Research in Motion, now known as Blackberry, has had a tripling of price over the six months or so. For those that don’t follow me, I warned when Blackberry was in the $60’s that it was just about a goner (reference Hindsight Is 20/20, And As Luck Has It Our Foresight On Research in Motion Was Right On The Money Two Years Ago). Like Apple, it had a lot of followers who spent more time looking backward than forwards, hence were literally and figuratively blind to the upcoming crash.
Well, after tripling in an overdose of hopium, here we go again. Those who rode the fantasy narcotic-induced ride up obviously didn’t read my post “Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers“.
You see, the problem is that Google’s new age “less than free” business model has sparked a hardware war that no company that does not manufacturer its own parts can hope to win, or even flourish in – that is unless it is an expert in low margin sales. That… Blackberry is not! The Andriod tech, functionality, and mindhsar on both the hardware and software side is leapfrogging the competition (primarily Windows, Blackberry, iOS devices) almost QUARTERLY! With new handsets launching every six months boasting new functionality, and new OS versions launching every six months (alternating, thus creating an effective 3 month cycle) at the same many (or most) companies are slashing prices… How is a company like Blackberry which took two years to launch the revamped, yet barely competitive Blackberry OS10 to compete while maintaing a semblance of healthy margins or material market share? Quick answer, it can’t! It’s as simple as that.
All of the margin warnings that I gave throughout 2010 and 2011 still hold true today. Google’s Android business model was designed to gut companies such as Nokia, Blackberry and Apple – all three of which need wide margins in order for thier business models to thrive. Two years ago, I warned that Android would compress the margins of all three of these companies – to Google’s benefit and to their detriment. Let’s see if I was correct…
So, do Blackberry investors really think this time is different??? I answered this question many months ago…
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