Posts from RIM

The Present and The Future (continued)

It's the theme of the weekend. What looks great today may suck tomorrow.

Case in point, Blackberry and their parent company RIM. I was at dinner a few weeks ago with old friends. Both of them carry Blackberrys and they love them. I predicted that they would be using a new device shortly and that RIM would be in deep financial trouble within a few years. They were surpriseed to hear such a negative point of view.

But as this excellent analysis of RIM's business suggests, the present and the future look very different for RIM. The charts in this post come from the post I just linked to. You should read it.

If you look at RIM's financials, everything looks rosy:

RIM revenue and profit
Not only are revenues and profits at an all time high, but so are subscribers:

RIM subscriber growth
But subscriber growth has peaked:

RIM subscriber growth rate
And may be headed into decline:

Future OS plans of smartphone users

It is often the case that on the surface companies can appear to be in great shape. If you just focus on the financial results, you can miss the underlying symptoms of future problems. I've made that mistake many times, hopefully enough times that I will make it less in the future.

What you need to do is peer into the future and try to figure out what is going to happen next. In RIM's case, I sense that a "platform collapse", as the author of the blog post calls it, is a real possibility in the next year or two.

RIM's stock is trading at a PE of just under 12, almost identical to Microsoft's. It seems like the market is well aware that the growth era is over and is counting on a long period of flat growth but strong profits for years to come. A platform collapse is not baked into the market's multiple.

The big platforms out there, Apple, Android, RIM, Facebook, Twitter, etc are powerful but fragile. They need to keep innovating and providing users AND developers real value. As myspace has shown, when platforms stagnate they can easily fall apart and the decline can be fast and devastating.

I think the assumption that tech platforms can stop growing but remain great businesses is flawed in most cases. Maybe RIM can pull it off. Their strong enterprise franchise may make it possible to execute the long fade, but it is also possible that it won't. If you are an investor or manager in a large tech platform, dont' get caught up in the present. Think hard about the future and where the platform is going. That's where the value is.

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#VC & Technology#Web/Tech

What Blackberry Is For Outlook/Exchange, Android Is For Google Apps

My friend Wil Stephens posted his thoughts on his first day on a Nexus One just now. If you click thru and read it, you'll note the similarity with the review I posted last week. I am not suggesting Wil was influenced by my review, I'm simply pointing out that we've had very similar experiences and both of us moved over from a Blackberry Curve.

In Wil's review, he says:

Cube, like many companies I guess by now, have Gone Google. My Calendar, Mail, Docs, Contacts are all hosted on Google. This made the setup and transition to the Nexus very easy. I entered my Google credentials and within seconds, my mail, contacts and calendars were all synced up and ready to go. Which, unintentionally or not, makes this a seriously good business phone.

I've spent the past year migrating from Outlook/Exchange to Google's Apps. I've done it gradually, in fits and starts, as our firm is still on Exchange. But I just could not get Outlook or any other Exchange client to scale to the size of mailbox I operate. And so I had to move to a more scaleable solution. That solution was Gmail and now that I've been on Gmail for almost a year, I am so happy.

Most people and companies move to Gmail for different reasons, mainly cost. But regardless of why this shift is happening, it's a very important one to pay attention to. Because it leads to other changes.

Like what phone you want to use. Blackberry is the perfect phone for someone with an Exchange setup. The Blackberry Enterprise Server for Exchange is a great product. If you run that alongside your Exchange server, setting up a Blackberry to be a full blown Exchange client with mail, calendar, and contact sync is a breeze. That's how we've been doing it at the venture firms I've helped manage for over a decade now.

But as Wil points out, if you are on the Google App suite, turning on an Android phone is even simpler. You simply login to the phone with your Google credentials and you are done. And the native Google apps on Android are extremely well done.

So, for good and for bad, I believe Blackberry is attached at the hip to Exchange. As Microsoft loses share to Google in the enterprise, something I believe is bound to happen, Blackberry will lose share to Android as well. Wil and I are cases in point.

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