In case you had any doubt, RIMM is still truly dead…
In case you had any doubt, RIMM is still truly dead, as I have been had the unfortunate job of predicting to much hatred and chagrin from RIMM longs over the last couple years. I don’t know what else to say. I’ve been writing variations of this “RIMM is dead” theme for a year (see RIMM Is Dead; now what? or 49 app stocks that should go up 1000% and one that won’t or RIMM is truly dead, for examples).
I also have a long history having been both long and short this stock in years past, mostly long as it was on its tear back in the mid-2000s. Most recently we shorted the stock in the Revolution Investing model portfolio back when it was above $70 (Revolution Investing subscribers will remember the newsletter edition from April 2010 called Time to add some short hedges).
As far back as November 2009, I wrote an article called, “Three problems facing RIMM”. I will reprint most of that here now because the tech, business and stock analysis in the article focus on how the smartphone/app revolution has passed Research in Motion by and are, quite frankly, completely relevant still today. RIMM might be researching in motion, but they must be in reverse. Bad pun, I know, but my mom will like it and it makes the point that this company has completely lost touch with the direction of the marketplace they once dominated. Here’s what I wrote in that article:
November 16, 2009, 1:22 PM ET
Three problems facing RIMM
I’m not sure I’d ever get long RIMM again, and I’ll give you three quick reasons why:
1. The Apps. It’s not about the number of apps. It’s about how easy it is to use the apps and how many apps actually bring value.
Apple’s got 100,000 apps plus, Android phones from Google’s vendors have 10,000 apps plus and RIMM’s got a few thousand apps available for Blackberry. There are lots of technologies being created right now that will make it ever easier for developers to adapt an app developed for one platform, say the iPhone, and make it run almost identically on another platform, say the Blackberry. But that’s now what the real issue is. It’s the ease of using those apps that’s key. I mean, I have some apps that I might use on my Verizon blackberry curve, but it’s such a pain to get to them, to get them running, to scroll that wheel to get me to the place I want to go. And trying to watch Internet video on my Blackberry is like trying to get my dog to play guitar. He’s better at fetching than at strumming, and my Blackberry’s better at emailing than apps.
See, the Android apps will become ever easier to use as your Android phones become ever more synched to your main computers which will become ever more synched to Google’s cloud and networks and technologies. Apple apps will become ever easier to use as the Apple platforms and integrations between your living room, your handset, your office, and your car and so on become ever more integrated with Apple hardware and software. Blackberry? You tried gaming on the Storm? I’d rather play pong.
Upshot is that there’s just so many more possible value-add apps that come from the Android and Apple operating systems and form factors than from Blackberry’s gadgets.
2. The enterprise. That’s really where Blackberry built its dominance — by taking over corporate mobile email. And they owned it with 90% marketshare initially. But all that marketshare that Blackberry was had is eroding and the rest is there for the taking. I’m seeing an increasing number of executives bring out their iPhones during meetings and to tap out emails. When the execs get their tech guys who are still running on the “you can’t get fired for using Blackberry” mentality to finally commit to letting the company employees choose between the iPhone and Blackberry, it’s gonna be a long down hill for Blackberry’s hold on the enterprise.
3. What’s Blackberry’s future market? If they can’t compete with the best consumer phones when it comes to playability, form factor, and general app usefulness, and if they can’t maintain their outsized marketshare at the enterprise, Blackberry’s suddenly got an identity crisis on its hands.
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Cody here again, in present time, June 2011. Throw in some commentary about the Playbook and how the company just used the old “Microsoft Kin has shipped HUGE (er…into distributors, but not so much into end-users’ hands) and you’re basically got the analyst reports you’re going to be reading from your friendly neighborhood Wall Street analysts this morning.
I would note that I do expect RIMM’s gotten so “cheap” on a cash-flow basis and on a enterprise value basis that it will potentially end up being at least rumored as a target for private equity play. Or it could end up a target by HPQ or IBM or somebody. The big question is how low will she have to go before that kind of interest gets serious?
