This article, or report, or whatever you'd like to call it has been a long time coming. No doubt the past year has been a terrible one for Waterloo based Research In Motion, as has been powerfully reported everywhere from international business news television netwroks to local news paprs. The company has been completely battered to an absurd degree and has seen its share price fall by more than 70% in the past year and almost 90% from its all time high. So, perhaps its about time that something be written that offers an alternate perspective regarding the current state and future of the company - and that is what I hope to accomplish here: That is, to show why RIM is indeed in reasonably good shape as a company and can look forward to at least a stable future, if not a full return to a leadership role in the industry.
Why would a Mortgage Broker have an interest in writing such an article? Well first of all, RIM is a great success story in my home town of Waterloo ON, and is in fact one of Canada's few remaining large global technology players - if not the only. I personally know several clients and friends that are directly employed by RIM, and my community of Waterloo Region as a whole has quite a bit riding on the company's success. So with this, lets dive in take a look at some reasons why this Canadian success story should be not only be here to stay, but gorw over the long term.
The current state of RIM:
RIM needs to be careful, very careful - this much is true. It has lagged behind the market in development and has seen its share of the smart phone market fall in half over the past year in North America, leaving it with about 10% market share. Internationally the numbers look a little bit better as the share sits closer to 15%. Although many followers of the company think that RIM may find a business user niche and settle with this share in a similar way that the American Express Credit Card has, the company from a broader growth perspective is deifinitely not on track for the success it once had. They have fallen behind the market - and the company knows this - which is why drastic change has been brewing for some time.
What's interesting about RIM in its supposed darkest hour, is what surprisingly good shape they are still in. The company has absolutely no debt, has almost $2 billion in pure cash on the balance sheet, is still extremely profitable to the tune of at least $1.5 billion dollars in profits for the year 2011 and continues to expand the number of BlackBerry users globally. The company however is being treated by Wall Street and the media as if it were a distressed asset, but it is in fact still very profitable. The company holds some of the best patents in the mobile industry and is unmatched in its security features. This explains why over 90% of Fortune 500 companies and most world governments use RIM devices, and why they will continue to for the unforeseeable future. The company recently purchased, in a consortium with 2 other large tech companies, an entire patent library from bankrupt Nortel Networks. These patents are known by most in the high tech business to hold the keys to what will be the backbone of wireless technology for the remainder of the century. So while it's hardware may be seen by many as dated and lacking in certain features, the company itself continues to turn a profit and provides service to a user base of over 70 million ccustomers internationally, and health wise, is well positioned for the future. Even at just 15% market share internationally, the company does look more impressive when we notice that Andriod market share is masked among a number of device makers. RIM at 15% on the other hand provides exclusive software, services and hardware to its users. So while RIM from a more objective perspective can be seen as strong at present time, it does not address questions of what kind of track the company is on and what the future may hold.
Fear and anxiety are present in our market, and are very real forces. The overbearing perception held by most is that RIM is not on the the right path, and when combined with a lack of future based information, fear logically prevails resulting in pessimistic product and corporate sentiment and depressed stock valuations. But if we dig a little deeper, we find a company that is scrambling to not just stabilize itself but to provide some of the most compelling and exciting mobile solutions that the market has yet seen.
In early 2012, RIM will unveil its 'next generation' BBX based BlackBerry smartphones and Playbooks that hold promise to return the company to a dominant competitor and technology leader. Built on its current DNA of security, simplicity and functionality, BBX and the new BlackBerry will also answer many of the screaming requests from the broader market.
First off, RIM's app world will be greatly improved. Not only is the company aggressively continuing to develop its own brand of productivity based 'super apps' and BBM based connectivity apps, it has also tapped in to the Google Andriod app wrold which will help bring a gigantic scale of applications to RIMs devices. For app creators, RIM offers on its new BBX platform the most 'open of open source' operating systems, which means it is very easy for an app programmer to create an app for RIM devices, or alter a current Apple based app to work on BB. For gamers, RIM promises to feature some of the largest and most colour rich displays on the market, as well as CPU and graphics processing power that has been rumoured to out preform the gaming experience of Sony's portable PS3 gaming device. So in short, from an app perspective RIM will emerge as a company with arguably the highest quality apps for productivity and connectivity, the most apps available, and anoperating platform that is the easiest, and therefore most palatable to create applications for going forward.
The BlackBerry device itself is supposed to live up to the highest of standards for touch capabilities and screen sizes. RIM will have refined and re organized its device options, providing both tactile or purely touch based keyboards thereby providing the right phone for every user. The graphics in general are reported to be more rich and vibrant, and the processing power increased as well. The BlackBerry phones will use the same operating system or platform as the next generation of Playbook tablets, so the congruency between the BlackBerry and the Playbook will be seamless. Given the fundamental security components to the software, it may also prove to be anunmatched phone/ tablet combination in the industry.
There are a whole myriad of other detailed software and hardware upgrades that RIM has hinted at and is reportedly working on, but the most significant of these is the nature of QNX based operating system itself that underlies the new BBX operating system.
It is often said that for RIM to really pull ahead, they need to offer something not just different, but something that is really significantly different. When we look to the nature of what the QNX operating system is and how it works, we may just find this. QNX, known as an 'embedded operating system', forms the base software for much of what technology helps to run our lives today. For example, the operating systems that run nuclear power plants around the globe, rely on QNX. Obviously nuclear power plants of all places must have software that never fails and is always up - in other words it must be incredibly stable and reliable software - and QNX has come through without fail for many years now. QNX is also installed on over 200 vehicle models and is the base of 'smart' electronic systems that run most 'cool new car features' today. The main point is that QNX is already installed on many underlying systems that power our world and that it is very reliable - and now its is owned by RIM and will be running BlackBerry and Playbook devices. The potential of this is exciting: If QNX is installed on cars, in grocery stores and in appliances and gadgets around the home, the user would be able to control pretty much everything right from their smart phone. While RIM has not come out and made this announcement yet, it seems very logical that this could happen and that it is only a matter of time. For years, RIM has been working on ways to make payment easier through Blackberry devices. Imagine just scanning your smartphone at the cash register in the grocery store and having automatic and instant payment for all your groceries! We are already half way there with automatic checkout, its just a matter of having the right technology to close the gap and make the entire paymet process instant. All signs point to RIM making this happen. What about your car? RIM already owns the software that is installed in almost every new vehicle that comes off the line. So we can logically deduce that there will be some kind of connection between the car and the smart phone. This could possibly include car security, GPS, hands free phone and many other synchability options for the car. If these strong possibilities become reality, it will be no stretch to merge over to many other devices as well. QNX and RIM already have agreements with several consumer electronics companies, as seen on the QNX web site, that may just make the entire home BlackBerry connected. And as far as security and personalization goes, RIM is by far the most patent rich and reliable in this area, and is only growing stronger.
So seen in this light, things are indeed looking up. It is easy to get caught up in the rat race and negative mentality that spread throughout societies like diseases, but if we take a step back and look at whats really going on, like a 'magic eye' image popping off the page, a different picture begins to emerge. Given RIMs current state of financial health and mentioned developments, it will be interesting to see what the future holds for RIM in any case. While it is easy to choose fear and pessimism, it is also very reasonable to choose progress and excitement. I have tried to clear a path for this way of thinking in these writings with regards to RIM in the hope that others will spread the word, and especially for those living in Waterloo region to remain confident and proud to call itself home to one of Canada's last great tech giants and one of its largest employers.
