On June 17th, 2011 RIM’s stock lost 21 percent of its value, as investors cashed out.
This doesn’t come as a surprise, as I have been observing my friends and classmates at the New York University gradually get rid of their old BlackBerrys, replacing them with flashy new iPhones or Android operated phones. Obviously, RIMM is losing the smartphone war to the competition, for three reasons:
1. RIMM has an ineffective innovation Model.
RIMM has simply not been able to keep up with the innovation of Apple and Google (GOOG). In fact, RIMM spends more money on R&D than Apple, but still fail to create better products. Specifically, it has failed to compete with the new touchscreen smartphones from Apple, Samsung (SSNLF.PK), LG (066570.KS), and HTC (2498.TW) that are fast and easy to use. Its latest attempts to break into this market with the BlackBerry Storm and Torch flopped.
2. RIMM is late to the app market.
RIMM was slow to develop the various apps, widgets, and games that are standard features of Apple and Google phones. Apple is the pioneer of the app market, now having over 450,000 apps, with Google following suit, with over 150,000. RIMM is dead last, with the smallest app store, and still many of its phones do not support apps. Without a strong app program, RIMM phones lack personalization, making them less appealing, and contributing little to the company’s bottom line in the long run.
3. RIMM is unable to create hype and buzz for new products.
With competition so intense in the smartphone industry, the ability to create hype for new products is vital. Apple has mastered the art of creating hype, with a cult following for the iPhones, and Google’s Android seems to be quickly gaining popularity. RIMM, on the other hand, has only been losing followers as its products and marketing campaign have come up short.
Ultimately, RIMM is fighting a losing battle. Its software and hardware are becoming outdated, edged out by a highly innovate, new generation of touch screen phones with great personalization and usability. I would stay away from the stock, even after its sharp decline, as it is unwise to jump on a sinking ship.