Don’t count RIM out

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With the iPhone coming, and initial positive review from personal technology Guru such as Walter Mossberg. It’s not easy time for RIM investors and Blackberry users. For one, your friend who gets new iPhone in a few days will laugh your Blackberry is so old tech, with his/her iPhone features touch screen, two fingers zooming in/out a picture, iPod for music and video, all of which a Blackberry can not do. 3G? The Blackberry Bold is coming but at least a month after iPhone launch. Ouch.

But not that fast. While RIM has all the disadvantages compared to iPhone, strangely the blackberries are still selling like crazy, and its subscribers base is also growing: it just added 2.3 million in the quarter ended May 31 (fiscal 1Q 09 call). One thing RIM and Apple users in common is they have kind of cult culture. Check out this and you will get an idea. Seriously I think compared to Apple/iPhone, RIM/Blackberry has the following advantages:

1) It solely focuses on wireless device, from hardware to software. They have been doing this for more than 20 years now, and it appears RIM technology is more efficient than Apple. Less data, more revenue for carrier, check Jim Basillie answers Peter Misek at fiscal 4Q 08 call.

2) More carriers. Unlike iPhone only available to AT&T in the US, RIM is available in all major US carriers, and many international carriers.

3) Innovate: RIM started from push mail (thus the crackberry name). It is expanding both in enterprise (SAP, integrate with voice), and consumer (facebook, Unite…).

Revenue breakdown
Device sales made up the bule of sales. The revenue is 1.52 billion (81%) in Fiscal 4Q 08 and 1.84 billion (82%) in Fiscal 1Q 09. They shipped 4.4 million (ASP is $348) and 5.4 million (ASP $341) units in each quarter respectively. I verified it $348 * 4.4 m = 1.531 b; $341 * 5.4 m = 1.841 b. Note the number matches with their offical revenue. For Fiscal 2Q 09, they forecast ASP $349 * 6 m units = 2.094 b. Notice the ASP $349 is a bit conservative considering they are rolling out the new BlackBerry Bold.

Service made up about 13%-14% of revenue. It was $254 m in Fiscal 4Q 08. With 14 m subscriber at the end of quarter, and net subscriber add 2.18 m, I am using the average number 14 – 2.18 + 2.18/2 = 12.91 m. Divide $254 m / 12.91 m yields average user service fee of $19.6745 (3 months), that’s $6.5582 per month. Similarly, do this exercise for Fiscal 1Q 09, $292 m divide by (13.7 + 2.3/2) m yields $19.6633, or $6.5544 per month. Pretty consistent! Use that number for Fiscal 2Q 09, we can estimate (16 + 2.6 net add/2) * 6.5544 = 113.39, multiply by 3 = $340.17 m.

Revenue Guidance
RIM expected the Fiscal 2Q 09 revenue to be in the range of $2.55 b to $2.65 b. Beisdes the $2.094 b device and $0.340 b service revenue, that means the other revenue will be 2.60 – 2.094 – 0.340 = $0.166 b, or $166 m, which includes software (in last 2 quarters 3% of total revenue) and other (2%). Divide 166 m by 2.60 billion results 6.38%, slightly more than 5%.

The revenue breakdown of business and consumer???

(Update July 10) I like Walter’s Mossberg (WSJ) bottom line take on the new iPhone (quote): If you’ve been waiting to buy an iPhone until it dropped in price, or ran on faster cell networks, you might want to take the plunge, if you can live with the higher service costs and the weaker battery life. The same goes for those with existing iPhones who love the device but crave faster cellular data speeds. But if you already own an iPhone, and can usually use Wi-Fi for data, you probably should hold off and get the free software upgrade before deciding whether it’s worth getting the new hardware.

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