As we reported last week, there is nothing wrong with RIM when it comes to profit margins these days. Somehow, despite the current state of the economy they are not not only showing no sign of slowing down any day soon, but seem to be growing and thriving. But one question was raised over at Seeking Alpha which is something I have been really wondering for a while now. What about RIM makes it so profitable to carriers to constantly push products? Thankfully, co-CEO Jim Balsillie was able to answer this question to Seeking Alpha in an interview with them. The answer in one word is Bandwidth... it's Bandwidth makes RIM profitable for carriers.
To market that you are most of the network consumption of a carrier I don’t think is a very good marketing plan. Because what you’re seeing is, in this capex environment, when there is scarcity—when you have call performance issues, most of the time it’s a capacity issue. And that’s what happens. You just get stung on capacity.
So, you’re running a 5kbps voice stop and somebody’s trying to stream a TV show for a 100 kbps or a 80 kbps, I mean, you’re taking away 10 to 20 voice calls of capacity.
Time and time again in interviews and speeches such as Mike Lazaridis' one at CTIA most recently, "network optimization" has come up "creating applications that use minimal network resources" is another quip often heard, so overall it costs carriers less to run BlackBerry devices on their network then some other devices out there, due to the network optimization that is built into BlackBerry devices. Great, so this must be why my browser is limited to approx a 5MB download then, huh? Lets hope as networks evolve (LTE anyone?) that we can at least have the ability of downloading podcasts on our devices without jumping through hoops. So umm... any questions why we hear so many complaints about AT&T's network?
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