BlackBerry: a smouldering platform

Not quite burning yet. But emitting smoke. Sobering assessment of what RIM’s latest results tell us. Excerpt:

When reporting its fourth quarter in March, RIM had forecast revenues in the range of $5.2-$5.6bn and profits of between $770-812m.

Instead, they both came in lower. Now, you might look at that and say that revenues are up, and shipments are up – so what’s the worry?

First, it’s in the gap between those two – which led to the fall in profits. Basically, you can see clearly from those numbers that RIM must be getting less money per phone. Quite substantially less, if you take into account the average cost of a PlayBook (which is going to be a lot more than a BlackBerry).

We would have been able to tell you exactly how much it was getting per handset – but following its results last time, RIM said it would stop giving out both average selling prices (ASPs) for handsets and the total number of BlackBerry subscribers, which it had been doing since the beginning of 2002. And another financial point: the company is to buy back 5% of the outstanding shares. I won’t go into the mechanics of why share buybacks are bad (two quick reasons: the company should have better things to spend its cash on, such as R&D, and buybacks featherbed executive share options). But when a company circles the wagons by reducing the amount of data it gives out and does a buyback, something is wrong.

Here’s what’s wrong: RIM’s platform is burning. Except that this isn’t the fully-fledged conflagration that Stephen Elop perceived at Nokia. It’s more of a smouldering. But it’s happening nonetheless, and it’s been happening for a long time: RIM hasn’t released a major new phone since August 2010. (Yes, that’s nearly as long as Apple.) It sort-of showed off a new version of the Torch in May; that will actually be released in September. (Way to kill the sales, people.)

RIM’s management knows it has a problem, but doesn’t seem to be able to make the shift – the very difficult shift, it should be noted – from the old BlackBerry OS to the new QNX platform that is going to power forthcoming BlackBerrys (and already powers the PlayBook).

QNX-based phones have been much promised; RIM hasn’t however delivered.

That figures. I’ve noticed how almost all my corporate contacts — the people who once had BlackBerrys to a man or woman — now have iPhones.