Research In Motion, the company behind BlackBerry emailers, has just announced its latest financial results. It says: "Revenue for the fourth quarter of fiscal 2007 was $930.4 million, up 66% from $561.2 million in the same quarter of last year." Annual sales reached $3 billion, "up 47% from $2.1 billion last year."
I'd have thought these were pretty impressive, but apparently not. The $930.4 million in sales missed the $935.4 million average estimate of analysts in a Bloomberg survey, so the shares took a beating.
What's interesting is that this is still a device business, not a service business. RIM says: "The revenue breakdown for the quarter was approximately 73% for handhelds, 19% for service, 5% for software and 3% for other revenue." And -- unlike services -- devices is an area where there is stiff competition, especially with more companies now offering "push" email from the Microsoft Exchange email servers commonly used in businesses. As Bloomberg notes:
Competition is intensifying as more e-mail phones hit the market. AT&T Inc., the largest U.S. mobile-phone carrier, started selling a device called the BlackJack in November that handles music and e-mail. Suwon, South Korea-based Samsung Electronics Co. makes the BlackJack. AT&T also offers Palm Inc.'s Treo e-mail phone.
Motorola Inc., the world's second-largest mobile-phone maker, introduced new versions of its Q e-mail phone in February. Nokia Oyj, the biggest mobile-phone maker, released three new e- mail phones that same month aimed at business users.
One obvious route to higher sales is to target the consumer market, which BlackBerry is now doing with more stylish phones that include cameras and music players. Unfortunately for RIM, this market has also been targeted by Apple, with its forthcoming iPhone.....
RIM has been a great Canadian success story, and has had an amazing amount of publicity, considering it still only has 8 million users -- a trivial number, in global phone market terms. That was partly because it provided a good proprietary solution (including the device, client software, and server software) to the problem of handling email on the move.
However, when every smart phone does the job, off the shelf, RIM could have a much tougher time trying to prosper, or even survive.
