Research in Motion posted strong numbers for the fourth quarter of 2009, found a way to cut costs and hinted toward more diversity in its portfolio, especially when it comes to more consumer-specific handsets. But can the BlackBerry maker stay strong against the soon-to-arrive Palm Pre, as well as competition from Apple, Samsung, HTC, LG and a gearing-up-to-attack Nokia?
in Motion saw profits of $3.46 billion for the fourth quarter
year 2009, the BlackBerry maker's very pleased co-CEO Jim Balsillie announced
The company's quarter ended Feb. 28, and RIM's revenue shot up
from $2.78 billion the previous quarter - which was an impressive 84 percent increase
from the $1.88 billion in the fourth quarter of 2008.
Approximately 83 percent of the newly announced revenue came
from devices, 12 percent from services, 2 percent from software and another 3
percent from "other revenue."
"RIM experienced an extraordinary year in fiscal 2009,
shipping our 50-millionth BlackBerry smartphone and generating $11 billion in
revenue," said Balsillie.
RIM's overall revenue for fiscal year 2008 was $6 billion,
with gross margins 51.3 percent; in 2009, while revenue rose considerably,
gross margins fell to 46.1.
Balsillie says gross margins in the current quarter will be
in the 43 to 44 percent range, partly due to a decrease in BlackBerry component
costs; while RIM manufacturers many of its devices near its headquarters in
Waterloo, Ontario, it's expected to send some of the work to Hon Hai Precision
Industry in Taiwan, which also manufactures the iPhone for Apple.
"RIM does a better job than most of managing its production
costs, and we think RIM should be able to hold its gross margins broadly around
current levels in the near-term," Neil Mawston, a director with Strategy
Analytics' Global Wireless Practice, told eWEEK.
"The longer-term threat is that R&D spending may have to
go up as RIM's portfolio expands, while its average handset price will
inevitably come down as it pushes toward the mid-range mass-market," Mawston
added. "If cost-growth outstrips revenue-growth, then RIM's profits will
During a call with analysts, RIM's Balsillie had noted,
"Pricing is a big function of what is at play. [Going forward] you'll see more
powerful segmenting and more powerful options."
says that RIM has indeed been quietly expanding its handset
portfolios into the consumer market for the past couple of years.
"First, RIM offered more consumer-friendly handset designs
with smaller keyboards, such as the Pearl 8110," said Mawston "Second, RIM offered
more consumer-friendly services beyond corporate e-mail, such as BlackBerry
Media Sync for music. Third, RIM is partnering with operators such as Orange to
drive devices like the Pearl down into the mass-market prepaid segment in
Europe, Africa and Asia."
In some ways, RIM's
plans are mirror opposite of what Apple did with the iPhone.
"RIM has the opposite challenge to Apple," said Mawston. "Apple started
in consumer and wants to push into the enterprise. RIM started with the
enterprise and wants to push into consumer. Repositioning for both of those
brands will take time and resources."
of that R&D may be in service of competing against the Palm Pre
out this June - though
some say it's no contest
Though Mawston says there's more than just the Palm Pre
standing between RIM and expanding 2010 revenues.
"RIM is and will be competing on several fronts in the USA
in 2010," said Mawston. "The Palm Pre is one major competitive threat, while Apple,
Samsung, LG and HTC are others."
list should also include Nokia
, which is quietly preparing to re-attack the
U.S. market over the next couple of years.