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Blackberry Bold |
] , then Palm's [PALM
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] dismal news, and now a profit, revenue and margin shortfall coming from BlackBerry maker Research in Motion. So what might this mean for Apple [AAPL
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] and its iPhone?
Consider that RIM [RIMM
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] took pains in its release this morning to spotlight macro-economic issues, including an unfavorable currency exchange rate, a global economic slowdown, softer than expected sales, margin issues, supply and component shortages and a bunch of other stuff. Not spotlighted, however, are the ongoing execution issues plaguing RIM as it tries to get its new products on store shelves, but just hasn't been able to. The Bold was late. The Storm was late. And despite the company downplaying slight delays here and there, in an economic climate like this one, companies simply cannot afford execution snafus. And they're riddling RIM.
That just doesn't seem to be the case at Apple. Sure the company is at risk from the same economic headwinds, but the more its competition missteps, the more opportunity a nimble company like Apple has to gain market share. That's a big problem for RIM and any other company trying to stem the iPhone juggernaut. The fact is, Apple has been able to capitalize on competitor problems, most notably RIM. Sure, Apple had some issues with the original launch of the iPhone. Remember, it was delayed and the company had to switch engineering teams from other products to the iPhone to make sure it dropped close to the original release date everyone was anticipating.
But iPhone wasn't a part of Apple's core competency at the time. It was a new product, a blockbuster product, something the industry had never seen before, and something Apple had never built before. You can cut the company some slack when its pushing the innovation curve the likes of which no other company before it had ever attempted. Not the case at RIM. New product delays are inexcusable; but not nearly as inexcusable as the company downplaying those delays as they're happening. Hubris like that tends to cost a company, which it has these last few months with RIM shares down a staggering 70 percent so far this year.
RIM's market cap today sits at around $21 billion. This was a $80 billion company a year ago. Some might argue that it was unfairly inflated back then. And some might argue that it has been unfairly devalued since then. I'd argue, of course, that the truth sits somewhere in the middle. RBC cut its price target on RIM today from $65 to $45 amid the profit warning this morning. Analyst Mike Abramsky cites widespread demand deterioration, but definitely emphasizes the company's execution problems as a "significant issue in this warning."
I'd agree. Apple too has not been immune from execution issues in the past. It's had problems with Mac. And iPod. And iPhone too. But in this what-have-you-done-for-me-lately kind of world, iPhone's technology trumps the Blackberry; and thanks to Apple's meticulous attention to execution, iPhone's been thumping Blackberry in the marketplace.
Questions? Comments?
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