[correction: please note: I got Apple's number wrong. Since their IPO their stock has actually gone up 10,000 per cent, not 1,000 per cent]
RIM is getting pounded in after hours trading today (down 18 per cent and still falling) after announcing their second quarter results. Apparently they only sold 200,000 playbook tablets in the second quarter (Apple sells about 2.5 million iPad's a quarter).
I guess the question is becoming, is RIM approaching its last breath? (My totally non-empircal, shot in the dark call of RIM stock hitting $15 bucks isn't looking so crazy right now though).
Is the Grim Reaper calling? (now that's a good pun!)
I don't necessarily think so, although as I've been saying for over a year, they do have a brand crisis on their hands.
But first a couple reasons why the Grim Reaper may not be blackberry messaging RIM just yet:
1) If you look at RIM over a 10 year period (which is to say if you invested in the company in 2001) you'd have made a 1,100 per cent return. That's right, one dollar would have made you 1,100 dollars. If you had invested when the company first went public you'd have made a return of 1,500 per cent!
If you had invested in Apple when it first went public (which went public two decades before RIM did), today you'd have made a return of 1,000 10,000 per cent. So technically, being invested an extra 20 years with Apple and your returns would still be less than what RIM has produced.
Yet two caveats worth mentioning:
If you had invested in Apple in 2004, the gains since then would have been over 4,000 per cent.
If you had sold RIMM in 2008 (ie. taken your profits and walked away), you would have cashed in on gains over 5,000 per cent!
These numbers tell us a lot and help us get some perspective, they say:
The question now though is whether RIM will wake up and get back in the race or let Apple steal the show for good.
2) No one can beat Apple right? Wrong.
There was an interesting article in BGR about the Apple iPhone losing its cool factor with kids. It's purely speculative, but I wouldn't be surprised if it were true.
If true, it suggests that Apple may be entering a generational marketing paradigm, where adoption of its product by one segment of society actually discourages adoption by another segment. Not to mention all the technology rogues who are happy to ultimately abandon any company that gets too big for it's britches.
So those that say RIM can never, ever compete against Apple effectively at this point I think over estimate Apple's dominance, just like they did with RIM from 2000-2008.
Apple can be dethroned. In fact, I'd argue that it's more probable that Apple will be dethroned at some point than not.
The reason, basic commdification. Apple's a lot like a pharma company, for the first five years of a new drug they make out like bandits. But then the generic becomes available and their profits disappear.
Eventually everyone will catch up to Apple, all smartphones will eventually be of equal calibre, all tablets will be the same, etc.
So what determines the winners in these markets?
Marketing and brand. I'd argue that a huge part of Apple's dominance is already the result of marketing, not so much technology.
So for those two reasons I'd argue RIM doesn't have to die. But it doesn't mean they won't - let's face it, corporate suicide is a common phenomena in tech. They continue to do a bad job at marketing their products. Hence why the GBR article is mentioning that kids are moving to HTC and Samsung.
The alternative to Apple should be RIM, but without good marketing, it won't be. It will be HTC or Samsung or some other vendor.
Yet, like I've said before, if RIM can get their marketing going and take a rusted out brand and give it some shine again, then their demise will be highly premature.
The real question is whether they will wake up before it's too late?
Personally I hope they do. I think it would be quite exciting to see RIM give itself a total facelift and re-brand itself in the public eye. If they fail to do this (which looks to be the case right now) then I do think we are witnessing last call for RIM.
RIM is getting pounded in after hours trading today (down 18 per cent and still falling) after announcing their second quarter results. Apparently they only sold 200,000 playbook tablets in the second quarter (Apple sells about 2.5 million iPad's a quarter).
Is the Grim Reaper calling? (now that's a good pun!)
I don't necessarily think so, although as I've been saying for over a year, they do have a brand crisis on their hands.
But first a couple reasons why the Grim Reaper may not be blackberry messaging RIM just yet:
1) If you look at RIM over a 10 year period (which is to say if you invested in the company in 2001) you'd have made a 1,100 per cent return. That's right, one dollar would have made you 1,100 dollars. If you had invested when the company first went public you'd have made a return of 1,500 per cent!
If you had invested in Apple when it first went public (which went public two decades before RIM did), today you'd have made a return of
Yet two caveats worth mentioning:
If you had invested in Apple in 2004, the gains since then would have been over 4,000 per cent.
If you had sold RIMM in 2008 (ie. taken your profits and walked away), you would have cashed in on gains over 5,000 per cent!
These numbers tell us a lot and help us get some perspective, they say:
- Over the full lifespan of each stock, the returns are equal (both stocks have returned about 1,000 per cent)
- During RIM's hayday you saw gains over the IPO price equal to the gains Apple is currently experiencing (actually even higher!). RIM at it's peak was a hotter stock that Apple is today.
- When a bubble pops (as RIM's did in 2008) it's a hard and fast crash to the bottom. While Apple may seem invincible now, remember that's exactly what everyone use to think of RIM (hence why RIM's stock climbed 5,000 per cent leading in to 2008)
The question now though is whether RIM will wake up and get back in the race or let Apple steal the show for good.
2) No one can beat Apple right? Wrong.
There was an interesting article in BGR about the Apple iPhone losing its cool factor with kids. It's purely speculative, but I wouldn't be surprised if it were true.
If true, it suggests that Apple may be entering a generational marketing paradigm, where adoption of its product by one segment of society actually discourages adoption by another segment. Not to mention all the technology rogues who are happy to ultimately abandon any company that gets too big for it's britches.
So those that say RIM can never, ever compete against Apple effectively at this point I think over estimate Apple's dominance, just like they did with RIM from 2000-2008.
Apple can be dethroned. In fact, I'd argue that it's more probable that Apple will be dethroned at some point than not.
The reason, basic commdification. Apple's a lot like a pharma company, for the first five years of a new drug they make out like bandits. But then the generic becomes available and their profits disappear.
Eventually everyone will catch up to Apple, all smartphones will eventually be of equal calibre, all tablets will be the same, etc.
So what determines the winners in these markets?
Marketing and brand. I'd argue that a huge part of Apple's dominance is already the result of marketing, not so much technology.
So for those two reasons I'd argue RIM doesn't have to die. But it doesn't mean they won't - let's face it, corporate suicide is a common phenomena in tech. They continue to do a bad job at marketing their products. Hence why the GBR article is mentioning that kids are moving to HTC and Samsung.
The alternative to Apple should be RIM, but without good marketing, it won't be. It will be HTC or Samsung or some other vendor.
Yet, like I've said before, if RIM can get their marketing going and take a rusted out brand and give it some shine again, then their demise will be highly premature.
The real question is whether they will wake up before it's too late?
Personally I hope they do. I think it would be quite exciting to see RIM give itself a total facelift and re-brand itself in the public eye. If they fail to do this (which looks to be the case right now) then I do think we are witnessing last call for RIM.
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