The secrets to Blackberry's success
Is there a company with a greater rabbit-to-hat ratio than Research in Motion (RIMM)? The Blackberry maker yesterday announced astonishing preliminary third quarter results, including a hefty 49% jump in revenue over last year's third quarter. Moreover, the Ontario-based company says that it addded 875,000 new Blackberry subscribers during the quarter, smashing their - and indeed everyone's - projections.
How do they do it? Ask your friends who've been using a Blackberry for years, and you'll hear little more than curse-laden complaints about the device's clunkiness. Skeptics have long predicted that the Treo and other handheld devices would surpass the Blackberry, and the company has been plagued by patent disputes. Even yesterday's statement noted that RIM "is completing a management-initiated, voluntary review of RIM's historical option granting practices," which sounds like a precursor to someone spending more time with his family. (UPDATE: The New York Times posted a good story on Christmas day concerning the company's reticence on the options question.) After some initial euphoria in after-hours trading Thursday, RIM stock was in the red by midday Friday.
But only the foolhardy would count this company out. Over at Bloggingstocks,
Eric Buscemi attributes RIM's continued success to the fact that "selling a wireless data device is difficult and barriers to entry high". Well...yes. But The Browser thinks the real key here is that RIM managed to do a thing we thought we'd never see: they cracked the foreign market. Europeans and, to a lesser extent, Asians were never as interested in non-phone devices (like pagers) as Americans were; if they want portable e-mail and Web capability, they want 'em on their phones. That, we thought, meant that Blackberrys would never catch on - who wants to carry around two devices?
But RIM was a step ahead of us; not only does The Pearl totally pass as a phone, but beginning in 2004, RIM began licensing its services to phone companies abroad, so you didn't need to own a Blackberry in order to have Blackberry functions. Those steps have paid off handsomely; according to RIM CFO Dennis Kavelman in Thursday's research call, a full 27% of RIM sales now come from outside North America. And so, as much as we still think the stock's ridiculously overpriced, there is still ample room for this company to grow.
Research In Motion (NASDAQ: RIMM) is one of the top 18 North American innovators in The Innovation Index. Since 2001, The Innovation Index is up 120%, and is up 12% for 2006. RIMM is the top performer on the Innovation Index, having notched gains in excess of 100% for the year.
"New product launches during the past few months have exceeded our expectations and we look forward to continuing this momentum into the new year," RIM co-CEO Jim Balsillie said in the Press Release.
RIMM has now over 7 million subscribers, and importantly, subscribers are loyal (inspite of their wanting more features), and growing internationally! And I agree that innovations beyond Blackberry, such as providing the services on other wireless devices would mean that RIMM would hold a majority share of the market in the near term. And the Pearl is finally a Blacberry done right.
More on RIMM, Blackberry and Innovation Index at:
I used the Blackberry for quite some time and found the problem to be not with the Blackberry but with 1. The carrier and 2. the carrier's data plan.
1. The carrier, Nextel had horrible reception in my area. I dropped more calls than water falls from Niagra. Terrible.
2. The carriers data plan, a "requirment" was $75 per month while the Sprint data plan with a cooresponding smartphone (PPC 6700) was only $10 per month...
the data plan on a 6700 is actually 15 dollars, not 10, you only get the 10 dollar plan if you want to cancel your power vision package, and you are eligible for the 10 dollar save offer. Secondly, Sprint's blackberry plan is 40 dollars. The reason why is you are getting Blackberry's "proprietary" messaging system, and you are guarenteed on time delivery. I mean A good majority of the U.S Government is using this puppy. That says alot about it's encryption method and reliability.
CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com makes reasonable efforts to review all comments prior to posting and CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.