RIM makes “land grab” with consumer market despite small margins

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RIM’s market is currently around 50% consumer and 50% enterprise. The shift has been a while coming and it has been helped by a series of aggressive ad campaigns, new software, and rolling out more consumer-friendly devices, such as the touch-screen Storm. The move has also proved successful due to RIM increasing its share of the smartphone market—up to 19.5 percent in the last three months of 2008, from 10.9 percent a year earlier.

Investors are weary due to the fact that these efforts to get the consumer market have taken a toll on RIM’s gross profit margins, which have shrunk to 40 percent, down from 50 percent in the last six months. It is also possible that these measures, in combination with other market factors, have helped knock RIM’s share price down a third from its July 2008 high of $147 per share.

Jim Balsillie is calling the strategy a “land grab” and that the company was looking for long-term gain with it. He said of their consumer push, “So we could have a sweeter margin for a couple of quarters and we might not torque the growth quite as much and then we will rue that for the next 20 years, that we gave up the key land for a little bit of interim gratification.”

In the end, investors are going to see RIM take not only a larger chunk of the consumer market, but also the enterprise market. Consumers are starting to see the BlackBerry as a status symbol that is a must-have mobile device. Enterprise simply can’t do without their push email and plethora of productivity apps with a simple and easy to use OS to boot. Expect these investors to say “sorry for doubting you Jim Dog” in the coming years.

[Via]

  • http://www.twitter.com/LouTreize LouTreize

    “The move has also proved successful due to RIM increasing its share of the smartphone market—up to 19.5 percent in the last three months of 2008, from 10.9 percent a year earlier.”

    Also means…

    In the last three months of 2008, it sold 7.4 million devices, up from 4 million devices, from the previous year.

  • http://www.twitter.com/LouTreize LouTreize

    “The move has also proved successful due to RIM increasing its share of the smartphone market—up to 19.5 percent in the last three months of 2008, from 10.9 percent a year earlier.”

    Also means…

    In the last three months of 2008, it sold 7.4 million devices, up from 4 million devices, from the previous year.