RIM’s 2nd quarter fiscal 2010 financial results conference call began at the close of the markets, at 5pm, Thursday, September 24th, 2009.
Before we begin a breakdown of RIM’s 2nd quarter fiscal 2010 financial results, there are a few BlackBerry Cool articles worth reading:
Rearch in Motion’s 1st Quarter Fiscal 2010 conference call
Lessons for App World – Keep your Market Open For Developers
App Store Numbers are Deceptive – Beware of Bulk Apps RIM
Improving the App World Experience
RIM vs Carriers – Balsillie and Lazaridis Strategies to Push App World
The reason these links are important is because RIM talked a lot about how BlackBerry is becoming “mainstream.” This is because RIM is seeing a tremendous growth in the consumer market. It’s not that the enterprise market is shrinking, but that the consumer market growth is so large, it is basically overwhelming the enterprise market.
As per usual, Jim Balsillie took the call and updated investors on the 2nd quarter for the fiscal year ending 2010. Revenue was very strong at 3.5 billion, up 37% from last year.
This quarter saw 2 new smartphones introduced to the market, the BlackBerry Tour 9630 and the BlackBerry Curve 8520. While the Tour was an important addition to the BlackBerry lineup, it was not the focal point of the conference call. The BlackBerry Curve 8520 was the center of attention during this quarter’s report.
Net subscribers for the 2nd quarter were at the lower end due to the nature of the devices released. The Tour in particular is an upgrade device and not necessarily a device that brings new subscribers. The 8520, on the other hand, is the ultimate device for bringing in new BlackBerry subscribers. The device appeals to consumers as well as international users, due to the low price point. BIS users have steadily increased, and RIM’s customer base is seeing over 80% come from non-enterprise subscribers.
This doesn’t mean that RIM has forgotten about enterprise users. Keep in mind that enterprise is what provides RIM with a competitive advantage and while consumer may become a larger share of revenue, enterprise is still crucial to the brand. The BlackBerry MVS system as well as some upcoming enterprise features will help stimulate a steady growth in enterprise users.
One of the more interesting discussion points surround this conference call was the focus on the international component of RIM’s business. About 1/3 of RIM’s new subscribers were located outside of North America. With 9.2 million devices expected to ship in the 3rd quarter, this will likely come from North America as these devices are in the higher end of the price and feature spectrum. On the other hand, this figure of 9.2 million will become significantly increased in future quarters when RIM launches more low end devices that appeal to an international market.
ASP, or average sale price, is another focus of RIM’s conference call. Many of the investors who called in with questions wanted to know more about this. RIM continues to lower the ASP while marketing campaigns and great partnerships with carriers further lowers the cost of owning a BlackBerry. Jim Balsillie hinted towards some upcoming “integrated marketing campaigns” which sounds interesting, but is too vague to comment on.
As previously mentioned, the Curve 8520 was the focal point of this conference call. The Curve 8520 for GSM networks is the first with the touchpad and is the first BlackBerry to offer the standard BlackBerry services at a pricing point that is more “international.” In Europe and Latin America, the 8520 has seen incredible sales because its pricing point makes it competitive in local markets. Latin America has seen double digit growth!
The 8520 exposes the new face of RIM which is an international company. More so than any other quarter or year, RIM is seeing sales of BlackBerry devices all over the world. Countries such as Indonesia, Thailand, Venezuela and Mexico, are all purchasing the 8520, the affordable BlackBerry.
Not only is the 8520 exposing an international side of RIM, but it also brings to light the fact that RIM is becoming increasingly a consumer smartphone manufacturer. As the smarpthone industry progresses, we’re seeing the line blur between enterprise and consumer, and a device that has been traditionally meant for business users, is now a device for the average user.
Back to School promotions were very effective due to this shift. Back to School during this fiscal quarter have been the most successful yet. In France, 3 carriers had a special rate plan and a lower pricing point for the 8520, making it more attractive for a larger market. Students are a real opportunity within the consumer market, and RIM is reaping the rewards of this consumer/enterprise split.
We can all agree that a smartphone is nothing without a solid developer community. RIM knows this and has invested heavily in their developer community. It seems RIM believes web application development is the future of smartphone applications, and the developer community is being given tools and resources to help further this type of development. According to Jim, web application development brings together the best of Java and the best web development.
In terms of popular applications, social media is on top. BlackBerry users have downloaded over 20 million social network type applications including MySpace and Facebook. Second in line came radio applications such as Slacker and Pandora, which have seen over 7 million downloads.
The news about the Torch Mobile acquisition was minimal, and RIM only mentioned that the acquisition would be beneficial for developers and provide a platform that was on par with the market. Something that has not been mentioned, is that RIM has bought into the development of Webkit. By purchasing Torch Mobile, RIM now owns developers who are part of the core contributors to the open source technology that drives much of the smartphone web browsing technology. If they wanted to, RIM could leverage these contributors to insert code into the open source platform that was beneficial to the BlackBerry platform, but not necessarily to the other smarpthones. This is purely conjecture on the part of BlackBerryCool.com and was not part of the conference call.
We’ll bring you more on the questions posed after the RIM 2nd quarter fiscal 2010 conference call soon. Feel free to comment your thoughts and opinions about RIM’s situation in the 2nd quarter, and we’ll discuss.
