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RIM's co-CEOs to step down | Mobile - CNET News

Research In Motion's co-chief executives have resigned their positions as part of a management shuffle, the company announced this evening.

via news.cnet.com

Balsillie and Lazaridis are stepping down to be replaced by their COO. It must be very hard for them to make this move. It will be interesting to see what affect this has on the decision making within the company. At the senior level it still feels as if RIM is the only one who doesn't understand how far behind the market it is. Will that change overnight? Or do they need leadership from outside the company to cope?

This was the one move they had to leverage for a statement acknowledging a need to change (more to the analyst, carrier, and IT segments than end users). However the strong "business as usual" statements ignored that opportunity.

As RIM stands now it's hard to believe they exit 2012 a standalone. Given this will not be an attempt to revitalize the brand or product portfolio it looks more like housecleaning in advance of a deal.

RIM earnings Q4 2010: US consumer bounces back, but mostly within installed base

RIM released their financial Q3 2011 results yesterday, revealing a positive bounce in consumer subscriber adds while holding steady in enterprise and overall North American adds.

As usual the best information is to just read through the earnings call transcript. Oh how I love seekingalpha.

Overall consumer growth rate was actually flat at 12% quarter on quarter, but within the US RIM bounced from about -5% last quarter to about 5% this quarter. This huge swing is important as a demonstration that the new OS, handsets such as the Torch, and the email/messaging-first proposition overall still have resonance with consumers. However, if I am doing calculator math correctly while also balancing my coffee, dividing new subscribers by devices shipped show an all-time low of 36% acquisition. Even when you discount this dip for holiday channel fill that number should not be dropping, only slowing. RIM is getting better at selling new devices to existing subscribers but getting worse at acquiring new subscribers.

Another thing to note: This growth rate seems to have been purchased by AT&T creating demand for and then promoting down the Torch 2-year subsidy price. "In the United States, Torch was launched in two new colors, red and white, to coincide with the $99 pricing from AT&T and sell-through run rates have increased as a result of these programs". RIM proves here that without hero status at AT&T, VZW, or Sprint (arguably only the first two) they are not a growth prospect in the US. One of the big two carriers has to spend RIM into growth. They can't do it on their own. Given Android's rapid growth in first time smartphone buyers this is a troubling trend which is not reversing.

With a total NA subscriber base of around 26.8M RIM will have trouble demonstrating critical mass and momentum to content developers. Figure at least half of those subs are on BES or older OS phones which cannot access or run app world, and believe me 50% is really generous, and you have an installed base of 12-14M. That's not big enough to drive investment from games and content developers who increasingly rely upon internet-size audience scale to support advertising, freemium, or in-app revenue models.

The JP Morgan analyst asked about this dynamic in the last question taken at Q&A. Balsille's answer is basically "we have a tablet, and some cool devices we will show at CES". That's pretty weak considering what a softball question this is. The tablet doesn't address the scale issue and actually highlights it--how will Playbook draw evergreen content if it is a single device and only rolls onto a base of less than 15M? And no, "eclipse development tools" is not an answer.

The "we sell through carriers, not against them" is more interesting but given the flatness we see on the devices side for subscriber acquisition in NA relative to years past this also rings a bit hollow to me.

BlackBerry Outage Again, Day 2?

Blackberry having an outage in February/March? No updates available? An eighth straight year of outages with no customer support?

"Day 2 of this outage. No update, no RIM statements… just the same continuance from yesterday’s data issues. 

Again, this is affecting devices on all North American carriers, BIS and BES, and it appears to be only devices on WiFi, wherein data works “sometimes” when connected via WiFi; no data when WiFi is disconnected."

 Shocking!

Great recap of RIM's decade of success

Engadget has a great essay on Blackberry handset evolution.

The article abandons its more industry-wide focus at the beginning but is nonetheless a very fun and well written piece showing the slow steady evolution of the Blackberry. Go read it!

Blackberry profit surprises on Dec 17th (Fiscal Q3 '10 for RIM)

RIM posted some solid earnings after a rough quarter last time. Here is the earnings call transcript. Note that for some reason they have labeled it Fiscal quarter 2 for RIM but this is Q3 FY10 for RIM.

Some key stats: RIM shipped 10.1 million devices and added4.4 million new subscribers, claiming 16% QoQ growth.

80% of new subscribers were "consumer", meaning they were not associated with a BES server.

There continue to be some worrying trends for RIM within these numbers. 

First, their net new adds relative to devices shipped is quite low. That looks like only 44% of devices shipped went to new customers? On the one hand it's great to show customer retention and upsell but on the other hand with the biggest channel partners heavily marketing 2-for-1 deals I think it's a real problem if this has indeed slipped below the 50% threshold. Everyone will be comparing Blackberries shipped to iPhones but the huge difference to keep in mind is that RIM is bringing 4.4M new subs in while Apple is doubling that.

And just to really nitpick, RIM didn't sell 10.1M devices. They shipped that many and sold about 9M data-enabled devices and less than half of those to new subscribers. It's a very healthy quarter but that is not kicking Apple's ass. 

Secondly, RIM's Edel Ebbs  stated that they "don't break out" international subscribers. Well, they did across all quarters in 2006, 2007, and 2008. Suddenly last quarter they stopped. There are few reasons to stop reporting that and none of them are positive ones for RIM. The WSJ is reporting international growth "at 37% of overall revenue, up from 30% the previous quarter". RIM's share of subs who were international had been slowly climbing from 25% to 35% so if the WSJ is right in their numbers they are wrong in their assessment that WW growth is driving RIM. I think Verizon, AT&T, Sprint, and the two big UK operators are driving RIM growth and the rest is ticking over at the same rate. Still upward, and still good, but at a flat rate of growth.

Third, the Flip Pearl sure seems MIA. For a company rapidly reaching downmarket to lower ASPs and youth/consumer segments it's interesting that their first departure from the standard form factor seems to be a dud.

A really positive factor to watch is RIM's tiered pricing: "As we discussed during RIM's capital market day in May, we are continuing to implement service price tiering strategies to further segment the market for BlackBerry products and services. For example, [Telecom Sao] Indonesia, in addition to its full BIS offering, also offers the lower priced version of BIS that gives the customer a more limited feature set that includes only IM and texting for the equivalent of about $7 a month."

Carriers and service providers should notice and learn from this. In the Q&A portion the meaning of tiered pricing was misinterpreted, which Balsille didn't correct, showing that this is really going under the radar.

RIM also promised to "deliver a web kit browser during calendar 2010". Amen!

RIM email down--Eight years running for EOY outages

RIM's email service is down.

Every year as the calendar turns over, RIM experiences service outages. At first I didn't mind this so much. Cloud services such as Gmail have their outages too. But RIM's NOC is supposed to be super reliable. And what really frosts me more than anything is this happens every single year and every single year there is no "maintenance being performed" notice or other notification. 

Blackberry outages are a signal that RIM is expanding its BIS capabilities and preparing for new device launches. But why at the expense of existing customers?

The voice signal still works on the device so what about an SMS or PIN message RIM? Why not pre-install a device side client which can give user notification if it loses IP push for more than 15 or 30 or 60 minutes? How f***g hard can this horrible customer service experience be to solve?

The long term solution for me wasn't that hard. After having switched from a first-gen iPhone back to a Blackberry I'm going back again, having just ordered a 3Gs online. 

RIM growth stalling--no longer reports int'l, enterprise stats

One of the real frustrations of sitting in on earnings calls is hearing the limited question time go to the same question over and over. A few weeks back RIM reported surprisingly low growth. Subscriber additions were flat quarter on quarter. RIM stopped reporting on the split between consumer and enterprise (BIS/BES) and international and NA on this call for the first time in years--at least four years. That lapse is very meaningful.

And what did the analysts ask about? ASP (Barclay's). And ASP (Citigroup). And ASP (Scotia). And ASP again (UBS). WTF?! Hey guys, here's a hint--RIM isn't going to hit the margin numbers you modeled so try tweaking the Excel.

I can see asking this once but you're not going to get informative forward looking context on device margins from this call. Why not ask a more basic question, such as why RIM would stop reporting a metric which was really useful and which they reported on for at least the last four years? You would have a better chance of getting a meaningful nonanswer from that.

It really says something to me that RIM won't mention US growth and enterprise growth. New subscriber ads has been flat the last two quarters. New devices, especially the Tour, seem to mostly be going to existing customers and not winning in the market. Two quarters ago the overall QoQ growth rate dipped to 11%--the lowest in years, if not ever.

My suspicion is that RIM's BIS growth rate has dropped to around 20% QoQ, which only looks bad compared to iPhone, but the enterprise growth rate has stalled completely and is lucky to be in the high single digits. International has slowed substantially as well. And the elephant in RIM's room is the iPhone. I believe the iPhone is now really impacting new consumer subscriber uptake even though RIM, Verizon, and other key partners are heavily subsidizing new devices. This is the real reason RIM doesn't want to break out growth metrics.

The BES 5.0 release has had adoption fatigue from the beginning. RIM handled the release poorly by first keeping it in beta for years, announcing its launch over and over without doing so, and then launching without real customer testimonials and uptake metrics. I'm skeptical that the largest customers even want it given the amount of custom dev, integration, and security requirements invested in 4.1 and earlier. This has very troublesome growth implications for RIM if it's true. The enterprise base may not get headlines but it is the foundation of RIM's strategy and a requirement for consumer success. A large proportion of RIM's "consumer" base is comprised of workers whose businesses don't want full native Exchange integration into a BES. 

How about someone asks some questions about these things next time instead of asking for guidance on device margin? I think RIM is slipping behind and their slowing growth is showing it. I believe their messaging platform has not translated well to web services and app-centric marketing of carriers critical to their success. Despite RIM's 450+ carrier partners only the top five drive real volume. Carriers like Verizon, AT&T, and T-Mobile USA are essential for RIM to continue its growth and RIM is slipping within each of these. And this will be a real headwind for RIM for some time.

FUD alert: MSFT & Nokia aliance is not RIM challenge

Well the rumours were true and Microsoft and Nokia announced a collaboration to distribute Office mobile software on Symbian devices. Reuters quotes a Nokia executive as saying "This is giving some of our competitors -- let's spell it out, RIM -- a run for their money".

FUD alert! It is not, of course, doing anything of the kind.

1. Mobile client software is not a challenge to the device, middleware, and NOC integration offered by RIM.
2. This deal is with Microsoft's Office division and not the mobile division so it does not neccessarily signal anything further than software distribution. It is in effect a bigger version of a dataviz launch. 
3. Offering Microsoft mobile does not affect enterprise buying decisions for solutions--that happens because of role admin capabilities, security from both a process and hardware/software perspective, more basic usability criteria such as battery life, UI, device durability, etc. 
4. Slapping more client software on top of Symbian as an OS is not a recipe for better integration and access to mobile business needs. Integrating those features natively in Symbian would be, but that won't happen because the OS moves to the Symbian foundation and not Nokia.  

So this is a great distribution deal for Microsoft and a nice extra for Nokia's E-Series device line. But you'd certainly think that a company that had burned through several in-house mobile email efforts, a huge acquisition and divestiture, and several partnerships during failed efforts to offer solutions competitive to RIM would know better than to use a client software distribution deal to claim parity with a Blackberry and BES solution. Doing so just demonstrates how little someone understands the enterprise mobile market.

Reflecting on RIM's fiscal Q4 2009 results (April 2 2008)

I finally had a chance last night to look at RIM’s earnings report from last week. RIM made news with its surprisingly strong subscriber growth, improved margins, and higher ASPs. In short they blew the doors off in a quarter when most every other company is struggling to survive.

 

The enterprise quarter on quarter growth rate slipped a percentage to an all-time low of 7% but the real surprise there is any positive growth when almost all of RIM’s key business verticals are absolutely imploding. It makes you wonder if a Blackberry has become critical for remaining part of the work ecosystem and a “have to have” even for, maybe particularly for, unemployed or job hunting workers. A slower growth rate for enterprise also makes sense with the product cycle. With BES 5.0 finally, finally ready for its release at WES (for reals this time!) you would expect enterprise activations to fall off a bit anyway as some businesses sit on the sidelines to see what the non-beta looks like in the real world before committing further to BES.

 

On the consumer side RIM saw quarter on quarter growth of 31%. They actually had a higher rate last year for this quarter but obviously off of a much smaller subscriber base. The consumer growth rate was very, very strong. It was achieved with strong margin and high device ASPs as well.

 

RIM’s phenomenal growth has some aspects that surprise me. Penetration in the US and Canada continues to accelerate, particularly amongst consumers. It’s easy to overlook just how much of a US story Blackberry remains. For the first time the reported percent of consumer subscribers hit the 50% mark while international remained flat at about 30% of RIM’s business. Dividing that out by their claimed new subscribers added you get over 200,000 net new adds in North Americathis quarter.

Think about that. RIM is now turning 200k new customers per quarter in a mature market which is flooded with cheaper, heavily advertised competitors. The increased presence in retail channels has to be a big part of this picture. RIM also mentioned Verizon’s “buy one get one” campaign and certainly that kind of subsidization has to help. But whatever the method the surprise to me is that in a deep recession consumers are willing to buy high end devices and relatively expensive service plans.

What does this mean for competitors? Apple is driving operators further into RIM’s arms and RIM is delivering while others are not.

 

For Microsoft, it means WM 6.5 is not enough and not in time. Microsoft needs to get past focusing on pushing a mild OS refresh and deliver integrated services, own or partnered, to the table in campaigns with direct marketing support for specific devices. On the server side it also looks like SC MDM hasn’t been enough to put a dent in enterprise growth for RIM. Faster integration back into the overall Systems Center architecture and better packaged roles and policies are two immediate fixes that come to mind, but Microsoft should consider a full strategic re-think about how they are playing in enterprise mobility.

 

Nokia faces a similar problem to Microsoft in competing against RIM for consumers. Their worldwide smartphone market share has dropped to 47% and given these numbers Nokia can expect to hit 40% soon. It’s a stunning loss of value. Creating Ovi services is a great long-range plan but by the time that all comes together what market share will they be operating off of? Packaging existing devices by optimizing them for specific core services is becoming one of the few meaningful cards left for Nokia to play. That would give them a chance of actually getting a certified device to market in a reasonable time and then perhaps even marketing and supporting that service through a carrier. This is a North American prescription but this model will be needed in other regions as well.

 

Competing against RIM in services will be no easy task. The one real weakness, music, is owned by Apple. RIM is relying heavily upon internet radio startups who are facing an ugly death when the VCs who fund them finally find out that music labels are not rational business players. That whole model is doomed and iTunes is one of the only healthy ecosystems in music.

 

Video has a lot of potential. As RIM described at some length in their conference call, the NOC and the compression technology RIM runs over it becomes a huge advantage there. Microsoft trumpeted video at the CTIA keynote but as RCR Wireless noted their key US partner’s service terms wouldn’t even allow what Robbie Bach was describing. If they did they would find their network hammered. If these types of services really do start to take off I think RIM is correct in believing they will be an even more valuable partner to operators. What is the strategy for the other players? Sideloading? Building in WiFi only service capabilities similar to the iTunes download restrictions for files over 10MB? No easy answers there.

 

RIM’s real competition for the next year or two will be winning non-smartphone customers and indirect competition from specialized, stripped-down entrants. Think of the Peek,  Hutchinson’s INQ, and some of the netbooks coming out. The INQ in particular is a space that RIM should have owned. The app store has been a distraction for RIM and other vendors as they overlook creating complete service offerings per carrier with services such as the social networking device.

You should have expected yesterday's RIM outage

It's hard to believe RIM hasn't learned to pre-emptively message and position these events.

If you compete against RIM, it's also hard to believe you still don't have a campaign pre-loaded to capitalize.

February upgrade cycle has led to an outage each year for SEVEN years:

 

1. Yesterday's service outage.

 

2. "Service out in N. America--No word on the cause or fix” Feb 12 2008

3. “BlackBerry Crashes Across The Entire Western Hemisphere” April 18 2007

4. "Some T-Mobile BlackBerry customers affected by service outage” Feb 28 2006

5. "Blackberry outage reported– AP” Feb 2005

6. "Cingular Data Service - West Coast Outage?” Feb 2004

7. "BlackBerry outage widespread” - Feb. 13, 200