PlayBook Pricing – Sterne Agee

Really? RIM was blindsided by the Kindle Fire’s pricing? I’m not really sure the two were competing in the same space (e.g. PlayBook aimed at business/pro users versus the Kindle Fire at first time/impulsive/opportunistic tablet purchasers), aside from being approximately the same size.

Do analysts piece stories together with arbitrary data that is top of mind these days? The PlayBook price cuts started happening well in advance of the Fire’s pricing or announcement, in mid-September. Sad what can “information” can influence the markets.

BlackBerry Bold and iPhone 3G Comparison

Introduction

First of all, let me be clear, this isn’t intended to be a full-blown review of every single little feature and function of the BlackBerry Bold. There are plenty of great, in-depth reviews of the Bold: CrackBerry, APC Mag, and more. Instead, I’m looking at this from a previous Curve and current iPhone user. I haven’t been very happy with the iPhone, especially its worse-than-mediocre wireless performance, and I wanted to see what else was out there that could replace it. After looking around, the Bold came out as the most probable candidate, given my happy history with the Curve.

BlackBerry Bold
What’s in that case?

I was lucky to get the opportunity to use a Bold for a day. This comparison tackles the larger usability points and looks at the fundamental differences between the iPhone and the Bold to see which is better suited for my use.

A Beautiful Device

BlackBerries may be traditionally thought of as ‘suit’ devices – very business-like and serious – but with Research in Motion focusing more and more on the vast consumer market, device design has vaulted up its list of priorities. The Bold is without a doubt the best-looking BlackBerry to date; I’ve used a Curve extensively and played with an 8830 on end. The chrome (plastic) ring around the device works well with the otherwise black design. The large menu and call/hang-up keys feel far more integrated into the design, as opposed to the chrome-y stubs that adorned the 8300 and 8800 series.

BlackBerry Bold

The fake leather back actually feels much harder than it might appear in photos. I half expected the soft touch of real leather (or at least some decent pleather). You certainly won’t mistake the feel of plastic for leather. It does however prevent the device from sliding around on a desk unlike the bulbous, glossy backed iPhone 3G. It also won’t show scratches, unlike other glossy phones. Great for business types who would rather worry about the meeting with the CEO rather than scratches on their phone.

BlackBerry Bold
It’s not as soft as it might look.

The Bold is a bit thicker than the iPhone 3G, but remains a pretty thin device. The chrome trim adds to overall width, but makes it feel far thinner than it actually is. The rest of the back curves in beneath the border, disappearing in the palm of your hand. The iPhone is definitely a bit easier to hold, simply due to the width differences. I still have a bit of muscle memory from the Curve and it’s a pretty big step up in width to the Bold. In comparison, the Bold feels a bit better than the 8800 series, which is just as wide, but doesn’t have the sloping back to make it feel thinner.

BlackBerry Bold and iPhone comparison

The Bold’s screen is beautiful. The Bold and iPhone both have 480×320 pixel resolution displays, but the Bold crams those pixels into a much smaller display, making it a bit crisper. A compromise had to be made to fit a hardware keyboard. It’s a trade-off between the larger, more usable display of the iPhone and the smaller, but sharper display of the Bold. Still, the iPhone’s display is still quite clear, so I’d go with the larger display in this case. Still, that doesn’t take anything away from the quality of the Bold’s screen.

BlackBerry Bold and iPhone comparison

RIM Disappoints, Or Does It?

It looks like even Research in Motion is being dragged down into the abyss of the financial meltdown (oh, did I mention Washington Mutual is the latest to go under?). Earnings for the Q2’09 were released earlier this evening and with the lowered margins and earnings forecast, the stock got a 20% haircut, down to $78.60US in after hours trading. I’ll point out why I think the sell-off was way overdone and why I think it’s a good time to buy.

First off, the big worry is the headline 47% gross margin forecast for the next quarter, which is a pretty big drop from the 51.3% last year and 50.7% in the most recent quarter. I’ll be blunt. Up to this point, and to and extent even now, it’s been easy sales and money for Research in Motion. In the business crowd that has been RIM’s core market for many years, there simply isn’t another option. There are certainly a few iPhones here and there amongst business users, but now more than ever I see the prevalence of the BlackBerry as I take my morning walk to work. There’s no comparison. It’s almost as if every decently dressed person is holding a BlackBerry.

With 3G devices becoming more prevalent, RIM will certainly face higher component prices. In addition, with the touchscreen Storm/Thunder looming, there are other more expensive components adding to the overall cost. But RIM still has pricing power. Many predicted that the Bold would come in at a lower price than usual to compete against the iPhone 3G, but it didn’t. Yet they still sell out at Rogers. The push towards the consumer market has meant lower average sale prices, but that’s with the result of vastly higher sales numbers. As stated in the earnings report, top line growth is expected to be even better than analysts expect, $2.95B to $3.1B for the next quarter, versus consensus of $2.9B. Sales aren’t the problem.

That’s why I found it hilarious that Jim Goldman wrote something of a self-confirmation article, entitled ‘Apple IS the Issue at RIM‘, regarding RIM’s earnings report. The premise of the article is that the nearly $380 million in sales and marketing expenses combined with the weak earnings forecast shows that RIM is struggling to compete against the iPhone. He also goes on to state that the $380 million figure was ‘an enormous figure no one was counting on‘. Wrong. RIM has clearly been putting more efforts into targeting the BlackBerry at non-business users. This past quarter, RIM launched the multimillion dollar ‘Life on BlackBerry‘ campaign, and for the first time, I’ve been seeing BlackBerry commercials on TV. Given that the sales and marketing expense for the first quarter was already at nearly $330 million, I don’t think $380 million was such a shock to most, well, except Mr. Goldman it would seem. RIM is expanding its brand outside of business. Surprisingly, many classmates I’ve talked to actually want a BlackBerry more than an iPhone. That’s saying a heck of a lot. The visibility is working.

I’m happy to see RIM increase its marketing efforts and expenses, as long as its growing sales at a proportionate rate, which it is. Margins will no doubt will be pressured by lower ASPs to the precise market they’re targeting, but sales growth is very resilient, even in light of the current economic troubles. At under $80, we’re talking about a sub-20 P/E, rapid-growth company. It looks like speculators pushing the stock rather than fundamentals, and I believe one Warren Buffet has made a killing investing in irrationally beat down companies.

Taking Push Email and PIM Beyond the Enterprise

I’ve become quite enamored with the BlackBerry and its email and PIM functions. While Sybase won’t open up their email system to me (I don’t blame them, to be honest), I’ve been manually inputting meetings and schedules into my BlackBerry. The ability to get a reminder of a meeting or task deadline is invaluable in the fast-paced and busy work day.

So it got me thinking – why not extend the convenience and usefulness of schedule management and push email to the university? I know many students are just as busy, if not busier than full-time workers. I already get my university email pushed to my BlackBerry, but I’d like to connect my calendar up as well. Waterloo is the hometown of a leading-edge university (University of Waterloo) and a pioneer in the wireless email business, Research in Motion. What better place for a trail deployment of a university BES for students? Here’s what I’d like to see.

The university implements a BES that manages the existing email infrastructure. Furthermore, course calendars would be synchronized and professors and teaching assistants can add assignment due dates to these calendars directly.

Now I haven’t quite nailed down how the project would be run – whether all students would have access to it or if only a subset of them would – there is an existing program at the Minota Hagey residence that gives students smartphones, replacing their existing land-line phone and boosting wireless usage and personal management, so recruiting a subset of the population can definitely work. The program would be far simpler to implement for a smaller group, so for trial purposes, that is probably the best solution.

What are the benefits? Let’s look at it from all parties.

  1. The University of Waterloo – the university has been on the forefront of several initiatives, some good, some not so good. PDEng, the Velocity residence, and the co-op program itself are some leading edge programs that the university has undertaken. In order to maintain its image of being a school of innovation at the forefront of technology, a student email/calendar system would be one more step towards this goal.
  2. Research in Motion/Microsoft – I mentioned a BES for students because I use a BlackBerry, but in reality it could be Microsoft Exchange and Windows Mobile devices as well, or any other wireless email + PIM service. This builds a large student population that is familiar with the product and service, and if they’re like me and find it useful, will continue to be users down the road, upon graduating from university.
  3. Wireless carriers – Data service is more lucrative for wireless carriers and is one part of the market that they have all been targeting to offset declining voice revenues. Just imagine entire universities filled with BlackBerry/Windows Mobile toting students. The revenue growth would be significant, even if some sort of cheaper student plan is introduced for the market. Again, if these students find the service useful, they will continue to use it after graduation, adding a whole new revenue group for the wireless carriers.
  4. And finally the students – Although the above-mentioned parties all stand to gain from this program, the student benefit is the end goal of the program. After all, this is something I’m conjuring up – clearly it’s to my benefit. 🙂 A student’s life can be extremely busy at university. Assignment after assignment are due and examinations seem to pop up without warning. The ability to have calendars with these events pre-populated pushed to a wireless device that is with the user at all times allows reminders and constant contact.

Hopefully something like what I’ve written about here will help students get more organized, plan their free time more effectively, and allow them to do better at their academic and extracurricular activities. I know in the past month with the BlackBerry, I’ve become more organized and event reminders have helped me at least appear more intelligent and on the ball to co-workers. Well worth the investment in my opinion.

K790 Resuscitation and RIM Earnings

I finally got around to flashing my K790a today (I actually had to boot into Windows XP because Sony Ericsson doesn’t support Vista with their update service) and it seems to have solved most of the software issues I’ve been experiencing lately. Obviously the navigation stick problems are still there. I’ll probably end up having to send this phone in to Sony Ericsson anyways. Nevertheless, it’s nice to not have a brick…

The company right next door, Research in Motion reported absolutely spectacular earnings and forecast another blowout quarter coming up. First quarter earnings were up 73% over the prior year while revenues were up 77% year over year. Going forward, Research in Motion forecasts earnings of $1.37 – 1.49 per share for the upcoming quarter on $1.30 – 1.37 billion in revenues. That’s substantially higher than the analyst consensus of $1.12 per share and $1.11 billion respectively. They also announced a 3-for-1 stock split, effective August 20, 2007.

Research in Motion stock is up over 17% after hours at a penny less than $194USD. Wow.