With RIM’s Traditional Stronghold Under Attack, Balsillie is hoping to do a Counter Attack in the Tablet Space. But it would be much more Important to Ensure that the Smartphone Battle is not Lost Forever
When you look at the war on the ground, Jobs does have some degree of logic, and numbers on his side. Apple posted record analyst estimate beating revenues of $20.34 billion in its quarter ending September 25, 2010 (66.6% growth y-o-y) and net profit of $4.31 billion (growth of 70.35% y-o-y). RIM has posted revenues of $4.62 billion, a relatively modest growth of 31% y-o-y (considering its smaller base) for the quarter ended August 28, 2010, and a net income of $796.7 million, a much better growth of 67.7% y-o-y (buoyed by a larger services revenue mix). Yet, analysts pick Apple overwhelmingly. Apple has overtaken Blackberry in the latter’s stronghold – the smartphone market in the quarter ending September, with iOS sales reaching 13.5 million units while RIM could only manage 11.9 million. The other real worry for both players is Android, as it sold 20.5 million units in the quarter. Symbian continues to sell the most due to Nokia’s traditional dominance (29.4 million), but that is fading fast as rivals catch up. Joseph Beaulieu, analyst at Morning Star, opines, “RIM has spent several years benefiting from strong tailwinds, but we are now concerned that those winds are reversing.” The enterprise market was RIM’s stronghold, but it is facing intense competition there. It has made a successful foray into the consumer market, since it now accounts for half of its subscribers compared to around 25% 3 years back. But Joseph feels that the traditional strength of e-mail services isn’t enough. RIM needs more bite for the consumer market – in terms of hardware as well as attractive apps (for which it has to attract the developer community). Blackberry was a dominant force in networks like Sprint, Verizon and T-Mobile earlier in America, but is facing competition there as well, particularly from Android-based phones. Apple’s iPhone, meanwhile, has the momentum going for it in a big way, and is in fact Apple’s ‘star’ product (BCG matrix wise) with around 60 million units sold till mid-November 2010. Toan Tran, Associate Director, Morning Star believes that Apple’s soup-to-nuts model, wherein it provides hardware software and applications has allowed it to unleash a terrific customer experience, which has given it the momentum to now attract even more customers as well as developers.
While Blackberry is considering upgrading its OS to Blackberry 6 and QNX for its tablet; there are words of criticism for the shift, and not from Jobs alone. Shaw Wu, IT Hardware & Storage Analyst, Kaufman Bros., comments, “We agree with Steve Jobs in that it isn’t clear there is room for a third software platform besides iOS and Android.” Analysts are in fact of the view that RIM should consider having a few Android-based smartphones in its portfolio. Moreover, as iPhone and Android go low end, they are threatening the dominance of the Blackberry Bold and Curve portfolios, which would further threaten market share. Another major threat is to its margins, as average selling prices of Blackberry phones have already come down to $304 in the recent quarter from $345 a year ago.
When you look at the war on the ground, Jobs does have some degree of logic, and numbers on his side. Apple posted record analyst estimate beating revenues of $20.34 billion in its quarter ending September 25, 2010 (66.6% growth y-o-y) and net profit of $4.31 billion (growth of 70.35% y-o-y). RIM has posted revenues of $4.62 billion, a relatively modest growth of 31% y-o-y (considering its smaller base) for the quarter ended August 28, 2010, and a net income of $796.7 million, a much better growth of 67.7% y-o-y (buoyed by a larger services revenue mix). Yet, analysts pick Apple overwhelmingly. Apple has overtaken Blackberry in the latter’s stronghold – the smartphone market in the quarter ending September, with iOS sales reaching 13.5 million units while RIM could only manage 11.9 million. The other real worry for both players is Android, as it sold 20.5 million units in the quarter. Symbian continues to sell the most due to Nokia’s traditional dominance (29.4 million), but that is fading fast as rivals catch up. Joseph Beaulieu, analyst at Morning Star, opines, “RIM has spent several years benefiting from strong tailwinds, but we are now concerned that those winds are reversing.” The enterprise market was RIM’s stronghold, but it is facing intense competition there. It has made a successful foray into the consumer market, since it now accounts for half of its subscribers compared to around 25% 3 years back. But Joseph feels that the traditional strength of e-mail services isn’t enough. RIM needs more bite for the consumer market – in terms of hardware as well as attractive apps (for which it has to attract the developer community). Blackberry was a dominant force in networks like Sprint, Verizon and T-Mobile earlier in America, but is facing competition there as well, particularly from Android-based phones. Apple’s iPhone, meanwhile, has the momentum going for it in a big way, and is in fact Apple’s ‘star’ product (BCG matrix wise) with around 60 million units sold till mid-November 2010. Toan Tran, Associate Director, Morning Star believes that Apple’s soup-to-nuts model, wherein it provides hardware software and applications has allowed it to unleash a terrific customer experience, which has given it the momentum to now attract even more customers as well as developers.
While Blackberry is considering upgrading its OS to Blackberry 6 and QNX for its tablet; there are words of criticism for the shift, and not from Jobs alone. Shaw Wu, IT Hardware & Storage Analyst, Kaufman Bros., comments, “We agree with Steve Jobs in that it isn’t clear there is room for a third software platform besides iOS and Android.” Analysts are in fact of the view that RIM should consider having a few Android-based smartphones in its portfolio. Moreover, as iPhone and Android go low end, they are threatening the dominance of the Blackberry Bold and Curve portfolios, which would further threaten market share. Another major threat is to its margins, as average selling prices of Blackberry phones have already come down to $304 in the recent quarter from $345 a year ago.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles
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