The WSJ reports - BlackBerry to Slash Workforce by Up to 40% [5]: Layoffs to Cut Across All Departments as Phone Maker Confronts Shrinking Sales. This was a foregone conclusion. If you remember, we called the very profitable Blackberry (then RIMM) short in 2010. With the advent of the new touch screen Z10-type devices, the stock rallied as many thought Blackberry had a snowball's chance in hell. They didn't! Even if Blackberry was on plane technically, which I feel they weren't for their devices were on par with many Android/Apple at launch, but Android's innovation/development/growth rate is off the chart. This means that whatever is cutting edge this quarter is old hat 3 quarters from now.
How could Blackberry keep up with this pace? They simply can't. Even if they could, there's this issue of margin compression. You see, as tech in the Android space advances, the prices drop - precipitously! Let's reminisce, referencing Blackberries, Apples & Fruit Borne Successitis - The Problem With Excess Profits Is Hubristic Management Tends To Take Eyes Off The Prize!!! [6]
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Looking Through Windows To See The Big Data On Fruit - Or Android Gets 'em Again [7]
In early 2010 I warned on Blackberry (then RIMM), with market share loss to Android being the prime determinant... [7]Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion [8]. I put significant data out in the public domain to illustrate my point and put explicit price points out for subscribers, ie. RIM Smart Phone Market Share, RIP? [9] Was I right?
[10]Blackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysisBlack
I explained this in detail in the post "Cost Shifting Your Way To Prominence Using The Network Effect, Or Google Wins - Apple, RIM & Microsoft Have ALREADY LOST! [11]". Failure to achieve the network effect effective is tantamount to a failure to be able to control you margins, long term. Of all people to of know this, who do you think preached it most convincingly?
Margin compression was sure to kill Blackberry, even if they did hit their sales numbers, which they didn't and couldn't!!!
This is how Google did it...
Reference our Blackberry research as well...
BoomBustBlog Research Performs a RIM Job! [12]
Hindsight Is 20/20, And As Luck Has It Our Foresight On Research in ... [13]
Right On Time, My Prediction Of Apple Margin ... - BoomBustBlog [14]