Friday, September 26, 2008

What Happened to RIM?

Research In Motion from Canada has been a darling on NASDAQ and Wall Street in general.  If you're a mobile warrior working in finance, tech, and Internet industries, you've got a Blackberry.

Since even before the iPhone came out and the economy started tanking, there was already a move by RIM to increase its reach beyond business users.  Hence, more consumer friendly features were added.  However, as enticing as it was, once the iPhone and a lot of other consumer friend smartphones started competing with Blackberries, things apparently got ugly for RIM.

RIM is still making money.  It is just not making money at the rate analysts on Wall Street would like them too.  After all, RIM's revenue forecast for the coming quarter outpaced estimates by a bit.  Still, it was the cost of new devices that will eat into the margin.

What is RIM to do?  Innovate, innovate, innovate.  Forget about what Apple or anyone else is doing.  In fact, RIM should expand in the goodwill the e-mail service has brought them.

Also maybe take a page out of Android's playbook.  Hook up with a music or video provider like Amazon.  As much as I love Apple products, I want to see competition for iTunes.

Going forward, RIM will need to look at the long-term picture and not worry about short to medium-term goals.  It is short-sightedness that got them to spend more than 350 million on pushing back against the iPhone.  And look where it got them.  They've lost half their valuation in less than a year.

Just don't do what Palm is doing with Centro.  It killed their margin and hurt their bottom line even though they've had success moving them.  The only winners in that scenario were the wireless providers and consumers.  I'm fine with consumers winning if RIM is willing to take the hit.

As CNBC analyzed , there is demand, they see no evidence of a slowdown in smartphone demand.  It's a matter of how confident RIM is about their products going forward.  If they feel they can compete well against existing products, RIM should be fine.  But if they have to take hits on pricing, boy, I don't know...

Silicon Alley Insider believes RIM will not repeat Motorola's RAZR mistake because in addition to sell phones, RIM also sell subscriptions.  Well, not so fast.  G1 has free push mail with Google and Apple has MobileMe (as bad as it is now, it'll only get better).

RIM has one choice:  make better products people will want to buy and make yourself recession-proof like Apple and Microsoft.

Note:  It's a great opportunity for everyone, not just RIM, with Microsoft possibly delaying Windows Mobile 7 to the second half of 2009.  Plenty of time for land grab.

Another Note:  RIMM down big today.  Massive downgrades ranging with target prices from $70-$90.  RIMM is being hammered for 25% today.  It'll recover some of that technically and from short-covers.  I don't think if short-selling ban by SEC covers stocks other than bank stocks.

Third Note:  Those who likes to hold grudges.  Macdaily News is infamous for making Apple haters eat their own words.

Prediction:  Apple will likely lower MobileMe's annual rate when new iLife comes out.  We'll discuss why at On Apple .

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