I'm going to play devil's advocate here and say think that the situation at RIM is while serious, it's not yet terminal or life threatening.
Financially, their cash balance actually slightly increased to $2.2 billion despite the weak fiscal Q1 earnings result. The announced layoffs will help decrease operating costs by a projected $1 billion yearly. Their still growing worldwide subscriber base of 80 million+ BB users (who all pay monthly BIS / BES service fees) is a financial cushion which is a major reason why RIM continues to be cash flow positive.
Product wise, RIM's decimation of market share in USA continues to be somewhat substituted by developing markets growth. BB is actually #1 in several of these nations in South East Asia, Africa, and Latin America. Smartphone growth continues to be strong here, and smartphone penetration rates vs. feature phones are still low compared to developed markets. Of course the problem here is that gross margins are typically lower than in developed markets, which is why their rapid expansion in these markets over the last few years hasn't totally compensated for their decline in the North America.
For those who advocate a software platform switch to Windows Phone, Android, etc. this will be almost impossible from a financial & time point of view. The reason is that RIM's network operations centre (NOC) are 100% proprietary to RIM. IMO, the reason why RIM is taking so long to get BB 10 running on Blackberries is not because of the OS itself, but the process of integrating BB10 into the entire NOC. It's the reason why the PlayBook took so long just to get native e-mail working, because they had to get BB 9 (aka Tablet OS 2.0) working nicely with the NOC. The only way RIM can switchover to another platform is if the buyer is willing to fund the transition from BB10 to (buyer's tech / OS).
The above reason is precisely why I think if RIM as a whole of its parts isn't attractive to any competitors. The integration of RIM's NOC (including BIS & BES) with whichever company buys them will be hell that no buyer will want to go through. RIM's patents are likely the only asset of interest to potential buyers.
In summary, it really comes down to if RIM can maintain enough cash to make the transition to BB 10 while simultaneously operating until Q1 2013. Indeed this is as tough as it gets for any technology company in the midst of reinventing their own company. As a consumer who benefits from more competition, I hope RIM makes it through.
Disclosure: Never owned a Blackberry phone, I own a PlayBook. Never owned RIM stock, but its currently on my watch list.
Financially, their cash balance actually slightly increased to $2.2 billion despite the weak fiscal Q1 earnings result. The announced layoffs will help decrease operating costs by a projected $1 billion yearly. Their still growing worldwide subscriber base of 80 million+ BB users (who all pay monthly BIS / BES service fees) is a financial cushion which is a major reason why RIM continues to be cash flow positive.
Product wise, RIM's decimation of market share in USA continues to be somewhat substituted by developing markets growth. BB is actually #1 in several of these nations in South East Asia, Africa, and Latin America. Smartphone growth continues to be strong here, and smartphone penetration rates vs. feature phones are still low compared to developed markets. Of course the problem here is that gross margins are typically lower than in developed markets, which is why their rapid expansion in these markets over the last few years hasn't totally compensated for their decline in the North America.
For those who advocate a software platform switch to Windows Phone, Android, etc. this will be almost impossible from a financial & time point of view. The reason is that RIM's network operations centre (NOC) are 100% proprietary to RIM. IMO, the reason why RIM is taking so long to get BB 10 running on Blackberries is not because of the OS itself, but the process of integrating BB10 into the entire NOC. It's the reason why the PlayBook took so long just to get native e-mail working, because they had to get BB 9 (aka Tablet OS 2.0) working nicely with the NOC. The only way RIM can switchover to another platform is if the buyer is willing to fund the transition from BB10 to (buyer's tech / OS).
The above reason is precisely why I think if RIM as a whole of its parts isn't attractive to any competitors. The integration of RIM's NOC (including BIS & BES) with whichever company buys them will be hell that no buyer will want to go through. RIM's patents are likely the only asset of interest to potential buyers.
In summary, it really comes down to if RIM can maintain enough cash to make the transition to BB 10 while simultaneously operating until Q1 2013. Indeed this is as tough as it gets for any technology company in the midst of reinventing their own company. As a consumer who benefits from more competition, I hope RIM makes it through.
Disclosure: Never owned a Blackberry phone, I own a PlayBook. Never owned RIM stock, but its currently on my watch list.
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