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Does RIM's "Huge Loss" Signal Wider Handset Market Deterioration?

Posted by samzenpus on from the blood-in-the-water dept.

zacharye writes "RIM was expected to deliver a nightmarish, -30% year-on-year revenue decline into the May quarter — the company issued its latest profit warning just four weeks ago. Yet it ended up missing the lowered consensus estimate by 10%, generating just $2.8 billion in sales. The reasons for RIM's decline are well-known and will be rehashed again over the next 24 hours. But the size of the F1Q13 sales miss raises another question: apart from Apple and Samsung, is the handset industry drifting into serious trouble?"

13 of 278 comments (clear)

  1. No by ghn · · Score: 5, Insightful

    Look at apple's profits.

    And please stop the sensationalist question mark titles.

    1. Re:No by gl4ss · · Score: 5, Interesting

      The handset industry is facing the same problem as the PC industry did during the 80's and we will end up with 2 or 3 large players.

      oh you mean just like happened to handset industry in 1996? and again in 2000? and again in 2004? and 2008?

      hint: handset industry is in perpetual trouble, always been, always will. the bigger players manage with their momentum over the bad times, like motorola & samsung have done(even moto ended up getting chopped up, since last time they had a hit was with the original razrs) and how nokia is doing now after almost a decade of good times. it remains to be seen if blackberry is too big to fail or not in this regard.

      the difference to pc industry is obvious though, you can't as easily just buy the parts and throw them together - another difference is IP rights, which basically bar any new entrees to the market(only small niche players are tolerated without getting sued by the big 5) even though anyone can buy the devices from the subcontracting factories.

      and rims huge loss just signals rims situation - they hit their market peak. their actual problem was that they were never a global player and another problem is that they kept just hiring more and more people during their good times - that's another thing these companies do, they hoard engineers on the good times even if they don't have anything worhwhile for them to do - so expenses balloon when their profits balloon and then if they have a period of not having a hit phone in the stores it's doomsday instantly.

      also - bb only ever had a lead in very few countries. they were never a truly global contender - however they did have growth until now.

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    2. Re:No by hairyfeet · · Score: 5, Insightful

      Actually the reason RIM is gonna end up toast is the same reason we have seen tons of other companies go from being the big cheese to just another small fry, hell its the same reason we are seeing MSFT throw the Hail Mary of the century with Win 8 in Oct, and that is they didn't see the disruptive shift in the market coming and instead of innovating they sat on their laurels.

      There is no reason that Blackberry couldn't have branched out, they could have had sleek elite lines like Apple and entry lines like Android, but like many corps they got fat and sat on their asses and the world passed them by. Seriously how many times have we seen this play out? RIM, Palm, the above mentioned MSFT, Nokia, these corps become the king of their respective hills and instead of staying hungry and growing they plop down and just count the money...right up to the point the Mac truck that is the changing tech scene runs their asses smooth over.

      if you want to sit on your ass? tech is NOT the market you want to be in. just look at how much things have changed in the last decade, the end of the MHZ wars and the rise of multicores in the PC market, the death of the dumbphone for smartphones, netbooks and tablets appearing out of thin air, if you try to set on your ass in the tech world somebody will come along and kick you right in the ass, simple as that. RIM had a sweet thing going with business users but instead of doing the smart thing which would have been branching out into new markets, developing new exciting designs, and trying to stay ahead of the curve, they basically pulled a Palm and just rehashed what they had. Bad move RIM and now it looks like you're toast.

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  2. Obvious? by SultanCemil · · Score: 5, Interesting

    I'll venture a guess that in 10 years, RIM's fall from grace will probably be a great case study in business schools around the world.

    How a successful company managed, through horrible fore-sight, atrocious product management and lousy business management, to squander an insurmountable lead in the enterprise market is amazing.

    On to the story at hand: there is no doubt that the wider handset market is in all kinds of trouble. Apple clearly makes most of the profit, and Samsung picks off what is left. What does this leave the other players? Nothing. Clearly there is no competition in the iOS market, and Samsung has a huge lead (and massive fab capabilities). Unless one of the other players steps up and makes a handset that, you know, you'd actually want, then they're dead.

    End of story - this isn't that complex. Make a product people want. The competition has showed you the way....

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    1. Re:Obvious? by Anonymous Coward · · Score: 5, Insightful

      You don't disrupt a market by being a follower. Being a follower is always a volume business, you are just there to run a numbers game.

      In apple's case they re-wrote the rulebook and turned the first question abotu every product into "But is it better than apple's offering". Once a single player is in that position t becomes very hard to unseat them by simply copying. You need to change the rules again to win that game.

    2. Re:Obvious? by Anonymous Coward · · Score: 5, Interesting

      Nokia will be an even greater case study.

    3. Re:Obvious? by Dynamoo · · Score: 5, Insightful
      RIM must be smarting because it *was* a market disrupter.. it's just that the market continued to evolve. Their problem now is.. how to disrupt the market again? I honestly don't think they can do it without radical and painful surgery to their business model.

      My two cents worth.. RIM should dump plans for BB10. The world doesn't want another mobile OS, regardless of how good it might be from a technical POV. RIM should slot itself in with Android or perhaps Windows, but then differentiate itself with its software and services offerings (e.g. BBM, BES etc). If you offered me a truly enterprise-capable Android phone I would rip it out of your hands! Sure, margins will be thinner and the glory days will be behind them.. but they would probably survive, and that gives them time to look at the next way of disrupting the market.

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  3. Just because you build it doesn't mean they'll ... by Gr8Apes · · Score: 5, Insightful

    No, it's not the end of the handset industry, nor are they in trouble. It's an industry that 80+% of the users toss their perfectly good handset every 18-24 months because their contracts generally make it worthwhile to do so. Just try to get a decent contract with a reasonable monthly fee that's lower than getting the same contract with a brand new shiny phone attached. However, just because you make a handset doesn't mean people will buy it, especially if that handset comes at virtually the same price or within easy disposable income range of the top of the line handsets. Why would you buy a Yugo if for $10 more you can own a Lexus?

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  4. No competition by Anonymous Coward · · Score: 5, Insightful

    Who can make a phone with all the patent traps?

  5. Re:RIM not industry by erice · · Score: 5, Interesting

    RIM was in the same place two years ago, with a nasty software stack and no ecosystem. They responded by buying QNX. Even with the latest delays they are still going to from purchase to market faster than Apple did with OS X. Same fundamental problem, same solution, dramatically different outcomes.

    OSX might have saved Apple from extinction, but it wasn't enough to make them thrive. The Ipod did that.

    Qnx might save some residue of RIM but if they want to thrive again, they will need a fresh beachhead in a new market.

  6. Microsoft Deserve credit too by Freaky+Spook · · Score: 5, Insightful
    In apple's case they re-wrote the rulebook and turned the first question abotu every product into "But is it better than apple's offering"

    Microsoft expanding their ActiveSync license program as well I would contribute to helping the iPhone succeed. Suddenly you didn't need to invest in expensive BES licensing costs, windows licensing and hardware costs just to connect a phone to a mailbox. When that happened I wondered just exactly how Blackberry would react to the market, and well they didn't.

  7. So... by SmallFurryCreature · · Score: 5, Informative

    HP/Compaq, Lenovo, Acer, Asus, Dell, Samsung, Sony, Fujitsu... who among these would you call small players? A small player in my mind is a store chain that sells rebranded or white label computers, not an asian mega giant.

    Just because YOU don't shop around, doesn't mean nobody else does.

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    1. Re:So... by alfredo · · Score: 5, Interesting

      All of the above used the same OS, and all were competing on price. Sony did try to distinguish themselves in the design department, but they couldn't match the Apple design team. HP made some handsome machines, but once booted, they looked like everyone else. They were all Microsoft's bitch, and though it gave an advantage in some markets, they had no control of the quality of the OS. In the end, they were boring in design and use. Their products were associated with work. Booting up your home computer shouldn't remind you of the crushing boredom of your beige box in your cubicle.

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