Archive for 2010

Has Steve Jobs totally lost it? The cool guy in the black turtleneck who knows better than most how to market hardware seems to have gone a bit bonkers.

On the release of excellent numbers today which showed Apple’s profit up 70 per cent on iPhone sales of 14.1 million in the quarter (compared with 12.1 million BlackBerrys) Apple’s CEO decided it wasn’t enough just to crow, he had to castigate.

But first, the condescending warm-up lecture. “They must move beyond their area of strength and comfort into the unfamiliar territory of trying to become a software platform company,” said Jobs of Research In Motion. “I think it’s going to be a challenge for them.” As for the future, RIM is finished. Anyone who buys RIM’s PlayBook will need sand paper to sharpen their fingers so they’ll fit the 7-inch screen. “The 10-inch screen size is the minimum required to have great tablet apps,” he oozed. “We haven’t pushed [the iPad] real hard … and it’s being grabbed out of our hands.”

Let’s give Jobs his 10-inch moment. But the Greeks had a word for it … hubris. Pride goeth before a fall.

Everything you watch on TV these days seems to be sponsored by BlackBerry. Whether it’s Major League Baseball or Glee, Torch and BlackBerry Messenger are well and widely touted. The run-up to Christmas is, of course, a major time for retail sales, BlackBerry included, so promotional activity peaks.

All this activity is just as well. BlackBerry is losing its ranking as top dog in North American smartphone sales. Although BlackBerry remains number one in sales by an individual brand, recent market share figures show it has been eclipsed by Android when you take into account all of Android’s iterations.

To top it all off, The Globe and Mail this morning ran a story saying that Research In Motion is ripe for the picking. With a market cap of “only” $24.2 billion the company is increasingly affordable as a takeover target by Apple, Google, or Microsoft, according to the article.

With all the brouhaha over Potash Corp. falling into foreign hands, surely Canadians and their governments would not allow any such grab for RIM to go through. Selling off our natural resources (potash, nickel or petroleum) is bad enough, but worse would be to permit the takeover of that far more important natural resource, people, in particular the 8,000 employed by RIM in Waterloo out of a global workforce of more than 12,000. If such a takeover is launched and not stopped, Canadian entrepreneurs and workers will rightfully feel abandoned.

I like the redesigned Globe and Mail. Somewhere there’s a black-and-white photo of me, aged about six, crouched on the kitchen floor reading the Globe, spread out before me, so I’ve seen a few designs come and go.

This was not one of the usual rejigs, where sans serif type was switched to serif and a few column rules were dropped in where they didn’t exist before. No, this was the biggest upheaval I can recall.

Even so, there were those who dismissed last Friday’s launch as being derivative of The Guardian. All those naysayers were blown out of their snooty baths by the Saturday front that looked like an electrified pinball machine.

But will there be enough to read? Clearly, there is less than before. I’m glad to see features like Greg Keenan’s tad-too-long Saturday piece on Bombardier and Andy Hoffman’s excellent investigation today about how Investment Canada changes takeover rules to suit the foreign buyer.

However, I’m not a fan of foolish full-page graphs like yesterday’s ROB explanation of bank market share. The feature could have been done with a much smaller bar chart, leaving plenty of room for another well-written story.

But I’m afraid good writing no longer matters as it once did. Rick Salutin’s Friday op-ed column was axed because, he was told, “You don’t fit the redesign.” In the 1980s, when I was at Maclean’s, Editor Peter C. Newman ran Barbara Amiel’s column arguing that she needed to be heard as a rare right-wing voice.

Thirty years later, with the pendulum swung in favor of conservatives, Salutin was one of the last left-wing columnists in Canada. That alone should have been sufficient reason for him to continue.

But, as Jason McBride says in Toronto Life, the Globe used to be a writer’s paper, then it became an editor’s paper, and now it is a designer’s paper. And, I might add, an advertiser’s paper. On many pages of the new Globe, the most compelling presentation is the ad, just like the publisher would prefer. In such a format, the Globe cares less and less about the avid reader, kitchen floor or otherwise.

Mike Lazaridis and Jim Balsillie this week announced they will both be donating some Research In Motion shares to their respective foundations and selling additional shares. For Balsillie, about 800,000 shares are involved with half going to a charitable foundation. At $50 a share, that’s about $40 million.

The gift by Lazaridis is larger. He will be divesting 1,050,000 shares. Of that, 350,000 shares will go to the foundation with the remaining 700,000 shares sold over an 18-month period plus additional shares until the value reaches $200 million.

Some of the shares to be divested by the co-CEOs come from options that expire in January 2011. The rest are from current holdings, which remain sizeable. Balsillie owns 27.5 million shares, Lazaridis 29.2 million.

Add this activity to the $400 million they’ve already donated during the last decade to various new institutions and the two men are well on their way to meeting the recent urgings of Warren Buffet that billionaires give away half their wealth. At current prices, Balsillie is worth $1.4 billion, Lazaridis $1.5 billion.

The release date is later than expected, the name is different, the location was a surprise … but no one admits to being caught off guard by the announcement yesterday about the new BlackBerry PlayBook. That’s what passes for reportage these days, I guess.

To me, it’s interesting that Research In Motion is going after the Apple iPad from its core strength, the enterprise customer. Consumers will buy it, too, but I can see CIOs approving this device for corporate use because the back end administration will be secure, just like the BlackBerry.

For office use, the two cameras will be good for video conferencing and the Flash support is a promising difference from iPad. More apps will be possible, a key message to attendees at the BlackBerry Developers Conference in San Francisco where the first demonstrations of PlayBook occurred.

I like the name, and I like the fact that a 10″ model will be available sometime next year after the launch of the 7″ version. From a strategic point of view, this pre-announcement makes sense. RIM’s hope is that potential iPad purchasers will wait to see PlayBook before committing. Like the coach always said, sometimes the best defence is a good offence.

Financial results announced yesterday show a healthy disregard for all the ghoulish speculation about Research In Motion. Revenue during the last three months was up 31 per cent while earnings per share rose 76 per cent. There are now more than 50 million BlackBerry users, up 56 per cent year-over-year. And all this during an economic downturn that has confounded many companies.

To be sure, BlackBerry has lost some market share. In the increasingly competitive U.S. BlackBerry was down two points, but so was Apple. Droid, in third place, jumped five points.

For investors, it’s been a good week. Share price has risen more than 10 per cent since Monday morning, including the after hours trading on Thursday. I can only hope the young man I overheard last weekend saying he was going to short RIM (see previous post) did not.

RIM’s results bring to mind a famous Mark Twain quote: “The report of my death was an exaggeration.”

A lot has happened in the world of Research In Motion since my book was published six months ago. Share price is down 38 per cent and some analysts, particularly in the U.S., have gone sour on the stock. The BlackBerry Torch seems to be selling well, but the iPhone 4 may be selling better. Several governments, including India, the United Arab Emirates and Saudi Arabia, have been holding RIM hostage trying to gain access to encrypted email messages for security purposes.

All of this reminds me of the bitter patent battle in 2005-2006 when it appeared RIM was finished because U.S. BlackBerry sales would be halted by a judicial injunction. For months, the crepe-hangers were unavoidable. In the end, RIM came through stronger than ever.

I think RIM will rise again from the current situation. Here’s why. Over the weekend we were in a restaurant and my ears perked up when I heard a nearby table talking about BlackBerry and iPhone. The conversation-stopper was someone who said, “Things have got so bad, I think I’ll short RIM stock.”

Now, let me tell you first of all that I have no time for “investors” who short any stock. But I snuck a look at the speaker, and he might have been twenty. I’m not saying a twenty-year-old can’t have views, but I think when this kind of talk has reached such levels, the worst is over.

But don’t listen to me. Second quarter financial results due to be released this Thursday will provide better food for thought than any restaurant fare.

Just back from a week’s holiday in Nova Scotia. Ate lobster daily, unlike the Globe and Mail’s Ian Brown who spent the summer writing about food across Canada, came to Nova Scotia, and declared he would eat no lobster.

We managed to miss not only Hurricane Earl but also the blessing of the BlackBerrys by Rev. Lisa Vaughan of St. Timothy’s Anglican Church in Hatchet Lake. “I think they traditionally used to call it Plough Monday, where people used to bring their farming equipment and tools to the church to be blessed,” she told the Halifax Chronicle-Herald. “Most of us live with our cellphones and laptops and BlackBerrys. I mean, those are just daily tools for us.”

Vaughan says she read about a church in England extending the blessings to modern day devices, so thought she’d try it in her parish. The aforementioned Globe and Mail must have read the story in the Herald; the Upper Canadian paper ran a matcher the following day. Too bad they didn’t have the professional courtesy to say where their idea came from.

Cantech Letter has done a fun item called “7 Things You Probably Didn’t Know About the BlackBerry.” My favorite is: “In the third quarter of 2009 RIM added 4.4 million subscribers, a number equal to the population of Ireland.” Here’s the link.

Economists have it easy. When they make a prediction about some exotic marker like GDP growth or inflation, they can keep revising their numbers as time passes so they look good in the end. The same is not the case when it comes to talking about technology.

Take my post on May 17, BlackPad Bunkum, where I went to some lengths to say that Research In Motion couldn’t possibly have a competitor to iPad on the way because co-CEO Mike Lazaridis had said he’d never do it. The size of the current BlackBerry was just fine with him. Moreover, touchscreen was a non-starter. He preferred a physical keyboard.

Well, did I ever get that wrong. Since then, RIM has launched the Torch with a keypad and BlackPad is coming, probably before Christmas, with an operating system designed by QNX Software, recently acquired by RIM. QNX also does operating systems for BMW. Too bad there are no warning lights to stop us bloggers from taking the wrong road.

As for Lazaridis changing his mind, good for him. Business leaders need to respond to markets and RIM has always shown itself able to revise its direction and revamp its offerings, just like those economists.