1. Homo Erectus's Avatar
    Research In Motionís last earnings report beat the street, which prompted their stock to shoot up to $15.50 in after hours on December 20th. However, that all changed when RIM CEO Thorsten Heins announced that users will no longer be required to purchase a special BlackBerry plan.

    This special BlackBerry plan, known as BIS, accounts for roughly 40% of RIMís service revenue. In total, BIS and BES service revenue account for 90% margins. Anything lost will certainly hurt RIMs bottom-line.

    An estimated $2.4 billion per year is at risk of loss from BIS alone. This revenue is crucial for the success of RIM, but the company understands it can no longer require service fees from customers for an outdated system.

    BlackBerry competitors such as Google, Apple, and Nokia do not require users to have a special plan in order to use their devices. This has prompted Seeking Alpha to devise 6 ways RIM can recoup any lost service revenue:

    (1) Apps, Music, and Movies in BlackBerry World

    Under the razor/razor blades model, a popular mobile platform can drive digital content sales in the form of apps, music, and movies. One great example is Appleís (APPL) iTunes store which now drives $12 billion of sales a year, and it is one business model that Amazon (AMZN) is trying to copy by selling the Kindle Fire tablets at a loss.

    RIMís BlackBerry World is already a popular place for apps for BlackBerry users, and with the announcement of adding music and video, BlackBerry World is setting up to make a noticeable impact on RIMís revenue when BB10 becomes popular.

    (2) Support for iOS/Android in Enterprise

    Under BlackBerry Mobile Fusion (or later, ďBES 10″), companies are able to securely manage their mobile assets from different manufacturers under a single solution. Currently, RIMís server supports the management of Appleís iOS and Googleís Android, and RIM has stated that it will consider adding support for the Microsoft Windows Phone if it becomes popular.

    Similar to existing BlackBerry users under corporate BES, companies under this model pay RIM a per-user subscription fee regardless of mobile OS. As mobile devices from various vendors penetrate into more companies and into deeper layers of employees, this will prove to be another growth opportunity for RIMís MDM solution Ė world renown for its manageability and security.

    (3) BBM Money

    RIM recently launched BBM Money in Indonesia, a peer-to-peer funds transfer solution based on the BlackBerry Messenger (BBM) platform. It has potential to turn into a significant revenue stream once this service becomes available in more places in the world.

    (4) NFC Payments via RIMís Secure Element Manager (SEM)

    Approaching commerce from another angle, RIM developed a proprietary solution for securely managing identities for NFC payments. This solution is already available in Canada from CIBC and Rogers, and it has also recently been approved for use by VISA. The mobile payment industry is still in its infancy and RIM is situated at its forefront.

    (5) OS Licensing

    BlackBerry 10′s underlying RTOS (real-time operating system), QNX, is already being licensed within various vertical markets, including nuclear power plants, network switches, industrial machinery and about 60% of our cars. From here, RIM has a repository of experience and expertise on how to make a business model out of OS licensing.

    In terms of the new BlackBerry 10 platform, RIM is building the first line-up of hardware themselves as ďaspiration models.Ē RIM hinted in the past that once the BB10 platform has proven itself, it may be open to licensing it at a fair price.

    And licensing will not be limited to smartphones. As BlackBerry invades various other verticals such as PC, automotive, home appliances, medical devices and other M2M opportunities, we do not expect RIM to build all of the hardware themselves, which means licensing may be a big part of RIMís revenue in the future.

    (6) Cross-platform BBM

    There have been rumors about RIM creating a version of BBM for Android and iOS at various times in the past. It may make sense to do that at some point, but RIM isnít about to give away its crown jewel for nothing. Will there be a subscription model? Or may be an ad-supported version of BBM for other platforms (while the BB10 version remains ad-free)?

    Regardless of how it plays out, itís no secret that monetization of BBM will be a big part of RIMís master plan.

    The above initiatives are some of the more obvious paths RIM can take to replace, or even grow, its service revenue. There are probably other less obvious ways that we havenít thought of yet, but one thing is for sure Ė if BB10 gets the users, the money will follow.

    Once again, everything is riding on a successful launch of BB10. This whole discussion is irrelevant otherwise because RIM is still collecting service fees on the old BB7 devices, albeit from a declining user base.

    Ironically, this begs the question: Given how dramatically upset the investors were when they heard about the uncertainty around BB10′s service revenue, does it mean the market is already expecting a successful BB10 launch that warrants this discussion in the first place? All will be revealed in a few more days.

    6 Ways RIM can Restore Lost Service Revenue - N4BB
    VeGiTo likes this.
    01-22-13 02:24 PM
  2. Bold_until_Hybrid_Comes's Avatar
    Profit on hardware sales
    spike12 and Superfly_FR like this.
    01-22-13 02:26 PM
  3. VeGiTo's Avatar
    01-22-13 02:43 PM
  4. dentynefire's Avatar
    Profit on hardware sales
    I think he's saying in addition to handset sales.
    01-22-13 02:51 PM
  5. BaconMunch's Avatar
    However, that all changed when RIM CEO Thorsten Heins announced that users will no longer be required to purchase a special BlackBerry plan.
    This statement can be sorely misunderstood and Thorsten has already clarified, BIS fees for existing BB OS users are not going away and they will continue to support these devices and bring in BIS revenue as part of their strategy. The 6 points in the article that follow are new suitable opportunities for RIM and involve more meaningful avenues of revenue with the new BB10 platform, I applaud them for not going status quo and executing new revenue streams with larger potential growth. I wish the market reacted with the appropriate new risk and not on the basis that all BIS revenue would be turned off.
    01-22-13 02:58 PM
  6. VeGiTo's Avatar
    Profit on hardware sales
    I'm sure hardware sales will be important post-BB10 launch, but it is the recurring service revenue that smooths out product cycles and produces very high margins. If it weren't for the service fees, RIM may not have survived the past year. So it's great to see what else RIM has in the pipeline other than hardware.
    01-22-13 09:03 PM
  7. Goint's Avatar
    I was glad when RIM tanked after earnings. That provided a great entry point and cut down the cost of the options that I wanted to purchase by almost 40%.
    01-22-13 11:05 PM
  8. Superfly_FR's Avatar
    Profit on hardware sales
    What I - as I could - wrote in comments
    The 30% devices - 70% services scenario was the "crisis" balance. Standard one should be 10-30% services - 90-70% devices to compare to others. If you look in the mirror (2yrs), you'll see that, when RIM was a leader, revenue was based on devices. RIM slashed their ASP (average selling price) to maintain a high level of customers while their large user base (BES+BIS) maintained the services fees, thus the "upside-down" revenue balance.

    Now with an ASP rumored to be over $600, the deal is quite different ... I believe this should be #1 in your replacement list . But, I agree with the extra-list you made !
    01-23-13 06:11 AM

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