Eric Jackson's Blog About Longs, Shorts, Hedge Funds, Corporate Governance, and China
By Eric Jackson, Senior Contributor
Now there seem to be thousands of RIMM haters among hedge fund managers and investors. Why? Didn't it add almost 5 million net subscribers last quarter? How can it be dying with that kind of growth?
In the stock market, the focus is always on where companies are going - not where they've been. In the smartphone market, this is probably doubly true.
Motorola's(MOT) RAZR used to be the world's No. 1 selling phone for many years, and as late as 2007.
After former CEO Ed Zander quit the company, one of his successor's (Greg Brown) first marketing campaignswas a promotion of the newest incremental version of the RAZR. Management then said that the new version would help the RAZR on the top by being faster and sleeker. However, the new RAZR was a dud and we haven't talked about it since. That story is a warning sign for RIMM.
The mobile phone and now smartphone business is brutally competitive. There's no loyalty. What's hot today is ancient history tomorrow.
At a conference last month, Apple(AAPL) CEO Steve Jobs talked about how he liked the consumer market much more than the business market. His reasoning was that, in the consumer market, if you make a good device, people will buy it. If you don't, they won't.
In business, it's often not the end users who are making the purchase decisions, so inferior products can remain market leaders for years and years with no accountability.
The co-CEOs of RIMM (which has always been a terrible organizational structure which hasn't been previously questioned because of RIMM's prior success) should take a look at that Jobs interview. RIMM is about to be RAZR'ed in the consumer market by Apple's iPhone 4 and the new phones using Google's(GOOG) Android software which are popping up all over.
