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Sunday, January 23, 2005

RIM - It's Time To State Your Vision For The Future

There is heavy speculation in the market about potential takeover of RIM. RIM continued to attract share buyers after talk started swirling round the market when banker Goldman Sachs suggested the company could attract a bid from either Motorola or Nokia. Another source suggests, that Hewlett-Packard Co would be a far more likely suitor because it would give it a user base in the carrier market, where Nokia and Motorola are already well established. RIM is by far the most successful handheld device maker, and constantly turns in financial results that its rivals can only envy. In its last quarter to November 30, it increased net income by 453% to $90.4m on revenue 138% higher at $365m.With the BlackBerry device now dominant among executives who need email on the move, Goldman Sachs said it is the only player with a technology stronghold in the corporate arena, making it a very attractive take-out candidate.
It said 2005 will be the first full year when major carriers promote RIM and the addition of 20 to 30 carriers a quarter will further drive demand. Moreover, applications beyond email that give users fuller access to information on corporate networks will be in the spotlight this year as RIM looks to entrench its position with corporations, consumers, and carriers. RIM is walking a tightrope because over 70% of its revenue comes from hardware. However, in order to fend off competition from companies such as Extended Systems and Good Technology, it has been forced to license its software to rival hardware makers. A price tag of more than $20bn will deter all but the most determined buyer.The Register also reports about speculation to buy RIM.

My Take: This may not be the best development - RIM is a category killer device and is the most successful one at that - seeing this being taken over by a handset manufacturer , who despite having time and tons of money either did not share RIM’s vision in its early days or could not execute very well to compete with RIM in its space is not a cherishable development –In general any takeover should see a synergistic value not only in terms of market offering fitment, but also alignment in technological ethos, vision and execution capabilities. The issue with RIM’s current management is not being able to articulate its vision and future positioning very well to solidify it current runaway success For all its success – RIM’s marketing mechanism does not seem to be powerful enough – RIM is perceived to be a staid company – but no doubt a strong company.In a way this development is good as it would force RIM to shell out its vision and make it open up and talk. RIM has to go beyond mouthing platitudes,saying "we want to be see more revenue from software stream" as it does here to remain HOT enterprise for times to come.

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