM Always Second Rate

    RIM has always been more about marketing and lobbying rather than inventing.

    They could not produce the inventions they needed to stay ahead and they alienated those who could.

    RIM made the inventor of push email life miserable and ran Thomas Campana Jr into his grave. That sent a message top other inventors to partner with other companies. The end result of their disreputable conduct, including being caught red handed foisting manufactured evidence on the court, is that we will soon see them expire with a whimper.
    rjriley9
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