RIM’s Q1 Earnings Down; Can It Weather the Mobile Storm?
Strong product competition from Apple and Google have bruised BlackBerry company Research in Motion’s momentum in the mobility space, with the vendor reporting less-than-stellar Q1 2012 earnings. Can its new technologies such as the Bold Touch and the PlayBook tablet help RIM right the ship, and is there a silver lining somewhere in its cloudy forecast? The VAR Guy has a few ideas. Read on for speculation and a bit of insight …
First, the stats: RIM posted a 12 percent decrease in revenue for Q1 2012, to $4.9 billion from $5.6 billion in the previous quarter. And while RIM is up 16 percent when compared to the same quarter a year ago, the company failed to meet Wall Street predictions. More worrisome, perhaps, is RIM announcing its first drop in BlackBerry sales since 2005, according to the Wall Street Journal, selling 13.2 million BlackBerrys in the first-quarter 2012 — below RIM’s conservative sales estimates of between 13.5 million and 14.5 million units. Also sluggish were BlackBerry PlayBook sales, with only 500,000 units sold in the first quarter (though that number met expectations). And as if the grim financial figures weren’t enough, RIM reportedly will be slashing its workforce and buying back shares.
RIM cut its expectations for August 2011 as it banks on new product launches including the BlackBerry Bold Touch to help turn the tide. Jim Balsillie, co-CEO of RIM, called Q1 2012 “challenging,” but affirmed that RIM was a profitable company that will continue to grow throughout 2012.
So The VAR Guy wonders: Why has RIM taken such a big hit? It’s easy to blame the success of Apple and Google, but really, it’s not just a popularity contest. RIM has been late to the game with lots of technology. The BlackBerry Storm 1 and 2 failed to impress in the touch-screen world and the BlackBerry Torch hasn’t exactly wowed many with its unresponsive UI. Unfriendly reviews complaining of a half-baked PlayBook haven’t been helpful, either. Adding insult to injury, U.K.-based mobile carrier O2 has rescinded its decision to sell the PlayBook because of device functionality concerns.
How does this affect the channel? Even though RIM has tried to stay afloat in the mobile maelstrom by bringing Apple and Android devices into its BlackBerry enterprise server management software, RIM’s bread and butter is still the hardware (and for Q1 2012, 78 percent of its sales were hardware). All the fancy technology under the hood means nothing if people don’t want to — or can’t figure out how to — use it. If RIM’s decline continues, channel partners may find themselves supporting fewer BlackBerrys and more iOSes or Androids, fueling the consumerization-of-IT trend.
Our resident blogger believes RIM needs to meet its new product release deadlines more frequently, and expand and create a device or technology that is a compete departure from what it has done in the past. The VAR Guy could see some serious love for a touch-screen BlackBerry phone that “borrows” the PlayBook’s operating system but includes a slide-out keyboard.
The VAR Guy is also interested to know how many readers are die-hard BlackBerry fans, and how many have been either reluctant or willing to switch to competitor’s devices. Tell us in the comments section below.