Stocks Playbook
Stocks Playbook
It is insufficient for management to focus on defending past business
Research in Motion pioneered the smartphone business. While Motorola, Samsung, Ericsson and others thought the answer to profitable mobile market growth was making ever cheaper handsets, RIM figured out that corporations wanted to put phones in employee hands while controlling usage cost and securely offering email distribution and texting. Blackberry handsets and servers uniquely met end-user needs while providing enterprise IT departments with everything they needed.
This success formula was a winner, driving tremendous growth for RIM. People joke about their “crackberry” connecting them to their company 24×7, but it was a tremendous productivity enhancer. RIM produced a consistent string of growing Sony vgp-bps2c battery revenues and earnings, meeting or exceeding projections. RIM still dominates the “enterprise” smartphone business.
Market Shifts can obsolete even a well run company with good products.
“RIM’s CEO is Annoyed that People Don’t Appreciate Our Profits” headlined Silicon Alley Insider. He can’t understand why the stock languishes when the company meets its financial projections. Frustrations have mounted for the co-CEO as analysts have become unenthusiastic about the company. When challenged with product use and reliability questions, such as whether or not Blackberry is as secure as RIM claims, “RIM CEO Abruptly Ends an Interview After Getting Annoyed About Security Questons” (SAI).
That the CEO is annoyed by RIM’s situation with analysts is the first of two reasons you need to sell RIMM now. He’s too entrenched in past strategies to recognize, or deal with, market shifts. If you are waiting for a recovery to old highs, forget about it. Won’t happen. Can’t happen.
The mobile phone/smartphone market has shifted dramatically. Apple’s iPhone introduced the “app” phenomenon – allowing smartphone users to do a plethora of things on their devices that aren’t possible on a Blackberry. If we compare app availability, iPhone users can do some 350,000 things that Blackberry users cannot. Additionally, iPhones – and increasingly Android phones – are a lot easier to use, with bigger Hp pavilion dv6 battery touch screens, more built-in functionality and easier user navigation. People like their iPhones, and prefer them to company Blackberries.
RIM has only about 5% the apps of iPhone. And less than 10% the apps of Android. Even Microsoft Windows Phone 7 handhelds will soon have more apps than Blackberry. But the CEO of RIM is stuck – defending his company and its success formula – rather than aggressively migrating the company into new products. He’s hoping all those company employees, including execs, now carrying 2 phones – their corporate Blackberry and personal iPhone – will keep doing that. He’s hoping to “defend his enterprise base” but is myopically missing the market shift.
Every month the re-invention gap between RIM and Apple/Google widens. And the Nokia/Microsoft threat becomes closer. While no other provider offers the “enterprise solution” of RIM, increasingly the gap between the usability of new solutions and RIM is widening. It won’t be long before users won’t put up with having 2 phones – and the loser will clearly be RIMM.
RIM does not understand the emerging tablet market.
It won’t be long before most people stop carrying laptop PCs. Rather quickly the market is shifting to tablets. Into this market RIMM launched its Playbook product last week. And that’s the second reason you need to sell RIMM.
We all know the iPad has been a remarkable success. To date, nobody has developed a tablet that users, or reviewers, find comparable. Unfortunately, RIM launched its Playbook tablet to entirely consistent reviews, such as “The Playbook: Blackberry’s ‘Unfinished’ Product” headlined at TheWeek.com. The Playbook simply isn’t comparable to an iPad – and doesn’t look like it ever will be.
Playbook was launched into an emerging, high growth market, against intense competition, lacking apps, with a very limited developer network, using a smaller screen, and without an intuitive interface. But most concerning, Playbook users must also have a Blackberry. Playbook relies on the Blackberry to provide the network connectivity – via Bluetooth. This would be like Apple saying users must buy an iPhone to use an iPad.
With Playbook, RIM is trying to keep corporate customers locked-in to Blackberries. Playbook is a misguided product effort to defend and extend the company’s original product. Playbook isn’t designed to be a stand-alone winner. So we’re seeing the product strategy follow the CEO’s management style – defend the history, and hope to extend the life of historical “core” customer.
Winning companies shift with markets, overcoming lock-in to old technologies and defensive product plays.
When markets shift it is absolutely critical competitors shift with them. Xerox invented desktop publishing at its Palo Alto Research Center (PARC), but tried to defend xerography and lost the new market to Apple. Kodak invented digital cameras, but tried to defend the film business and lost the new market to Japanese Touch Screen Monitors competitors. When the CEO tries to defend and extend the old success formula after a market shifts only bad things happen. When new products are designed with the intention of defending and extending old products, new sales do not emerge. Competitors introducing game changers kill the pioneer.
Read More:http://www.wholesaleeshop.com.au/Wholesale-Electronics-News/tips-for-the-worlds-cheapest-and-best-tablet-pc-by-www-wholesaleeshop-com-au/
September 26 2011 The Stock Playbook
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