Apparently, not only Nokia’s platform is burning. From February to June 2011 RIM has lost 60% of its value, and had 21% drop in the share price after the Q2 results in June 17th. RIM dropped to its lowest level since 2006 after the BlackBerry smartphone maker said quarterly revenue may drop for the first time in nine years and unveiled plans to reduce jobs. Device gross margins are down to 28%, a drop of three points from the quarter before. The year over year revenue increase was driven by a 67% increase in sales outside North America. If you look only at North America, sales were down about 18% year over year. Full-year profit will be $5.25 to $6 a share, excluding some costs, RIM said, down from a previous forecast of $7.50.
And this happens when, according to comscore in the US market:
- 74.6 million people in the U.S. owned smartphones.
- 62% of smartphones in use in the US are either Android or iOS. The sum a year ago was 37%
- There are about 20 million iPhone users and 27 million Android users in the US today. A year ago there were 12 and 6 million respectively.
- Android and iOS gained 3 million users in April. One million switched from other smartphones and 2 million switched from non-smartphones.
Basically, this is happening as the smartphone market is growing, a lot. The first Android device was launched in 2008 and the first Apple iPhone in 2007, but they changed the industry.
Jean-Louis Gassée in his Monday Note blogs writes, as usual, a great post titled RIM: What Did You Know and When Did You Know It? How did we get there?
Some excerpts from the post:
Is this yet another example of the Incumbent’s Curse?:
“The Incumbent’s Curse works like a neurotransmitter disease: it starts slowly, there is no brutal onset of symptoms. The patient’s good health of the moment encourages denial; but when the malady becomes obvious it’s hard to combat, it’s often too late.”
The execs are partly right: RIM is an amazing success story. And the company is still profitable with about $3B in cash.
But, unfortunately, they’re also dangerously wrong. RIM has been an amazing story, but its leaders have been in denial for too long, they have failed to recognized how two from-stratch platforms were able to move much faster than the incumbent, with its need to preserve the past while trying to build an incompatible future at the same time.
Another great analysis is What’s Next for RIM? from Michael Mace.
Some highlights from the post:
A computing platform runs on momentum. When the platform’s growing, there’s a virtuous circle between the growth of the customer base, the introduction of new products, and the arrival of new developers. Each one reinforces the others, and it produces strong, resilient growth. Look at Apple’s current expansion for a great example.
But if that momentum breaks, the same forces that help you grow can create a self-reinforcing decline. The loss of customers reduces your resources, so you can’t spend as much on new products, so developers are less excited, so you lose more customers, and so on.
To restore momentum in a faltering platform, you need a hit product. Can RIM generate one?
At Asymco, Horace Dediu writes a great, as usual, post titled Peak RIM
Some excerpts from the post:
During the second half (Sept 2010 to April 2011) RIM lost 1.8 million users (in US).
RIM went from being a consistent net usage gainer to a consistent net usage loser during this 16 month period.
There are many interesting patterns to observe in the data, but I think the most evocative is the erosion of Blackberry usage. If the Blackberry peaked, and a follower platform not yet in sight, the question is how long will RIM survive?
The smartphone domain is a very competitive and dynamic market. Google Android and Apple iOs have disrupted the industry by providing new platforms in an environment in which the ecosystem is more important than the single device or list of features. And a former RIM employees says, the difference between a ‘list of features’ and ‘inspiring’ is the difference between 1st place and potentially ‘out of business’ – and this is something they need to understand – culturally.
It is easy to criticize the incumbents, but transitions are very hard and include technical challenges and more importantly cultural shifts. Being comfortably at the top for long time can make anybody blind to the changes or disruptions coming, sometimes from a different industry.
Some more analysis on THE CRITICAL PATH (Critical Path is a talk show contemplating the causality of success and failure in mobile computing.)