Forget U2, RIM Is the Real Rock Star Today
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Research In Motion (NASDAQ: RIM) is rocking the industry today after posting impressive fourth-quarter revenue despite the recession, with the lion's share of revenue, 83 percent, coming from its stable of recently released smartphones.
RIM reported revenue of $3.46 billion for the fourth fiscal quarter of 2009, a 24.5 percent jump from $2.78 billion in the previous quarter and a staggering 84 percent increase over the same quarter in 2008.
According to RIM, devices made up roughly 83 percent of its fourth-quarter revenue, while service and software accounted for 12 percent and 2 percent, respectively.
In the fourth quarter, RIM shipped roughly 7.8 million devices and for the fiscal year shipped about 26 million handhelds. In addition, RIM added 3.9 million net new blackberry subscriber accounts, pushing its full subscriber base to more than 25 million worldwide.
"We are very pleased to report another record quarter with standout subscriber growth that speaks volumes about the early success and momentum of our new BlackBerry products," RIM Co-CEO Jim Balsillie said in a statement. "RIM experienced an extraordinary year in fiscal 2009, shipping our 50 millionth BlackBerry smartphone and generating $11 billion in revenue. Looking ahead into fiscal 2010, we see exceptional opportunities for RIM and its partners to leverage the investments and success of the past year to continue growing market share and profitability."
While it's no secret that the smartphone market is doing well compared to other segments of the tech industry, including PC-makers, it is surprising the BlackBerry maker is netting such big numbers - beating estimates across the board -- while its competitors see sales stay relatively flat.
So should Apple be scared? No, said one of Canaccord's top analyst Peter Misek. Rather he tells InternetNews.com it's Nokia and Micosoft that should be trembling.
"RIM has always been positioned well. It is the most profitable product carriers sell. It has the best messaging and is fast becoming the best overall smartphone on the market despite perceptions," he said. "Apple really attacks a different segment although there is obviously overlap. Apple and RIM are competing in a 500 million unit per year segment of an overall 1 billion unit market. There's plenty of room, the ones who should be scared are Nokia and the rest."
The way Misek sees it, RIM's healthy numbers are due to its expansion beyond the core business of enterprise customers. "They have a very compelling offering to consumers, with expanding SKUs and expanding segmentation," he said.
An efficiency advantage?
Misek said RIM's numbers are also due to the fact that it's the most profitable device for carriers because its devices eat up less bandwidth.
In a recent research paper Misek shared with InternetNews.com he states that this gives RIM has a huge advantage over its competitors - and for the long-haul.
"Carriers admit RIM devices consume much less data traffic. We have spoken to several tier one global carriers to get their views on which devices are most efficient under identical loads and usage patterns. Our checks concur that RIM wins on all counts. The BlackBerry consumes materially less data, not just messaging or e-mail data traffic, but all data traffic.
"One of the single largest motes that RIM has protecting its business model is the unique advantage of this data efficiency. Why? If a carrier can support services with less capacity and support, then it is inherently more profitable. If a service is more profitable the carrier will have incentive to subsidize the service to a greater extent.
Misek also referred in his report to "an inherent fallacy" promoted by others that RIM's servers handle only e-mail. "RIM's servers handle all data traffic," he said.
Next page: Extending into other areas