[cgk]

Asymco is always worth a read as it's purely numbers based - the analysis of RIM's current position is interesting (the graphs in particularly are very illuminating in regards to RIM's position relative to the competition). Horace's analysis notes that:

Operating margin tells the most sobering story. As I�ve often repeated, historically no company has survived dipping into the grey zone.

To reiterate, the logic of irrevocability in this industry is as follows:

Success depends on three conditions being met by the vendor�s products:

1. consumers trust the platform�s promise
2. operator see the product as creating value to their core business
3. developers offer investment to innovate on top of the platform

If all these factors are present, the vendor enjoys a virtuous cycle of growth. If any of these is lost, the others are also likely to be lost as well creating a vicious cycle of decline.

Loss of operating margin is an early indicator that at least one condition is not met. Usually, a failure of consumer trust leads to a drop in purchases which leads operators and distributors and retailers to flee and then developers defect.

It�s been impossible to recover from this tailspin so far. There is a procedure which works in theory: accelerate downward by investing in a new platform. The move is counter-intuitive but essential in re-building trust, quality and relationships.

However, the reason it does not work in practice is that this struggle is not with gravity alone. While spinning downward, the company is also subject to competitive attack. Competitors fill the void and take customers into locked-in ecosystems. There is neither the time nor the ability to defend.

RIM�s tailspin | asymco

So how does RIM meet conditions 1,2 and 3 with BB10?

[Sith_Apprentice]

1 is going to be the hardest, simply put.
2 can be easy if RIM offers competitive advantages that others do not (security and data usage savings for instance)
3 they have been very hard at work on this already

[JasW]

Frankly, I don't see RIM getting past no. 1. Perception is everything, and the overwhelming perception among consumers, at least in the U.S., is that a BlackBerry is yesterday's smartphone. The marketing and rebranding efforts that would be involved in reversing that perception would be incredibly daunting for any company, and are far beyond what RIM has shown itself capable of.

[cgk]

1 is going to be the hardest, simply put.
2 can be easy if RIM offers competitive advantages that others do not (security and data usage savings for instance)
3 they have been very hard at work on this already

It provides both of those now and they provide no competitive advantage outside of 1) corporate sector and 2) the third world and emerging markets who buy zero or negative margin handsets and low tier price-plans - so why would they provide a competitive advantage in the future?

[Sith_Apprentice]

The data usage will become increasingly more important as areas go to 4G LTE and more users go to smartphones. AT&T for instance, already gets crushed in cities, offering their WiFi services to offload network traffic. Imagine LTE, using significantly more bandwidth, and more people using that service.

This whole data crunch is coming, and carriers are trying to stave it off by using the capped data plans. That will only work for so long before they are hit with it. RIM needs to be able to push this data compression.

[Sith_Apprentice]

Frankly, I don't see RIM getting past no. 1. Perception is everything, and the overwhelming perception among consumers, at least in the U.S., is that a BlackBerry is yesterday's smartphone. The marketing and rebranding efforts that would be involved in reversing that perception would be incredibly daunting for any company, and are far beyond what RIM has shown itself capable of.

I advised, sometime last year, that RIM should let the "BlackBerry" moniker die with BB7.x devices, and call the new devices something else. Perhaps rebrand the company name to BlackBerry (since no one has any idea about the name RIM) but call the devices something else.

[cgk]

The data usage will become increasingly more important as areas go to 4G LTE and more users go to smartphones. AT&T for instance, already gets crushed in cities, offering their WiFi services to offload network traffic. Imagine LTE, using significantly more bandwidth, and more people using that service.

This whole data crunch is coming, and carriers are trying to stave it off by using the capped data plans. That will only work for so long before they are hit with it. RIM needs to be able to push this data compression.

Is it actually clear at the moment that data compression will work the same way or at the same level with bb10?

[Sith_Apprentice]

Is it actually clear at the moment that data compression will work the same way or at the same level with bb10?

Data still goes through the NOC so it should work the same, though I am unsure if it will be compressed the same amount.

[app_Developer]

The increase in data consumption is because of content that is *already* compressed. Text is really not that big of an issue compared to video streaming and app downloads.

I'm trying to think of a brand that went down market (discount brand) and then went upmarket, high margin again. That would be an interesting case study for RIM to learn from.

[cgk]

The increase in data consumption is because of content that is *already* compressed. Text is really not that big of an issue compared to video streaming and app downloads.

I'm trying to think of a brand that went down market (discount brand) and then went upmarket, high margin again. That would be an interesting case study for RIM to learn from.

That is a good point - once you have gone downmarket like RIM has done, it is very difficult to shift consumer perception and shift back to high margins and increasing average selling price at the same time. Even within the emerging markets, there is no sign they are holding onto more affluent customers.

[Sith_Apprentice]

That is a good point - once you have gone downmarket like RIM has done, it is very difficult to shift consumer perception and shift back to high margins and increasing average selling price at the same time. Even within the emerging markets, there is no sign they are holding onto more affluent customers.

You both are very correct, I am not certain it has actually happened in the modern business world. The only ones that *might* come close would be car companies. GM comes to mind as the only possible.

[EchoTango]

As RIM continues to regularly misstep, the hole they need to dig themselves out of gets deeper and deeper. What should have been a short term downward blip as they changed platforms, is turning out to be a full blown marketshare meltdown. They are at 50% of their typical volumes and continue falling fast.

With IOS and Android gobbling up marketshare like Pacmen, how can RIM survive ? Let's face facts, BB7 is a text-based OS and the market clearly wants graphically based products. BB10 was to deliver this, but after two years of "development" even if it's a superior product, RIM will now have to knock out two firmly entrenched makers. With Microsoft coming on strong to take up the third spot, RIM is now largely irrelevant.

It's sad, but this last delay is just too great a self inflicted wound to recover from. They need to reach out to one of the three other players and cut the best deal they can.

[aniym]

Data caps get hit because users stream music and video. The NOC can't compress those, so the economic benefits for the consumer are largely moot.

Not to mention that BBOS/BB10 at this point have never had the data-eating applications like Netflix, Hulu, Skype 3G so the data savings argument is like saying you'll save on gas if you use a horse.

There is a good reason that even RIM doesn't advertise the data compression capabilities; it just doesn't hold water.

[trsbbs]

Seems like BGR was on to something way back in December of 2011 on this.

Many folks here said it was all a load of crap.

But read this and see if it was not spot on.
Seems that Thor is no different than the two clowns before him.

Tim

Bad products, horrible software and no cohesive vision have seemingly turned Research In Motion into a company without motion at this point. Throw in a huge delay before BlackBerry 10 smartphones start shipping, and it’s clear why people are losing, or have lost, faith in a company that played a tremendous role in making the smartphone industry what it is today. Thanks to one of our most trusted sources, BGR now has new information on what’s going on inside Research In Motion, and the picture it paints isn’t a pretty one.

Our source has communicated to us in no uncertain terms that the PlayBook 2.0 OS developers have been testing is a crystal clear window into the current state of BlackBerry 10 on smartphones. No email, no BlackBerry Messenger — it’s almost identical. “Email and PIM [is better] on an 8700 than it is on BlackBerry 10,” our contact said while talking to us about RIM’s failure to make the company’s new OS work with the network infrastructure RIM is known for.

We also have some more background on why RIM’s BlackBerry 10 smartphones are delayed, and it has nothing to do with a new LTE chipset that RIM is waiting on. In what is something of a serious allegation, our source told us that Mike Lazaridis was lying when he said the company’s new lineup was delayed for that reason. ”RIM is simply pushing this out as long as they can for one reason, they don’t have a working product yet,” we were told.


BlackBerry 10 is a failure that won't be able to compete, company source says

[Superfly_FR]

The increase in data consumption is because of content that is *already* compressed. Text is really not that big of an issue compared to video streaming and app downloads.

Interesting.
I believe, this is more than "compressed" in NOC perspective. For instance, if you browse a web site that provides very large images or videos, they will be resized/compressed to fit your device (or at least what can be named a "mobile" device) screen and/or connexion speed.
warning : I had this in mind, but can't be sure 100%, anyone to confirm ?

[WinningWithLogic]

Data still goes through the NOC so it should work the same, though I am unsure if it will be compressed the same amount.

From what I understand, it's not. The compression that they used to do came at the expense of a compromised end user-experience (BIS had *many* limitations - RIM documented these for us developers) so RIM will be switching this off.

[WinningWithLogic]

Interesting.
I believe, this is more than "compressed" in NOC perspective. For instance, if you browse a web site that provides very large images or videos, they will be resized/compressed to fit your device (or at least what can be named a "mobile" device) screen and/or connexion speed.
warning : I had this in mind, but can't be sure 100%, anyone to confirm ?

Yep, you *were* correct Superfly. The NOC used to resize images based on the target device. When RIM switched over to the webkit based browser however they stopped doing this.

[app_Developer]

Interesting.
I believe, this is more than "compressed" in NOC perspective. For instance, if you browse a web site that provides very large images or videos, they will be resized/compressed to fit your device (or at least what can be named a "mobile" device) screen and/or connexion speed.
warning : I had this in mind, but can't be sure 100%, anyone to confirm ?

If you make a folder of text and jpgs on your computer and then zip the folder, you will see high compression on the text files, but very little additional compression on the jpegs. This is just a normal characteristic of compression algorithms.

If RIM has invented a way to significantly compress content that is already compressed with other algorithms with little loss, then they should quit this whole phone business and license that technology to companies like Google, Cisco, Netflix, Verizon, etc. for *way* more money than they make with phones.

The fact of the matter is that no such magic compression algorithm exists. The NOC compression was a bigger advantage in the days when most of the mobile content was text (emails). Usage patterns have changed in the past 5 years, and so now this is not so important (because of the fact that the big data hogs are already compressed, and because of the latency introduced by type of approach ).

[cgk]

The other problem is that data compression provides some advantage when selling to teenagers, the poor and people in emerging markets who want cheap internet and thus are after the low-tier contracts - it provides no advantage when selling a premium device (bb10) because those users will not be buying such a device to start with...

[Sith_Apprentice]

The other problem is that data compression provides some advantage when selling to teenagers, the poor and people in emerging markets who want cheap internet and thus are after the low-tier contracts - it provides no advantage when selling a premium device (bb10) because those users will not be buying such a device to start with...

While I am not certain they are turning off the compression that they have (though undoubtedly BIS does have its limitations), I was referring more to the carriers as those to market this to. The end user really doesnt care about it and likely never will.

[jd914]

Seems like BGR was on to something way back in December of 2011 on this.

Many folks here said it was all a load of crap.

But read this and see if it was not spot on.
Seems that Thor is no different than the two clowns before him.

Tim

Bad products, horrible software and no cohesive vision have seemingly turned Research In Motion into a company without motion at this point. Throw in a huge delay before BlackBerry 10 smartphones start shipping, and it�s clear why people are losing, or have lost, faith in a company that played a tremendous role in making the smartphone industry what it is today. Thanks to one of our most trusted sources, BGR now has new information on what�s going on inside Research In Motion, and the picture it paints isn�t a pretty one.

Our source has communicated to us in no uncertain terms that the PlayBook 2.0 OS developers have been testing is a crystal clear window into the current state of BlackBerry 10 on smartphones. No email, no BlackBerry Messenger � it�s almost identical. �Email and PIM [is better] on an 8700 than it is on BlackBerry 10,� our contact said while talking to us about RIM�s failure to make the company�s new OS work with the network infrastructure RIM is known for.

We also have some more background on why RIM�s BlackBerry 10 smartphones are delayed, and it has nothing to do with a new LTE chipset that RIM is waiting on. In what is something of a serious allegation, our source told us that Mike Lazaridis was lying when he said the company�s new lineup was delayed for that reason. �RIM is simply pushing this out as long as they can for one reason, they don�t have a working product yet,� we were told.


BlackBerry 10 is a failure that won't be able to compete, company source says

That BGR article was spot on but those that thought RIM had any chance at surviving in todays market or simply in denial spun it off as tabloid journalism. I wonder what these same people have to say now?

[pinkert11]

You both are very correct, I am not certain it has actually happened in the modern business world. The only ones that *might* come close would be car companies. GM comes to mind as the only possible.

How about Apple? Do you forget how in the early to mid 90's Apple was a write off. Everyone thought it was going bust - down the tubes to never be heard of again. Then Apple released a new new line of computers - iMac and iBooks along with a nice posihed update to the OS in Mac OSX. Later that year came the iPod. This move from old products that no one would touch with a 20ft pole as they simply sucked so bad saved Apple. Read some tech news at the time, Apple was beat up more then RIM is today. So is it possible to get out of the grey and rise again, and have we seen it in modern business? Yes we have and it is more then possible.

[the_sleuth]

RIM is not the only one hurting. LG, HTC, and Nokia are being marginalized also. Motorola's saving grace is it's parent company: Google or it also would be in the same predicament. There is a real shakeout happening in the handset device makers. This is similar to what happened to PC makers in the 1990s.

I notice ZTE and Huawei trending upward and coming on strong. If a device maker cannot survive with 15% to 25% gross margins, then it won't survive.

Samsung, ZTE, and Huawei have other business segments. How much longer can Sony, LG, and HTC be willing to lose money in their handset division? The weak will exit or perish.

Asymco is always worth a read as it's purely numbers based - the analysis of RIM's current position is interesting (the graphs in particularly are very illuminating in regards to RIM's position relative to the competition).

So how does RIM meet conditions 1,2 and 3 with BB10?

[sosumi11]

How about Apple? Do you forget how in the early to mid 90's Apple was a write off. Everyone thought it was going bust - down the tubes to never be heard of again. Then Apple released a new new line of computers - iMac and iBooks along with a nice posihed update to the OS in Mac OSX. Later that year came the iPod. This move from old products that no one would touch with a 20ft pole as they simply sucked so bad saved Apple. Read some tech news at the time, Apple was beat up more then RIM is today. So is it possible to get out of the grey and rise again, and have we seen it in modern business? Yes we have and it is more then possible.

Apple's conversion from OS 9 to OS X was virtually invisible to consumers. Apple was able to allow users to run both OS's at the same time (OS X and Classic). Since developers had to rewrite every app for the new OS, OS X at launch was practically useless (outside of showing off how sweet it looked). So, users were able to crawl into OS X at their own pace. Apple has reversed this process for the PowerPC to Intel conversion (Rosetta translator).

RIM, meanwhile, has no such system to allow existing hardware to run the new OS. Thus, hardware sales are at a snail's pace because it is an established fact that the current phones will not work with BB10.

Microsoft refused to upgrade XP for a decade because they did not want to force users to buy new hardware and had to make any OS upgrade "reverse compatible". This was a marketing decision by MSFT because once they force a hardware upgrade, users may not choose a Windows powered PC. This is why it took Microsoft years to get to Windows 8.

Just coming out with a new OS is not enough. It's how you integrate it with existing hardware.

[pinkert11]

sosumi11, you are correct but my point was simply that there are some parallels and a company that was failing in all areas could turn around. It is not impossible to do so and Apple is one such example. Where the article that was originally posted states "It’s been impossible to recover from this tailspin so far." is an untrue statement as many companies have switched gears, introduced new products or services and redefined themselves. The problem is more with how RIM is doing mostly everything wrong and very few things right as they change course.