A BlackBerry is not very expensive; the more pricey models go for a little over $300. But they are the best portable e-mail machines in the world, and many of them are bought by companies for their employees. They are, in many ways, one of the best productivity tools in the corporate economy.
Too bad Research In Motion (NASDAQ: RIMM) says that sales are slowing. After posting a good quarter but weak forecast, RIM shares dropped 14% after hours Thursdat. According to The Wall Street Journal, "Second-quarter earnings released Thursday showed RIM growing strongly, but weak earnings guidance for the third quarter spooked investors already worried that the economic downturn will erode the profits of do-it-all phones known as smart phones."
Costs to bring out new products will hurt margins at RIM to some extent, but investors and economist should fear what may be a broader implication. There is an extent to which Wall Street has hoped that sales of small electronics devices like the Apple (NASDAQ: AAPL) iPhone and game consoles would dodge the current economic slowdown. Since these items are cheap, corporations and individuals should be able to afford them.
If sales of inexpensive items are beginning to slow, what does that mean about the reaction that business and the consumer are having to tight credit?
There are very few things that corporate IT departments buy that are cheaper than the BlackBerry. Because the device allows employees to work from almost anywhere at any time, it would seem that the RIM product is an almost essential communications tool.
But nothing is essential when money is getting very tight. The BlackBerry may have become a leading economic indicator.
Douglas A. McIntyre is an editor at 24/7 Wall St.
Tiffany's serves up solid quarterly earnings
Cramer on BloggingStocks: This bullish retail story looks like a good fit 
Top growth fund manager sours on Apple, U.S. tech
Reader Comments (Page 1 of 1)
9-26-2008 @ 10:47AM
mike said...
Your articles are so biased it's unbelievable.
You simply need to look at the facts that now that RIM is no longer the sole smartphone creator with a solid product, sales are going to come down. We're not going to see 100% growth y/y anymore. Plus, the slowdown of the Blackberry is no indication on the consumer market, since they cater mostly to the corporate market.
Apple's iPhone is clearly hurting RIM, along with the other smartphones out there. The only thing Blackberry has going for it is BES and is very expensive to setup. RIM is done.
You need to accept this. RIM is a one trick pony. It can't compete with brands like Apple.
9-26-2008 @ 11:59AM
kevin said...
If you are in corporate IT and there is pressure to reduce spending, why WOULDN"T you start by paring expenses on Blackberries? They may be cheap, but most employees who need them already have them, so it is mainly a matter of replacement. A new Blackberry doesn't make someone any more productive than their current one does.
However, other IT spending is either non-discretionary (to support increasing data), or offers real savings by consolidating infrastructure, lowering support requirements, or saving energy.
9-26-2008 @ 5:27PM
Jack said...
Douggie, ye of little brain,
Did it ever occur to your small mind that RIMM's problems are mostly due to the competitive pressures from the iPhone.
Apple sold 1 million iPhones in 3 days after introduction on July 22. RIMM's total "sales" for the quarter? 2.6 million net new subscribers.
I have reason to believe that Apple will sell 10 million iPhones in the last calendar half of 2008. Don't forget, they will be in more than 70 countries by the end of this year.
One more thing, Apple has just one model of the iPhone (with different flash memory capacities). RIMM has at least 3 or 4, plus a couple more coming soon. Apple is supremely efficient with this approach. And, RIMM? You saw the results yesterday.
Douggie, your knowledge of how business works is so poor, I wonder if you have completed kindergarten.
Give it up. You are an embarrassment.
LOL.