The Blackberry maker’s (NASDAQ:RIMM) troubles are well-documented already, but even so they continue to bear further discussion on the competitive landscape as well as the industry as a whole. This week’s announcement that they were laying off about 10% of the workforce continued that trend.
With RIMM’s 52-week range pretty wide at $25.60-70.54 (closed yesterday at $27.39), you really have to wonder whether this is just the Street not giving the stock its fair value, or whether there was a colossal failing by management somewhere.
Warren Buffett famously refuses to invest in technology stocks because he doesn’t understand them. In fact, according to one of his books (“On the Interpretation of Financial Statements”), if a company has to spend more than a certain percentage of tis gross profit on R&D, its competitive advantage cannot be sustained, and so you should look elsewhere.
That percentage, for him, is 15%. By my calculation, RIMM is spending 15.3% (you can check their 10Ks for yourself).
Even if you prefer the iPhone or the Droid, the Blackberry is, objectively speaking, a pretty good product. The firm runs a state-of-the-art campus style headquarters in Waterloo and recruits heavily at the top technical and business schools in Canada to great response. And there’s a strong corporate brand image to boot.
So what’s the problem here, monkeys?
Is Warren Buffett right? Is it true that a good product doesn’t necessarily make a good company, or furthermore that a good company doesn’t necessarily make a good stock? Is it because Apple’ marketing machine is pretty much invincible at this point and can overcome competition even from technically superior products?
Did RIMM miss the boat on anything important? If so, what?
Hi, have you seen the iPhone or the latest android devices? They make Bberries look archaic. Aside from the software not keeping up, the quality of the hardware has plummeted as well. Why they ever dropped the side thumb scroller is completely beyond me, but I have found blackberries much harder to use since then. I once had a blackberry drop out of my pocket on thanksgiving eve on the Brooklyn Bridge, only to have a DOT worker pick it up and give me a call to let me know he found it. That Monday, I picked it up, and not only did the thing still have a charge, it still worked perfectly.
It will be a long time before they lose the business market, but the consumer market is all but lost to them. In my opinion, they really need to come out with a BB IB model. Stripped down for everything but email and phone. I can't even use BBM on my blackberry, let alone any of the other apps it came installed with or things like the camera.
Yeah, I mean when was the last time you tried surfing the web on a BlackBerry? It's like the Verizon web browser of 2005. Horrible.
Like someotherguy stated, the consumer market is all but dead to RIMM. Once firms start to get comfortable with android-based security for email/data they'll lose that market, too.
RIMM saw android pass it by and didn't innovate to keep up. It is a lumbering ogre in the land of fleet foxes.
Yeah, I mean when was the last time you tried surfing the web on a BlackBerry? It's like the Verizon web browser of 2005. Horrible.
Like someotherguy stated, the consumer market is all but dead to RIMM. Once firms start to get comfortable with android-based security for email/data they'll lose that market, too.
RIMM saw android pass it by and didn't innovate to keep up. It is a lumbering ogre in the land of fleet foxes.
BB was dependent and over confident in the loyalty of its established customer base and its devices once innovative ability to integrate into business systems. Smart phones passed them up in technology, with clouds- system integration is less-necessary as the same can now be accomplished over wireless data networks.
They failed to maintain and promote innovation and are not preceived by customers as such. They are IBM (circa 1985).
Some reason for Blackberrys fall
I think this is really the biggest problem, and is essentially the root of the rest of the huge problems with RIM.
Here is my opinion, as a Canadian person who spent many years living in Canada and also abroad.
Canadian analysts and journalists are blinded by nationalism -- a petty, insecure, Canadian-style nationalism -- which for years has helped perpetuate a distorted view in Canada about how RIM stacks up in the global tech sector. Being openly bearish on RIM has for years been taboo in Canada. The response is typically a fevered, even childish defense of the company on the grounds that it "is one of the top companies in the world", "up there with Apple", "it provides good jobs for Canadians" (so what?) and that "the Blackberry is so revolutionary" that it's "better than all other smartphones for business" and other nonsense. Sadly it is not only laymen who have been susceptible to this irrationality; the groupthink has extended well into Bay Street.
Another factor is that Canadian retail investors, retail investment advisors, and retail fund managers have one of the most damaging home biases in the world when it comes to equities. This is partly the fault of crappy retail brokerages including RBC, BMO, TD, CIBC and Scotia who are uncompetitive by American pricing and technology standards and for a very long time made it unnaturally expensive to trade on non-Canadian exchanges; and crappy nationalistic securities regulation which deliberately kept competition in the space unnaturally low (for fun, count how many retail brokerages there are in the US, and compare it to the number in Canada; it's a bit like comparing the number of banks in each country -- miniscule in Canada, even taking the country's size into account). Given that Canada's economy is so unbalanced (with a huge chunk of Toronto Stock Exchange market cap coming from natural resources and financials, and not much else worthwhile) retail investors and journalists who believe in "diversification" but are so home-biased that they are often oblivious to opportunities outside Canada, have had little choice but to pin their tech hopes on RIM. It is their way of diversifying. They've used the Canadian media as an echo chamber to convince each other that the company is "best in the world" and have gloated about it ever since because it's Canadian -- much the same way Canadian citizens and journalists gloat about Canada's banks being "the best in the world" (even though they are probably among the least innovative, and Canada is not the only country whose banks didn't fold in '08).
Since it's become resoundingly clear that the people who were saying RIM is falling behind and has dim prospects now that Apple is making phones were actually right all along, Canadian people who invested not only financially but also emotionally and reputationally, are hurting. They are Canadian so they won't admit that they are in serious pain with their RIM positions. They still come out in research notes and online comments trying to prop up the stock, and talking about how great they think the company is. Sadly, many of them believe it. Many of them will be bullish to the bitter end, and then blame American media for the company's demise. Actually some in Canada are already blaming "Wall Street analysts" for the recent sharp decline in the company's value, and try to characterize the stock performance of the last few months as an "aberration" that is basically everybody's fault except the company's management, and except Canadian analysts no matter how wrong they've been.
Anyway, that's Canada. There are a lot of great things about the country, but current circumstances really lay bare a less flattering side of the culture there.
This post is extremely unpatriotic lol.
While Canadian banks might be less innovative then their global peers they have held up well, and another country whose banks are not very innovative, Australia, has a strong banking system as well. It also helps that these are resource rich countries, but nevertheless the fewer risks they took, mostly for 'cultural' reasons saved their asses and their countries.
RIM definately needs to drop some new phones fast, I think the other thing with them is a communication issue they dont really advertise well. They have a great enterprise solution that allows you to split your blackberry for work and personal which is absolutely brilliant and saves you from having to carry around 2 phones. But the people in my IT department hadnt even heard of it until I brought it up, Even the playbook has gotten some really good user reviews on some tech sites but if you do a google search all the initialy tech blog reviews are what shows up, its like they have given up on it.
I think if Motorolla can make a comeback so can RIM, but it probably wont be a massive growth stock anymore, they still sell about 15 million phones a year and if they can maintain 15-20% of the smartphone market they will still be worth more than they are today. There is going to be room for more than one player in the smartphone market
Hard to compete with the other companies when you don't release a new phone for almost a year.
Like others said their fall is due to several factors: -terrible browser -very limited apps
I think of all the operating systems Android probably has the best outlook. Not only are they open source, which really drives the development of apps which in my opinion is a huge deciding factor in consumer phone buying.
I also think that because multiple companies are making phones for android it gives them a slight advantage over apple going forward. Apple is really reliant on its brand and marketing efforts, although it does put out a very good product. I think that Apple could really use a iphone specific perk like bbm to keep their market advantage especially since they really only have 1 model
Blackberry is a business phone. Its fun, doesnt have its own popular features except bbm, and they are overall straight up boring.
First Problem:
Blackberrys do change but not drastically. They are all alike except for a trackpad or maybe a bigger screen or soemthing like that. Nothing that really differentiates it from other blackberrys. They need a new phone that the entire public will like (not just business people). They have a small market compared to droids and iphones which are very user friendly and everyone can use and enjoy
Second Problem:
Graphics are weak and the same style phones are getting old. Look at the popular selling phone. Iphone4 and Droid, you ever see a blackberry that looks like that.
Third Problem:
RIMM is racing to catch up, rather then creating the next new big thing
Blackberry's need more SEX APPEAL if you will. They need to be made for everyone from the ages of 15 to 110. You will see youngsters ask for an iphone, none of them have any idea how to operate a blackberry. Plus all there stuff the same, what is really the difference between the bold, tour, and whatever else.
Just sit down with a blackberry and another product... The blackberrys haven't gone through much change, the other phones go through drastic changes
It is a good company, the products are reliable, but they got to take that step around competitors.. start thinking outside the box, to top them
I would suggest RIMM opening another line of phones, if you will, like a blackberry line (business phones) and such along with another line, user friendly for anyone
and btw, you are mentally freaking insane, I want to jump through this computer screen and shake some reality into you... just cause you said this:
"Is it because Apple’ marketing machine is pretty much invincible at this point and can overcome competition even from technically superior products? Did RIMM miss the boat on anything important? If so, what?"
Blackberry is not a technically superior product to any on them. Every other smartphone is far more advanced with way better graphics and can do way more tasks. Also, all the good applications are with apple products. it is way more simple.
It is so weak. and apple isn't driven by a marketing machine, its driven by better products straight up.. The world is changing and we are an apple generation. kids want iphones and mac books, you don't see kids braging about their new HP computer or even their new droid now.. Apple is in, their products are well connected, easy to use, and the best out there (opinion) but it is a fact, more people want apple stuff now a days and it is not because marketing. Its because their products are tech products, useful to every from janitors to ceos
Obviously RIMM missed the boat... on creating something cool... my friends used to like bbm, but according to them the iphone is worth buying and giving up BBM... If RIMM wants back in our competiting with top dogs, they need to have something that will make other users want to use their products besides BBM...
What other popular features do blackberrys even have that other smartphones dont do, besides bbm?
hope you find your answer.,, lunch break is over now
hookedup... are you in high school? RIMM's money maker is enterprise not commercial. I say fuck commercial and optimize the enterprise business.
No I am not in highschool, im pretty sure we were discussing how the commerical side of RIMM is falling off.. and I was speaking of how they can improve it...
The discussion wasn't asking how you would run blackberry... high schooler... its how to improve blackberry... I obviosuly didnt discuss anything with enterprise because they don't need to change much there..
It is the commerical that needs to change.. if just dropping commercial was an option (or is the best option), why are they releasing new phones?
What the fuck do you know? The question was what's the problem with Blackberry. The problem is trying to compete in the commercial market because their lunch is getting eaten by Apple and Android, and nobody wants a phone without a touch screen and fancy apps.
The Torch blew dick and the Blackberry's app store is pathetic. Why spend the money to recoup commercial market share when your dinner's (enterprise) about to get eaten by Droid?
Corporations couldn't care less about whether their employees are entertained by apps. All they care about is security, messaging, and email. Blackberry has all three.
So tell me, why should Blackberry have any incentive to catch up in commercial when you know that not only do they lack vision to make creative products, but they are also becoming irrelevant in that space?
I personally blame the Blackberry Pearl.
It it is quite obvious you have no idea what you are talking about.. look at the top dog... enterprise leader and commercial leader
In Apple's latest earnings call they said that 85% of Fortune 500 companies are testing or have implemented iPads in their businesses. Apple will soon own the Enterprise market as well.
The second I saw BB's response to the iPhone/Droid (their Torch) I knew they were toast. They clearly didn't get it. Their sorry excuse for a tablet in the Playbook doesn't help either.
I couldn't agree more, im with you on this
It's properly valued.
RIMM has been SO slow with new product rollouts. They stopped innovating. When a tech company stops innovating, it may never catch up to the competition. I would stay far away from this stock right now and for the foreseeable future.
They just laid off ~2000 employees, used to have a blackberry but moved to android after they started trying to reuse their product :/
Switch to android today too
I made a post a month ago stating that RIMM was an awesome value buy. Now im not so sure. I thought the July 12th shareholder meeting would role out something revolutionary, but it didnt.
I've never been more excited to switch phones. It is simply awesome (fast, light, thin, no glitches so far, + angry birds)
Harvard or Bust, you challenged my statement, I proved you wrong with my point, you said "what the fuck do you know" and then repeated my main point exactly.. No one gives a fuck about RIM.. it sucks ass, thats why I bought apple shares
How exactly did you prove me wrong? You said RIMM should ramp its commercial phones. I said fuck them. RIMM becomes a better company by shedding its unprofitable business and sticking to what it knows best. Meanwhile, all three of your points were saying that RIMM should come out with a phone that appeals to the mass audience.
Where are you getting your MBA? Pace?
Rimm dosen't have a good os or apps. There was about buying 3com but it never happened. The only ting they have is bbm and enterprise server. A good takeover target for someone who wanted there patents
Rimm dosen't have a good os or apps. There was about buying 3com but it never happened. The only ting they have is bbm and enterprise server. A good takeover target for someone who wanted there patents
I agree especially about the apps. I'm hoping the qnx os will be better. I've heard that it wil be easier to port over android apps on the new os. What would you guys think about rim's future if the next gen of phones could run all the best android apps?
The simplest way it can be put is that Steve Jobs is beyond genius and will find a way to take out any competition that stands in his way, i.e. RIMM and Blackberry.
black berry torch is shit do not get
Just made the switch from Blackberry to iPhone... I'd never go back to Blackberry but I miss the immediate push emai.
Seems as if RIMM has given up on innovation and is letting Droids & iPhones take the US while they are expanding into India/Indonesia. One of their weaknesses has always been their overdependence on North America so who knows. Either way it's subpar technology
Same I can never go back now.
RIMM is in the same position as other handset manufacturers like Nokia, Ericsson, etc. They got blindsided by a new category that made their products obsolete, and haven't had enough time to catch up.
The touchscreen is basically becoming the standard -- it's what is driving demand (in other words, we're not going back to physical keys anymore than the 8-track player will come back). Notice how the major players (Apple, and the Android phones like Samsung, HTC, etc.) didn't have much of a market share in the older keypad style cell phones. Simply put, the dominant players of the older cell phones like RIMM, Nokia, Ericsson simply don't have the expertise or resources to change their entire product line overnight and compete - and when they do, the margin of error is much smaller for them - they need near perfect execution just to stay competitive.
It's how technology trends work (at least in my view).
The biggest threat to IBM wasn't other mainframe companies. It was a new category called the personal computer.
Biggest threat to the leading newspapers aren't each other. It's online media.
Biggest threat to music/home video retailers isn't each other. It's online retail (iTunes, Amazon, etc)
Biggest threat to Barnes & Noble isn't other booksellers. It's the fact that more people are reading eBooks.
Biggest threat to Microsoft wasn't other OS/software manufacturers. It was the shift from computers to mobile computing/other devices. Across so much of MSFT's product line, they are still the dominant players - but in product categories that are becoming less important (and/or are growing much slower than other newer ones). MS Explorer is still the dominant browser on computers - but who cares? MS Office is still the dominant product, but in a market that has matured. Same with OS on computers. The real growth is mobile computing, and MSFT basically missed the boat almost entirely on that one. MSFT has basically become this generation's version of IBM when the personal computer first came out.
And so forth.
Same thing with handsets. Before the iPhone took off, biggest threat to RIMM wasn't Nokia or Ericsson (or vice versa). It was a completely new kind of product that would make theirs obsolete.
And this would extend to other things as well.
Biggest threat to Facebook isn't Google+. it's something else in the horizon that would make social networking obsolete (which could happen sooner than you think).
Same with the iPad. Apple has basically won the tablet market. But the "iPad killer" isn't some comparable tablet - it's some other device that will make the tablet obsolete.
Or here's the BIG one:
Cloud computing.
There's a reason why companies like Apple and Amazon are so aggressively getting into it. Because the cloud will fundamentally change so many aspects of the industry.
If you can store data remotely and have a lot of the computing/processing power done remotely, it changes the kinds of devices you use -- whether it's computers, tablets, handsets, or whatever. It can fundamentally change how consumers consume data (docs, media, communication, etc.), the byproduct of which are entirely new kinds of "computing devices". You don't need to lug around something with a ton of storage, or even computing power, so long as WiFi/4G (or whatever mobile standard) is everywhere. Combine that with more malleable or advanced touchscreen technology, you could very well end up having something that looks like a sheet of paper that simply acts as a screen that you can fold up into smaller forms (it can be a tablet if folded one way, a handset if folded in another way, or folded up completely so it can fit in your pocket).
So that's why I can't see RIMM surviving in the medium- to long-term. Same with Nokia, who just a few years ago were on top of the world, and how fast fortunes can change...
Damn Alex Chu just opened a can of whoop ass on you all.
The absence of apps on the Blackberry platform killed RIMM.
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