Addressing CrackBerry Nation comments and questions about Research In Motion's BlackBerry service revenue

By Chris Umiastowski on 24 Dec 2012 02:02 pm EST
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Merry Christmas Eve everyone! Last Thursday, following RIM's Q3 earnings report, I published a fairly detailed post with my thinking on the quarter, and in particular, the service revenue situation facing the company.

Well, many of you dropped comments on the post and asked questions. So I thought I'd record a quick video to go through some of the most common questions and concerns. Tell me if you like the format (minus my horrible ability to draw on a pen tablet).

And remember: BlackBerry the product and service is not the same as RIM the stock. The stock price weakness and service revenue issue has nothing to do with the quality of BlackBerry 10 as a platform for enterprise users and consumers. RIM may have a challenge on their hands to replace service revenue that is under pressure, but it doesn't mean BlackBerry 10 is any less amazing.

Reader comments

Addressing CrackBerry Nation comments and questions about Research In Motion's BlackBerry service revenue

100 Comments

like the format :)

would add that if they went for a licensing route, your calculation is missing the service revenues generated (potentially) by the licensed devices.
reflecting roughly on your figures if they did 10m per quarter, say thats 2m BES devices (your 80/20 split) so thats an additional 16m on your 100m at 8 per bes.

the extra side to that would also in theory be more devices means more customer acceptance and as we`ve seen with android you can build and build your sales, so that 10m per quarter in theory could grow larger, obviously thats all in the unknown, but the additional service revenue from BES would need to be added in for a closer number.

Service revenue will eventually decline but the 'big unknown' can compensate for the service revenue lost. You mentioned that you think that service revenue will start to decline within 2 years. Within that time, we could see RIM make money from other services, the one I think to be the biggest, apps. They already charge for BBM music, why can't they charge for other services people are willing to pay for. I do think we could see one of those service revenue compensators during the launch.

Great format,

I know when I've talked to rogers in the past, I've been told part of my blackberry data plan fees (I'm assuming this is then in turn the BIS services) is sent to RIM as they provide all technical support calls for the blackberry devices on Rogers.

I guess my question is, since I don't know of any other mobile device provider offering this, and I can only assume this saves alot of training on Rogers call center... and that this is likely part of that BIS service fee, do you really see them loosing upwards of 50% of the costs?

" I'm not really clear" - Chris in regards to service fee/s,lol.

Back track much!

Like I told you before Chris, go sign a new NDA, sit down with Thor before you spout more speculation that plays into your agenda, that is if Thor will still give you the time of day.

Secondly I think you owe Thor an apology for calling his words "candy coated"!

I'm pretty sure this is falling on deaf ears, Tom, but I said CEOs sugar coat.  I generalized that ALL CEOs do his.  Of course all generalizations are wrong, but they are useful models to understand.  I always enjoy the mix of comments here, including the occassional nonsense.  Merry Xmas.

Chris do us all a favor and don't waste any figertip skin on responding to posts like the one above. Those people are just shit disturb ers and it takes your effort away from helping to inform those people who appreciate your posts.
Good work.I hope to post again later when I have more time because I have afew questions about the service revenues.

Posted by Chris Umiastowski Friday, Dec 21, 2012 3 days ago
Well let's see what others think.  Am I full of BS while the stock tanks out of investor stupidity, or Tom, are you unable to notice that Thor himself said "some" users won't generate a fee for RIM?  

CEOs sugar coat. "some" means "lots"

________________

Chris, if you look at your post Dec.21.2013 you clearly made the suggestion Thor "sugar" coated when you took his "some" and drafted that to mean "lots".

So again I ask that you apologise for making the assumption/statement that Thor "sugar coats" ,as it is evident when you now say you "generalized" it rings hollow when put against the record.

If for some reason you feel it is beneath you to apologize then at least state on the record that you think Thor is not a "sugar coating" type of CEO.

I won't even bother to respond to your comments in regards to "investor stupidity" or your comment today of "occassional nonsense" as I have no NEED of a "chorus section" to feed my ego. ;)

TomJasper = Troll

Chris can't please every reader and will take occasional shit from people like Tom. Overall Chris does a good job. No need to apologize for generalizations that support arguments.

And back on topic, this is a great format. I'll be following all blog posts presented like this, because even if it's not, it at least feels more interactive.

kw9700,

I backed up my post with facts. Notice how Chris avoided my facts and instead used "insults". So really, think before you post.

Chris,
Excellent format. Great explanations. When you do it this way it comes across less, "doom and gloom ", than when it is just written.
This was very clear, and valuable to me. Thank-you.
Glad you went into the positives and possible solutions. Last time seemed all panicked and, "the sky is falling !".
Merry Christmas, Chris!
Good or bad,
I always enjoy your stuff. :)

Last time seemed all panicked and, "the sky is falling !".

__________
Shorts use that type of scenario (play) many times, this way they can double dip, once on the way down and then again on the way back up with their ill gotten cheaper shares,it's called "shaking out the weak hands". Mark my words, those same analysts that shorted (down graded)will very soon upgrade yet again. Players will play and the fox is still sitting in the hen house.

This is something hedge fund managers get blamed for much more often than sell side analysts.  There have been cases of sell side analysts accused of writing negative reports to get paid by hedgies, but those stories are uncommon.  Analysts who cover stocks at investment banks are not allowed to trade those stocks, and the prop trading divisions (those that still exist) certainly aren't allowed to discuss recommendation changes with analysts.  For the most part they make calls based on their genuine beliefs, right or wrong.  

Chris,

I'm sure most investors are well aware regulating/oversight is at best used in name only. There are many ways to use a "proxy" that leaves clean hands at the corp level, so lets not kid anybody,lol.

Some of the largest name brand banks of the world are being investigated as we speak for crimes MUCH larger then stock manipulation, yet you would have others believe "NOT ALLOWED" is the somehow a detriment,lol.

Randall2580,

Lol. Love the old school take.

One thing I have learned long ago is to go opposite of broker analysts (sell side analysts)most times, more so the Howe st boys,lol, yet TD and the like certainly are not excluded. ;)

As an example: At over $50 Chris is touting RIM as the stock gets hammered, yet when this summer and on when RIM was a steal all of sudden Chris talks down on RIM. Catch my drift,lol. We call them closet shorts or the foxes in the henhouse. ;)

The whole service side "manufactured" scare is just that, a scare that was manufactured in a coordinated fashion, watch and learn my friends,watch and learn. ;)

Tom - we have a bunch of sayings in my office, one of my favorites is "the next best thing to a hot trader is a cold one!"

randall2880,

Roflmao

Yep, as we speak the shorts are gobbling up the weak hands shares, some ppl never learn to do their own research, that includes lazy analysts who piggy back,feed and manipulate off greed/games.

Great format Chris.. really enjoyed the Umi on-line academic lecture.. much perferred than reading through an article response... I'm much more visual that way :)

The success of BB10 is still the ultimate question. Like Chris says, successful hardware sales can bring RIM to profitability more quickly than licensing or service revenue. Let's hope for kickass phones and a great launch on Jan 30.

Yes, it was someone in the comments on my last post that made this point crystal clear, not me.  I do agree with it though.  Falloff in service revenue is a 2-year issue (my guess / estimate).  

To add to this, working in technical support for BB I can say that they have internal documents outlining new data plans. Currently there's less than 10 types, Prosumer, Enterprise, Social, +IM, etc. There will be more tiered plans for say users who just want 1 hosted email or 1 hosted and 1 personal, W-Fi only, etc. Lots more options that will have lower service fees I would imagine. One of the best assets they have is multiple options for data plans for every user, and I believe this is their attempt to revise them for people's growing and diversifying data needs.

Tier services will benefit both carrier and rim. Perhaps charges for BBM video, mobile hotspot, nfc, security, bridge to playbook, cloud storage, etc. RIM is not crazy without a backup plan and they can't say anything for now.

Excellent format Chris

the obvious answer to the lower BIS service revenue is to sell more hardware. However the one question I have is, the fee that is/was paid to RIM by the carriers when it disappears are the carriers pocketing that revenue going forward or is the consumer going to see lower BlackBerry data plans?

My take on this is that this was the concession that RIM had to make for the carriers to promote and sell BlackBerry. We know the carriers have not thrown any marketing dollars at RIM products and their sales staff have not promoted BlackBerry's.

I think the trend is to see "data plans" that are not platform specific.  So no, I do not expect we'll see carriers drop pricing at all.  They have no need to do this.

Chris you are exactly right. I am on Wind Mobile and before they switched to a inclusive data plan, you were allowed to buy a BB data plan. To me this type of data plan only makes sense in developing countries were data is still a premium. Countries like Indonesia makes sense since BB is the majority. But over time, BB data plans have to go away because of economies of scale.

Chris as I said before great job. One thing I would like to see, if we are talking about the need to generate more revenue, is the other side of the equation which is the fantastic job that the RIM team has done with their cost reduction plan. They seem to be well on their way to the $1B goal and this is what caught alot in the market off guard. Remember the stock shot up before the unknown about the revenue came from the QA. So going forward this will allow the company more time to find other revenue streams or perhaps with this mind set and the theory that 10 will be a hit they may just be able to generate profit from hardware In addition to the service revenue discussed in your excellent post.

I still think the big part of this transition is the concession to carriers. The stories in the US now are how salespeople at carriers are trying to discourage people from buying iPhones and pushing them towards Android and Windows because of how much more expensive it is for the carriers to subsidize an iPhone. RIM needed to remove the disincentive from carriers to push Blackberry's. So the trade off was buy more inventory, train your salespeople about Blackberry's so they can sell them and throw marketing $'s behind our product, and the fees go away. And I think it was a trade off that the carriers, especially in the US, were only too happy to make, because the money and effort they have thrown behind Windows phone has seen limited success. Frank Boulben has mentioned extensively in interviews that RIM understands carriers better than anybody else in the mobile business, and this move is a further reflection of that. As far as service revenues over the longer term, I guarantee you none of the analysts who covered IBM 20 years ago had modeled even 5% of the service revenue they have today. Analysts are backward thinking - they model off of what they know today. Thor and RIM clearly have a strategy that has been communicated in multiple interviews, videos, etc over the last few years. They need to execute, which is why the company is valued the way that it is by the market. However, IBM and Apple both had uncertain and untested strategies 15-20 years ago, and they are now valued many multiples above where they were at that time. Microsoft had a certain and tested business model and strategy, and yet its valuation has not changed in the last 15 years, and if anything, their business model and strategy is under serious strain. Bottomline, technology changes very rapidly, and analysts and the stock market are usually the last to know and respond.

Well ill be buying a BB10 cash, off contract on day 1. I dont care if its more expensive then an iphone 5. One thing im trying to get away from is carrier contracts in general . Vast majority of people dont even know what they pay for there cell phone bill, they just pay it. And the odd time when its time to renew (every 3 years in canada) there carrier will sell them a slightly cheaper plan. It wont be till im off contract with the ability to jump to carrier-carrier while I shop for the best plan would I even care about it. For now all I can do is watch telus promotions on a reguler basis and try and switch my plan when something comes up.

This is the plan I was hoping for.
ie: Buy BB10 device outright, stick with generic data/internet plans. Specifically, no BIS plan.

But did you hear that BB10 devices *require* you to pay for a BIS plan, in order to install/use any App at all on your BlackBerry?
This is a major step backwards IMHO...

Even the early BB10 Developer devices allowed BB10 devices to install Apps without BIS plans...

I'm guessing that BB10 devices with generic data/internet plans allow you only to use the Browser, and phone. Apps require BIS plans ??

(Good luck to BlackBerry trying to claw back lost market share; Andr*id and iPh*ne users do not want expensive BIS plans).

Here in some parts of Asia, BIS plans are up to 40% more expensive than generic data/internet plans.

I've read a few of your posts before, and I've watched videos where you've talked. Now I am a bit more interested in this as I have just invested in RIM, but I would like to say that i LOVED this format.. So structured, interesting, the visuals were much easier to follow than just seeing your face and talking.

Please do more of these, loved the video!

Happy Holidays!!! :)

Chris....

LOVE...LOVE....LOVE...the new format. Informative without being too technical. Kudos.

You're absolutely bang on when it comes to RIM'S transitioning. I lump Microsoft into this equation because it to is going through the same transitioning - going from what they are now, software in the case of Microsoft to a device and services company. Ditto for RIM...a device and services company.

It will be crucial for RIM to execute successfully in both these areas in the near term to survive.

Oh..and Merry Christmas to you and your family. :-)

Love this new format but also loved your post.

I've been following RIM for about a year now and I can honestly say that I think they will come back from this. Short term (<1) I can see them being number three in this industry. In the long term I can see them being number 2 (vs Android)

I think one of the reasons BIS is going away is because the carriers finally got to RIM and negotiated something with them. I'm not sure what it is exactly but I think it might be something like some marketing dollars or more promotional activities.

One way that RIM can make this money back is licencing BBM. I know a lot of people love BBM and when I talk to people who use to have Blackberry's they tell me that the only thing they miss is BBM. What I think RIM should do is licence BBM to Windows Phone. I know that this might not be very popular to many people but you know what they say, your enemies enemy is your friend. RIM could form a partnership with Microsoft to licence BBM to them and help both companies in the short term, RIM receives some money and Microsoft gets something the competition wishes they had.

Any thoughts are welcome

Am I the only one who has forgot about the Enstream deal in Canada? We don't know the details of the deal that RIM has with Enstream but they are supplying the secure network. I would assume that would make up for some lost service revenue.

I Love this format!
====================

I wonder if the carriers are going to help RIM out a bit with fee's. My thinking is that the carriers are stuck with a potential duopoly ( with apple, and Samsung as the default Andriod phone provider).

I believe they know that position cannot hold much longer or there will be a tremendous pressure on the carriers, so a 3rd party is needed. IMHO I don't believe anyone thinks WP8 can succeed as that #3. MS products in the mobile space have always been an epic fail.

Also I would hope that BB can somehow leverage the additionally functionality of BBM, even going to the extend of using an advertising model or have a user pay an additional $2 / month for BBM with no ads.

-Jeff

I have been very bullish on RIMM since the Summer and have grown my position more and more as I get more excited about BlackBerry 10. In my Equities area at work, everyone knows this and some have even invested based on what I have told them.

I have told them that the service revenue concern is not that big because for RIMM to lose profitability BlackBerry 10 would have to fail, which the analysts dont seem to mention and or believe it will.

There will be new revenue streams from MDM, M2M, BlackBerry World revenue from more apps, videos, music, etc. and other unknown streams that they have not announced i.e. BBM Money.

From what Thorsten has shown, I am fairly confident they would have a plan in place to supplement the decline in BIS service revenue

I couldn't agree more with you! I think someone needs to make it more clear than RIM's service revenue/other revenue is not going anywhere. Infact they likely to increase.

Analysts who still have a loss still 2014 and assume BB10 will likely fail should discontinue coverage rather that put SELL/Underperform as RIM in its existing form without BB10 will not last another two years with or without service revenue. The rate of decline in subs for RIM will be sharp if BB10 is failure and likely a significant cash on the balance sheet would have been eroded by then. So the bet on RIM is 1)BB 10 will be a success 2) BB10 fails and RIM goes bust.

Here is the key- In technology you are NEVER too late as a lot of analysts claim/believe AS Customers always responds to INNOVATION.

I agree with MoolahMitch that RIM will find other avenues for service...

I suspect that BB 10 will be indeed very revolutionary with applications ranging from hospitals to automobiles to energy grids to retail. Check some of the you tube videos out

http://www.youtube.com/watch?v=2Ipp4elBnLs

http://www.youtube.com/watch?v=7GyOTlGw1LA&feature=related

http://www.youtube.com/watch?v=CQMTqN1jTMg

http://www.youtube.com/watch?v=_8QXxTT6O34&feature=related

http://www.youtube.com/watch?v=6TQtrXyeIhY&feature=related

Its important to read between lines when Heins speak. The fact that Heins have been implying this "mobile computing era" since quite a while and with the videos on youtube, I think it could indeed be plausible to see some of these M2M concepts at launch. QNX neutrino 8 is also a possibility which is new version of QNX neutrino and based on mobile computing.

Peek, flow, balance can’t explain “mobile computing” and will definitely not take 3 years to make that OS!

If BB10 is a hit, the service revenue may even rise. RIM had acquired Monitise Asia Pacific and has been hinting at BBM money for a while. I think that these are the "value added services" which Heins has been hinting at and for which RIM will continue to charge. I suspect that RIM will make core BBM messaging a free service and likely make it cross platform but for video chat and BBM money and ecommerce, you will need full BB10.

Great format Chris and excellent job explaining the situation.

I had a question regarding the BBM only or Facebook/twitter social networking plans that are popular in developing markets. These plans are only possible since rim manages data through the noc. In a bb10 world would these go away? Or would rim continue to collect service revenue on these since they are a unique function that only rim can provide? in which case only those who have complete his plans would loose service revenue, giving carriers a low onboarding cost and an incentive to up sell full data plans.

Absolutely AWESOME format, Umi. The Crackberry team is lucky to have you. Unparalleled insight and clarity regarding the business side of things. Awesome, man, I can't say enough.

Your analysis does not consider that when you give away BIS for free and give up that $2/sub, you are also giving away BBM for free. Whats app is not free so it does not seem that far fetched to me that they would be able to make $1 a month on the new more integrated BBM.
It seem obvious now that BBM needs to go cross platform - there is no reason now to keep it hemmed in if BIS has no economics any more.

Chris - first off - that was WONDERFUL! Really enjoyed the "conversation" using our posts and responding to them like that gives graphic evidence makes it real. Maybe ask Phil if he has a GNote 10.1 you can use next time.

To me the big question about the new fees...

Previously BIS fees were mostly hidden in the form you cited in your demonstration about the Canadian provider is similar to my experience here in the USA and that is that till now - BIS fees were pretty much invisible to the consumer. There was no cost diff among any of the phones you bought. Now will you pay more for BBM. For BlackBerry cloud services connected to BBM. Whatever else they have in mind - when you can get the same services on iOS or Android for free and will that be enough?

Judging from QNX fees generated before the acquisition - $10 per phone might be enthusiastic.

What ever happened to licensing out BlackBerry servers to carriers to reduce strain on carrier networks?

Example: BIS customer pays $30 = (secured private server --optimized for BB10 users exclusively so performance isn't compromised+ "blackberry.com" email credentials "NOT xxxx@sprint.blackberry.net")

Example: BES customer pays $45=( secured private server with enhanced security- blackberry optimized +"blackberry.com" email credentials, enterprise management tools, or $65 per month with addition of unlimited data) RIMM could BOOST service revenue here back up to $140 per share!!! (lol)

I would GLADLY pay $65 for unlimited Data!!!! I pay $50 now with a 5GB cap. And if T-Mobile can bring it back then I'm sure the RIM executives can find away to do the same. But perception is reality, carriers need to find value in RIM's proposition. I would like to see what's on the table and modify some of the T&Cs.

Going back to unlimited gives carriers a competitive advantage
QNX will change how data is consumed day to day
RIM gets a bigger piece of the Service Revenue pie and or can charge carriers to utilize BlackBerry servers
The mobile carrier networks have less "Strain"
Consumers are not restricted on data consumption (consumers WILL pay for what they want...unlimited... And as time goes on, its inevitable that smartphones will consume more data as technology evolves)
Carriers have higher MRC or Rev per Opp

Just throwing out some ideas. Exceptional quality on the video!!!!! I love the format.

Merry Christmas everyone.

Umi thanks for the video! Of your three points for how RIM can make up the declining service revenue you state a selling price of $550 per BB10 device. Is this the price to carriers or off contract consumers? If the price is to carriers does that mean the carriers buy the devices at $550 to stock their supply ahead of launch or do they make purchases from RIM as demand dictates? If they buy ahead of launch I don't think RIM would have a problem selling 10 million ($550M revenue) of the BB10 phones in the coming year as they are currently in testing with over 150 carriers.

Does the enteprise buy directly from RIM or through carriers? In general what is the pricing for enterprise customers.

Thanks in advance.

Oops.

"If they buy ahead of launch I don't think RIM would have a problem selling 10 million ($550M revenue)"

should say $5.5B revenue...better yet!

Great video chris, also excellently great commentary. Licensing QNX to other hardware makers so they can do their thing with it would give RIM more revenue. I wouldn't call time bb10 when it's licensed either, but whichever way rim does it, hope for the best in the future!!

Happy Holiday.

If BBM text messaging was free, would you pay for add ons like voice and conference calls over BBM? It is possible RIM could differentiate consumer offerings like on Skype. Other benefits include security and privacy that are worth paying for, especially if you plan on using your phone as a "mobile wallet" and other financial transactions.

I think someone needs to make it more clear to investors that RIM's service revenue/other revenue is not going anywhere. Infact they likely to increase.

Analysts who still have a loss still 2014 and assume BB10 will likely fail should discontinue coverage rather that put SELL/Underperform as RIM in its existing form without BB10 will not last another two years with or without service revenue. The rate of decline in subs for RIM will be sharp if BB10 is failure and likely a significant cash on the balance sheet would have been eroded by then. So the bet on RIM is 1)BB 10 will be a success 2) BB10 fails and RIM goes bust.

Here is the key- In technology you are NEVER too late as a lot of analysts claim/believe AS Customers always responds to INNOVATION.

I agree with MoolahMitch that RIM will find other avenues for service...

I suspect that BB 10 will be indeed very revolutionary with applications ranging from hospitals to automobiles to energy grids to retail. Check some of the you tube videos out

http://www.youtube.com/watch?v=2Ipp4elBnLs

http://www.youtube.com/watch?v=7GyOTlGw1LA&feature=related

http://www.youtube.com/watch?v=CQMTqN1jTMg

http://www.youtube.com/watch?v=_8QXxTT6O34&feature=related

http://www.youtube.com/watch?v=6TQtrXyeIhY&feature=related

Its important to read between lines when Heins speak. The fact that Heins have been implying this "mobile computing era" since quite a while and with the videos on youtube, I think it could indeed be plausible to see some of these M2M concepts at launch. QNX neutrino 8 is also a possibility which is new version of QNX neutrino and based on mobile computing.

Peek, flow, balance can’t explain “mobile computing” and will definitely not take 3 years to make that OS!

If BB10 is a hit, the service revenue may even rise. RIM had acquired Monitise Asia Pacific and has been hinting at BBM money for a while. I think that these are the "value added services" which Heins has been hinting at and for which RIM will continue to charge. I suspect that RIM will make core BBM messaging a free service and likely make it cross platform but for video chat and BBM money and ecommerce, you will need full BB10

If RIM can sell 50m BB10, a number it was already selling in 2012 and still only makes up about 6-7% of total smart phone market share.. the stock will be worth US$40+ assuming US$40 profit per BB10 and 10x PE. Easy...

In the simplest terms BIS is just BBM and BB Email services through RIMs NOC. Are you saying there will be no secure services with BB10 unless you sign up to a BES services? This is what I don't understand. Is BBM going to become an unsecure service because if RIM is still going to offer BBM and Email as a secure service then they will have to charge for it. They can't run that service for free. IOS and Android don't offer secure messaging and email services to the general public. This is the advantage that RIM has.

So is BBM going to become a free unsecure messaging service?
How are people going to get a RIM email account with any type of service?
Do we lose RIMs push email services without a BES plan?

This is where the confusion lies for me. How do the services work for the general public?

I don't think Heins hinted at a change in the services you already get. So don't panic. This is really about the business side of things.

Hi Chris,
Didn't read trough all the comments, sorry if that has been said before:
Here in Germany for example you have to pay extra fees to the carrier as a private BIS user; it's about 5€. It's called "BlackBerry solution" or something like that (depends on the carrier). To make this clear: this fee is additional, you still need a data plan. That's one thing that is holding a lot of people off bying a BlackBerry. For more expensive business plans you don't have to spend that extra money, BlackBerry service is included here. Cheaper business models have the extra fee (5 to 12€ a month). I'm still talking about BIS here.
I'm pretty shure that without this fee we will see a lot more consumers converting to BlackBerry here in Germany. So in my opinion what's happening now is a necessary step taken by RIM to grow their user base in this area.
If RIM is going to offer additional services (let's say: secure synchronization of data through the cloud, secure banking via BBM etc) I'm quite sure that those users now paying for BlackBerry solution will adopt those secure new services.

I think one important thing was not mentionned (i will not come back on extra fee from licencing as I will not consider this option).
If we consider, as suggested by Chris, that BIS will be down in mid-term 2-3 years,
I agree on the fact that BB10 devices sales will bring most of the cash and here is the critical point.
If we consider that BIS goes to zero they can generate other revenue. BBM Money has a probably a fee, like a credit card, on each transaction. BBM Music is a paid service. On Blackberry World a fee on each paid app. We can imagine other new ideas too.
The critical mass of these fees are linked to the success of the sales (in volume) of devices. The fact that BIS could disappear is I think not a big deal for RIM but depending on the volume of sales. And I think it is what Thorsten was trying to communicate, and Chris by the way.
Here I do not count other services fee that can be generated through BES.

Please choose me for this, I am a struggling doc from third world and this phone can help poor patients with safer health info. Many thanx.

Great report and I really like the format. Keep it up!

I know that the focus has been on the phone market but I have to point out one other market that RIM seems to be diving into which is not gett much press - Automotive Infotainment. Many of the new Infortainment systems that we are seeing in our automobiles will be BB10 based. This put an interesting angle - get the phone and it will do all these things with your car. Once there is a seemless connection with the infotainment system, this allows for many other services, streaming media, Car customazation apps's, Navagation apps, etc. While many phones connect today, they do a poor job past the normal phone and MP3 playback.

If there is anyone else that has informaiton on this, I would love to hear it.
http://www.youtube.com/watch?v=8Pdx79iybMI
http://www.youtube.com/watch?v=jqhhbN-SFt4

Crackberry - how about some stories on this. Thank you for all the work you do!

Peter I agree with you. Why would Rim stay with a business model that is losing market share. They are transitioning for growth by offering compelling, competitive, cutting edge products and solutions. The new team is world class, passionate and focused on execution. They are doing a good job managing a difficult transition to the BB10 platform and no reason to doubt they will develop a growth strategy for services. I pray 2013 is a breakout year for Rim. The train is about to leave the station. All aboard!

Have a blessed Christmas and New Year!

Pard

I can appreciate the effort to clarify or further explain the service fee but we shot ourselves in the collective foot with a bb gun.....anything this big tied to revenue on a company already with 2 strikes agaisnt it seems like a no brainer to get out in front of.....they played it cavalier and it just looks unprofessional and like another screw-up....even if it isn't.....again, it is not how BB plays out to us fans and loyal followers, it is how it plays out to mainstreet and those on the fence......

Hi Chris - excellent format to addres questions from CrackBerry fans!

I would like to bring to the CB fans attention that while we keep talking about the ~79 Million subscriber base that pay a monthly service fee, we tend to forget there are additional 10s of millions of BlackBerry users who do not pay any monthly service fees, yet many of these are likely to gradually upgrade to a BB 10 device once it is available!

So, it may not be too difficult to envision RIM more than making up for the service fee transition by selling higher margin hardware! In fact, they may more than compensate for the gradual reduction in service fees!

I wonder if you have any thoughts on how many such non-service fee users exist (one of my daughters is one of them)!

Merry Christmas Chris, this Format was excellent A ++

How licencing BES support to IBM , DELL , HP then they bundle their mobile computing services ?

BBM Money NFC ?

IMO there were 2 things that really stood out from CrackBerry's informative offerings in 2012 - #1 was the CrackBerry/RIM people on Twitter and #2 was this approach to discussing RIM's financials and the questions that followed from the CrackBerry community.

Chris,

I love this format. If you can do more where it makes sense that would be greatly appreciated...

I Love my BlackBerry

Good job, sir. After this I feel a bit more at ease with whats going on. And all of a sudden it just hit me...... Of course there is a game plan here. I think what we are seeing is a new phase in the company, sort of like the ipod to Apple. (Obviously not to the same degree, iphone fans. I can already see you overreacting with that statement). I think the RIM will take on a new business model. Simple as that. They can no longer use the same strategy that made them successful before. Beginning January 30, say goodbye to the old RIM. Say hello to Thorsten Heins' RIM.

Great format.

RIM has put an effort out to keep buzz up around BB10 by doing interviews and showing off new features of the new platform. My worry is that when Jan 30 comes around; everyone will have seen everything already and will leave unimpressed and call the launch a failure. I seriously doubt there are any features of BB10 that haven't been leaked yet. How can RIM keep the buzz going?

Great format that allows for a more interactive approach with some of the more complicated aspects of the business world.

Like a lot of people here, I go back to RIM's concept of mobile computing. Certainly since Thorsten has become CEO there has been a very different feel about RIM, so what if the long term strategy has changed? I believe that if BlackBerry 10 can make some traction in the mobile world that within five years RIM will have diversified to more than just a handset manufacturer to utilizing both QNX and the BES infrastructure to carry and route secure data.

Imagine as a company being able to have a secure network in place for all of your machine to machine data? Need to push a firmware update out to connected devices? Need a reliable method of routing data back to your corporate servers from the field? RIM's infrastructure is in place, known for its security, and could offer a good deal of value in the corporate world.

For the average consumer additional BIS charges may disappear while still using RIM's infrastructure, while businesses may pay extra fees for M2M data as opposed to handset data being routed to their BES. M2M data could be priced on the scale of devices, as well as give an added layer of protection against hacking or interception.

In the US alone, what would the cost benefit be to the power industry to have connected devices running on a secure network instead of the internet at large? What if auto manufacturers could push firmware or software updates to vehicles without the car ever coming to a dealer or other service provider? I know I'd pay extra for an extended warranty that covered software updates as well as the physical car.

There's a lot here and it's a little disjointed, but this is where I see RIM going in the future. For right now, the plan is to build a successful BB10 phone platform, but from there build out the network access in a more or less invisible to the consumer level by attracting businesses to the service.

Depending on the views here or what everyone thinks I may post this in the forum as well.

Chris, it was a very informative report and the format that you did with those illustrations simplified it and made it a lot easier to understand.

I really appreciate it.

Great and informative format Umi. Please do more post similar to this one. I've been considering RIMM as my first investment in the stock market, and would appreciate breakdowns like this as often as possible.

Thanks

told you so that it is oversold and manipulated. up almost 15%, half covered that was brought down by manipulators. Hotmail with 100 million users worth more, Zynga with no phone, cloud or patents woth half as rim. amazon over $200 bucks for losing money on kindle..not saying RIM did not make mistakes but evaluation was not correct. The service fees were considered when it hit $6 bucks

Chris, this format is an excellent way to respond to comments, and I hope you continue to use it. Maybe a pen-style input device would help with the writing?

BTW, I am a first-time poster, and have been reading CB for a few months, found my way here from iMore. I'm picking up my first smartphone this week (iPhone5), boo hiss! But as a Canadian interested in the market, I like keeping up on RIM and CB is a great source.

And sir dangerfield, if you don't have any other investments, starting with a single, volatile stock is probably not a prudent investment strategy.

RIM up 11.5% today on Nasdaq, close $11.83 , another couple of bucks to go before we get back to where we were last week .... before this service rev's misinformation campaign started, geesh!

First off love the format. Please continue with this method of responding to comments.

Also you might want to look into getting a Graphics tablet for when your writing your comments in the cast (http://www.monoprice.com/products/subdepartment.asp?c_id=108&cp_id=10841) not sure of your OS however...

I agree with you completely. I forsee RIM based on Thorsten's comments on going to a subscription based service if you want the extras with BBM and BIS for BB10. I hope they are doing the subscription into a "cloud" where they sync your calendar/contacts etc because I can see people/users paying for that. If users are paying for Office 365, I can see RIM selling a cloud solution which is tied into an encrypted network.

"If your paranoid, we understand you..."

Great new format - LOVE IT !

A few things to consider:

- RIM will get fees for each NFC cc transaction. It's not much, but it adds up. And it will be coming from Android and MS phones as well.
- If 82% of BB users still opt for the RIM plan, and RIM sells double the amount of phones then they currently do at a higher price, this will more then off set the slight decline in revenue services.
- RIM will continue to sell BB7, overseas, so service revenue will continue to come in from BB7
- There is so much more that RIM has to show you. You will get a better view comes January 30th. The reason that they are keeping it "hush hush" is because they don't want to give the competition any sort of head start on trying to come up with something similar.

STAY TUNED !

Thank you for the informative discussion.

I thought someone has mentioned earlier about RIM launching a "Paypal" like service using its secure money transfer capabilities, or even launching a more competitive online banking and/or credit card services by offering lower service fees than the existing credit card companies. RIM will be able to offer a better user experience with NFC than the traditional credit card companies. Money transfer services using the secure BBM servers should be welcomed around the world especially in the developing countries.

Why wouldn't RIM consider extending the BBM voice and video chat services to cover the regular land lines and other makes of cell phones outside of its platform, just like skype and Yahoo voice services, for a fee? RIM, with its servers already deployed around the world, should be able to provide a more cost effective service than Skype or Yahoo or and other VOIP companies.

RIM should consider challenging the establishment by offering its own secured equivalent of facebook and other social networking services, but without the fear of losing privacy? There will be more users willing to pay for BBM if RIM can increase the usefulness of BBM.

I believe RIM is in a better position to expand new services than Apple and Google; RIM has more originality and control over its hardware and software development than both of them. The Canadian government should be called upon to support the expansion of RIM services in Canada just like the CIA is helping Apple and Google in internet security technologies. The world does not want to see USA dominate the mobile communications market and RIM is the only remaining hope for the rest of the world against the US domination in IT.

Chris, I really love feedback this new format provides. Hope to see more of it in the future.

As for the services changing or disappearing I'm not going worry about it too much. Every business has to change their operating model to stay relevant. Nothing last forever. Rim's services fees are no different from issues faced by other companies(look at Canada Post or traditional print media companies). Either adapt or die. Thor is doing a good job ensuring the company has the resources available to lauch BB10 in the near term.

As mentioned in other comments, sources of revenue could come from BBM money transfers and NFC payments. I have family members, in other countries, who I transfer money to on a regular basis. It would be more convenient for me to use BBM than say Western U. I know this feature will be a big hit in developed countries where blackberries are heavily used. A lot of cash goes from the develop to developing countries via companies like Western U. Rim going after a part of that market for BB users is a smart move. Another source of revenue could be in the area of Home Automation. Rim already has a pilot program going on in the city of Stratford, Ontario Canada. They also appear to have business relationship with the company Osbee industries who develop home automation products. (See news links below) To me it seems like Rim is already moving forward on generating alternative future revenues by leveraging their network, software and hardware systems. Rim also talks a lot about QNX integration and mobile computing. We will have to see what these bring to the table. But clearly they are thinking ahead.

Flacko

http://crackberry.com/blackberry-launch-peer-peer-money-transfer-service...
 
http://press.rim.com/newsroom/press/2012/rim_s-secure-element-manager-so...
 
 
http://www.stratfordbeaconherald.com/2012/04/05/stratford-rim-in-pilot-p...
 
Tweet: From Osbee
@OsbeeIndustries: Osbee is running home automation systems on @BlackBerry PlayBook. So fast, so powerful. We are ready for #Blackberry10 http://pic.twitter.com/V3tvevI2

Great report Chris. I haven't had a chance to review this article. Keep doing this type of format for earnings call.

Doot, get a galaxy note 10.1 and u will be able to start your own epic revolution of videos.

This was sick.

Please do more!

And hey... If and when rim does out to something equivalent to note 10.1; use that!

:D