I have been meaning to post this for a while, got sidetracked, then ended up holding off as my prediction seemed to be coming through. Yet given RIMM’s recent resurgence, I feel my window has reopened. Let’s look back a bit to understand the Palm parallel. Shortly after its IPO, Palm went on to have a peak market cap of about $85B and was the darling of handheld computing, perched to lead the revolution. But then they made crap for years, and the market cap is now hovering at around $800M. Today, RIM has a market cap of about $73B. It’s NOT a $70B company. The writing is on the wall, and here are some reasons:
This one’s easy, but the biggest threat to Blackberry’s ongoing growth is the iPhone. The application infrastructure and user interface are without question the future of mobile computing.
RIM is a one-trick pony
Let’s be clear about one thing, RIM’s value is based entirely on one service it provides: push email. That’s it. It doesn’t make the best phones out there, they aren’t particularly sexy or usable outside of the core emailing functionality, and push email isn’t that defensible.
RIMM vs. AAPL Stock
It’s incredible but true that RIM has been outperforming Apple for the last 3 months, 6 months, 1 year and 5 year periods. Is that sustainable? RIMM today is worth half as much as Apple. Think about that. To use the venerable Chewbacca Defense “IT DOESN’T MAKE SENSE”. Apple makes the best computer operating system, the best computer hardware, the best music players, and the best phone.
RIM is on the wrong side of the innovator’s dilemma
I feel strongly that RIM will not reinvent its way to ongoing relevance because of their focus on the physical keyboard.
BlackBerry’s Quest: Fend Off the iPhone – New York Times: “THERE’S a reason that R.I.M. is averse to the iPhone’s glass pad. ‘I couldn’t type on it and I still can’t type on it, and a lot of my friends can’t type on it,’ says Mike Lazaridis, R.I.M.’s co-chief executive and technological visionary. ‘It’s hard to type on a piece of glass.’”
Note to Mr. Lazaridis: as the actual act of typing becomes a smaller percentage of the total time spent interacting with a particular device, the incremental speed benefit of having a full tactile qwerty keyboard is reduced. And that’s not even talking about the fact that in many cases, people type faster on the iPhone’s virtual keypad (myself included, I’m much faster on my iPhone than on my recently-retired BlackBerry Curve).
So good luck RIM, but you’ve peaked.
Disclaimer:I do own a (small) amount of Apple stock, a MacBook, an iPhone 3G, and until recently, a Blackberry Curve. Also, I am NOT an investment adviser, and the information in this column does not represent a recommendation to buy or sell stocks.