What is RIM's Business Model?

Happy New Year all. Just pondering a disucssion held last night over a couple of jars

Apple sells ipads really expensive and gets revenue from itunes
Amazon probsbly sells Kindles at a loss (lower tech so small loss?) but gets revenu by selling content tied into the hardware
RIM with it's Playbook now selling at well below initial cost, but has App World and will be getting more apps via the Android route. Cost to matket????

Is that really a sustainable business model? Normally you repeat someone elses model but go cheaper and win on price at expense of quality. Or you differentiate........

What is RIM planning?

Long run - Enterprise, business, public safety. Not toys. Safe, secure communications.

Short run, OS2 for Playbook - the OS Playbook hardware deserves.

Late in 2012, Blackberry 10 for smart cell phones. (OS2 adaption).

This route has been long, painful & costly. OS2 beta shows lots of programming progress.

RIMM's stock price has dropped terribly to a very low price.

The above goals have to be reached for RIMM to survive.

I think what you seeing is not so much of a deviation from RIM's underlying business model but a temporary adjustment to retain market share (and maybe even grow it a bit) during a tumultuous transition period.

The sales are being used as a "loss leader". RIM reasons that if they can get PB into more people's hands (even at a loss), customers will be more likely to stick with them until QNX phones are released. Increased revenues from App World will make up for some of the lost revenue but RIM's main focus right now is to try to stop the bleeding.

What does RIM currently make out of their App World?

Originally Posted by kevinnugent

What does RIM currently make out of their App World?

RIM gets 30% of revenue generated by apps (the developer gets the other 70%). Recent statistics have shown that App World generates more revenue for paid apps than does the combined Android market. This is not an insignificant source of revenue for RIM. The other important thing to note is that developers, for some reason, like the thought that there are more people with PB's now buying their apps. This means that RIM can attract and retain more developers, thus improving RIM's revenue stream.

RIM's stength has been the enterprise market. The Playbook has the quality and security to please the businessman and IT department.

RIM fails when they try to compete in the consumer marketplace. Consumers are interested mainly in entertainment value and price. The success of the Fire, Nook, and even the Touchpad clearly demonstrates that.

Yes, RIM needs a bigger base, but it is usually the more computer savvy that buy it. Clearly RIM's appstore pales in comparison to Apple and Amazon. Hardware wise, the PB puts the Fire to shame.

Consumers overwhelmingly want instant gratification from their toys. The more tech savvy will recognize the PB for the bargain it is and be willing to wait for OS2. The difference in posts on the Crackberry Playbook forum and those on the Kindle Fire forum clearly shows why the PB if failing to sell to consumers.

Originally Posted by blockbuy

Apple sells ipads really expensive and gets revenue from itunes

iTunes revenue, be it App Store or content, is negligible. As an example, in 2010 Apple's cut of App Store revenue was less than 1% of its total annual revenue.

Originally Posted by blockbuy

Amazon probsbly sells Kindles at a loss (lower tech so small loss?) but gets revenu by selling content tied into the hardware

True, but Amazon can't hope to cover the gap with app or song sales; their goal is to use the Kindle Fire to encourage Amazon shopping generally, be it music/movies/books or coffee makers, clothes or electronics.

Originally Posted by djnshores

RIM's stength has been the enterprise market. The Playbook has the quality and security to please the businessman and IT department.

RIM fails when they try to compete in the consumer marketplace. Consumers are interested mainly in entertainment value and price. The success of the Fire, Nook, and even the Touchpad clearly demonstrates that.

Yes, RIM needs a bigger base, but it is usually the more computer savvy that buy it. Clearly RIM's appstore pales in comparison to Apple and Amazon. Hardware wise, the PB puts the Fire to shame.

Consumers overwhelmingly want instant gratification from their toys. The more tech savvy will recognize the PB for the bargain it is and be willing to wait for OS2. The difference in posts on the Crackberry Playbook forum and those on the Kindle Fire forum clearly shows why the PB if failing to sell to consumers.

What you say rings true. There is ample evidence that RIM is just beginning to appreciate the average consumer's need for instant gratification. I believe the delay in delivering OS2 is all about failing to comprehend the immensity of building the perfect corporate device that can at the same time be considered "cool" by ordinary consumers.

Many will think I am being too generous to the two at the top, but I think that they simply underestimated the effort required to build a professional platform that satisfies everyone without any embarrassing compromises. If they don't deliver a reasonable facsimile of a polished consumer device in February though,, I will be forced to change my verdict to "incompetent".

Meanwhile we wait and while we wait, some of us rave about the bridge and the PB's potential for greatness. On the other hand, all the average consumer cares about is having a stand-alone device with all the bells and whistles. I think that this vast difference in expectations is driving most of the confrontational chatter in this forum.

Originally Posted by BuzzStarField

Recent statistics have shown that App World generates more revenue for paid apps than does the combined Android market. This is not an insignificant source of revenue for RIM.

Can you reference these statistics? While android users are less likely to pay for apps than, for example iphone users, there are a huge and rapidly growing number of android devices out there.
As a Russian general in WW2 said, "Quantity has a quality all its own".

cheers all, pretty much exactly the way the conversation went :-)

Apple predicted to trounce rivals with $2.9bn app revenues for 2011 | Technology | guardian.co.uk

Seems Apple pick up about $2.9bn. Android around the $400m mark. RIM $279m.

They all take 30% share.

If you build it, they will come. As long as RIM can maintain a very strong sense of user security, they will survive at some level. Doc Neutron :cool:

Originally Posted by Interloper.

Can you reference these statistics? While android users are less likely to pay for apps than, for example iphone users, there are a huge and rapidly growing number of android devices out there.
As a Russian general in WW2 said, "Quantity has a quality all its own".

Alec Saunders quoted market research from the Yankee Group at DevCon. I can't find the market studies themselves but there are many reverences to this quotation and try as I might I can't find any articles debunking the claim.

I can find lots of articles about the lack of profitability for Android developers. As you point out Android users are much less likely to pay for apps and despite projections that Android market will overtake iOS in terms of numbers of apps, profitability will lag by a considerable margin. Rampant piracy in the Android sphere is a huge problem and I think that App World will prove to be attractive place for Android developers who want to escape the "wild west" culture and actually make some money.

As for me (and considering the current low PB user base) I am very pleased with my current situation. My free demo app is getting downloaded a lot by appreciative customers, but remarkably, the conversion rate (i.e. people paying cash for my paid version) is over 1/3 of the number of people downloading the demo. I am absolutely convinced that if PB's growth treand continues and if I could find time to write 3 or 4 more apps, I could actually make a living in this racket.

RIM: BlackBerry App World is more profitable than Android Market - FierceMobileContent

Android apps much less profitable than iPhone apps � MacDailyNews - Welcome Home

AppleInsider | Android app volume to pass App Store but iOS developers to lead in revenue

Only 3 Percent Of Android App Downloads Are Paid Vs iOS� 17 Percent | StatSpotting!

Research In Motion in 2011- A snapshot and Future Trends | BlackBerry India

Originally Posted by Interloper.

Can you reference these statistics? While android users are less likely to pay for apps than, for example iphone users, there are a huge and rapidly growing number of android devices out there.
As a Russian general in WW2 said, "Quantity has a quality all its own".

True but a lot of people just use them for a phone and to check email or for messaging. Apps are not everything to everybody.

In the app market Quality and usefulness is everything - quantity means zilch. This ain't WWII and it ain't Russia and we aren't deploying soldiers in a battle, unless this is a battle of who has the most questionably useful apps.. The quote has to be kept in context.

Quantity adds nothing but confusion and too many selections, like how many varieties of cheerios do I need?
Just give me the basic functional stuff.

Appreciated your out of context quote by the way on your sig line.

LOL - Business model. Good one...

Originally Posted by emailthisaddress

LOL - Business model. Good one...

I don't think that you put very much thought into your post. Do you have any evidence that backs up your notion that RIM's business model is a good one? Links please.

Originally Posted by BuzzStarField

I don't think that you put very much thought into your post. Do you have any evidence that backs up your notion that RIM's business model is a good one? Links please.

Indeed, I did. Unfortunately the links were on my now bricked iPad2 thingy. Darn the luck.

Which, btw, is part of their business model: to wait for all of the iPad and iPad2 thingy's to break so that they can implement their evil plan to rule the world! GENIUS!

RIM is trying to build an ecosystem around blackberry phones. Playbook is created as a complement to their phones and it's only a small part of the picture.

1. They are hoping to sell more phones with the option of playbook.
2. PB is the first attempt to adopt QNX/BBX/BB10 in their product line.
3. BB10 phones will have the same aspect ratio and screen resolution as PB so apps works for all their devices, make it easier for app developers.
4. Android player opens up more app selection for QNX OS.

So they don't really care if PB makes money right now, the bet is to sell more phones with QNX+PB+app bundle. Let's hope they succeed.

RIM's annual shareholder meeting was July 12th, 2011. Things were very positive. A 4G playbook was planned for the 4th Qtr. New Blackberry models were planned by year end based on the QNX OS that powers the Playbook. A lot of other promises were made and RIM's future looked bright.

My, how things have changed! I'm tempted to buy a few RIM shares just to attend the 2012 annual meeting. Now that they are 80% of their value at the time of the last meeting, I can afford it. Who knows, before long they may become penny stocks.

If there is a 2012 annual meeting and not a bankruptcy hearing, it should be quite a lively meeting. RIM's business model for future has been exposed as a bunch of empty promises. The vultures are circling!

It seems ironic the meeting was held in Waterloo Ontario, the site of Napoleon's defeat.

Whatever business model they come up with, it better be right!

Originally Posted by djnshores

RIM's annual shareholder meeting was July 12th, 2011. Things were very positive. A 4G playbook was planned for the 4th Qtr. New Blackberry models were planned by year end based on the QNX OS that powers the Playbook. A lot of other promises were made and RIM's future looked bright.

My, how things have changed! I'm tempted to buy a few RIM shares just to attend the 2012 annual meeting. Now that they are 80% of their value at the time of the last meeting, I can afford it. Who knows, before long they may become penny stocks.

If there is a 2012 annual meeting and not a bankruptcy hearing, it should be quite a lively meeting. RIM's business model for future has been exposed as a bunch of empty promises. The vultures are circling!

It seems ironic the meeting was held in Waterloo Ontario, the site of Napoleon's defeat.

Whatever business model they come up with, it better be right!

I did not realize Napoleon fought in Canada - learn something new everyday! :D

Originally Posted by F2

I did not realize Napoleon fought in Canada - learn something new everyday! :D

The battle of Waterloo was fought in what is present day Belgium (which was part of the Netherlands back in the early 1800s). Waterloo Ontario has nothing to do with what is now Brussels Belgium.

Uhhhh, I do believe F2 was making a funny, and not making a historical mea culpa.

Originally Posted by blackjack93117

True but a lot of people just use them for a phone and to check email or for messaging. Apps are not everything to everybody.

In the app market Quality and usefulness is everything - quantity means zilch. This ain't WWII and it ain't Russia and we aren't deploying soldiers in a battle, unless this is a battle of who has the most questionably useful apps.. The quote has to be kept in context.

Quantity adds nothing but confusion and too many selections, like how many varieties of cheerios do I need?
Just give me the basic functional stuff.

Appreciated your out of context quote by the way on your sig line.

I said "While android *users* are less likely to pay for apps than, for example iphone users, there are a huge and rapidly growing number of *android devices* out there. My "Quantity has a quality all its own" quote was about users/devices, not apps.

Understand now?

Spin off about quality/quantity of *apps* all you want, just try do it at an appropriate place. You are also wrong on that topic by the way ( eg Citrix receiver on iPad vs Playbook for quality and thousands of examples of useful apps on iPad that are simply unavailable on Playbook for quantity and usefulness. I had my yearly physical recently and guess which device the doc was pulling up charts etc on? She and I both found that app pretty useful), but lets stay on topic.

Where were we? Oh yes. More platform device users = more potential app purchasers. The number of android users is far greater than the number of Blackberry users and recent market share results show a startling exacerbation of this situation.

"In the three month period to the end of November BlackBerry slid more than three per cent, from 19.7 per cent to 16.6 per cent, according to ComScore.
Android was the main beneficiary of the continuing malaise, gaining more than three per cent to account for 46.9 per cent of the American smartphone market. Most of Google�s new mobile users defected from BlackBerry, as between them Microsoft and Symbian lost a total of less than one per cent of the market.
Apple also gained as RIM suffered. The iPhone now has a 28.7 per cent share in the US, up from 27.3 per cent three months earlier."

Quote above is from from *yesterday*. Can't get much fresher than that I'm afraid: BlackBerry market share slides again amid takeover talk - Telegraph

Extrapolate from the above data and see which way a forward thinking developer would go, even in the handset side of the equation.

When buzzstarfield, who coincidentally is a PlayBook app developer, mentioned that App World generates more revenue than the combined Android market I was curious and I admit a little skeptical. That's why I asked to see the data which has *still* not been revealed
He gave a link to a positive quote which came from RIM's Alec Saunders. Saunders said that BlackBerry App World generates more paid downloads than Android Market. Forgive me if I don't lend a lot of credence to a RIM executive saying App world is doing well, especially since the same link reveals the following:
"However, Saunders was not immediately available to provide specific details on the figures he cited.
OK then...

If we go to the tablet market, things are even grimmer. Playbook is a dead man walking. Anyone with any sense can see that. Check out the fire sales on the product. See the massive "writedown" by RIM on the Playbook. What was it? Half a *billion* or so? See the constant delays to fix a product rushed to market at a beta level. If only I had a nickel for every Playbook apologist who said, "The hardware is great, just wait until the software catches up". It is to laugh. See the cavalcade of scathing reviews. See the stream of news articles on RIM's critical situation that almost without exception finger the PlayBook as a major cause of its *disastrous* 2011.

Why would anyone start a software development project for this thing? Sure, try to whistle past the graveyard if you have already sunk money into development of a Playbook app, but a new project? Please.

Re my "out of context" quote from you. Also not true. I have your original post saved in its entirety. If you like I can post it here for all to peruse except of course for your ad hominem attacks on me which got it pulled by the mods in the first place.

Have a nice afternoon.