Docstoc

PRD Template

Document Sample
PRD Template Powered By Docstoc
					Title TBD

[Name of Release]
Document Version: 0.1


April 15, 2009




Writing format: 1.5 line spacing, 12 pint Times New Roman, 1-inch margin
All references use EndNotes
Review guide: turn on “Check Changes” and use “Insert Comments”




                                                                           Page 1 of 49
                                              Table of Contents
1   EXECUTIVE SUMMARY ................................................................................................................................4
    1.1      HEADING 2 ............................................................................................................................................4
             1.1.1         HEADING 3 ..............................................................................................................................4
2   EXTERNAL ANALYSIS ...................................................................................................................................5
    2.1      HEADING 2 ............................................................................................................................................5
             2.1.1         HEADING 3 ..............................................................................................................................5
3   INTERNAL ANALYSIS ....................................................................................................................................6
    3.1      BUSINESS DEFINITION/MISSION/VISION .......................................................................................6
    3.2      MANAGEMENT STYLE........................................................................................................................6
    3.3      ORGANIZATION STRUCTURE, CONTROLS AND VALUES ..........................................................7
             3.3.1         ORGANIZATIONAL STRUCTURE........................................................................................7
             3.3.2         ORGANIZATIONAL CONTROLS ..........................................................................................8
             3.3.3         ORGANIZATIONAL VALUES ...............................................................................................8
    3.4      STRATEGIC POSITION DEFINITION .................................................................................................9
             3.4.1         CORPORATE LEVEL ..............................................................................................................9
             3.4.2         BUSINESS LEVEL ................................................................................................................. 12
             3.4.3         RESOURCES & CAPABILITIES........................................................................................... 13
    3.5      FINANCIAL ANALYSIS...................................................................................................................... 23
             3.5.1         PERFORMANCE AND OPERATING RATIOS ................................................................... 23
             3.5.2         VALUATION OF RIM ........................................................................................................... 25
             3.5.3         SCENARIO ANALYSES ........................................................................................................ 26
4   ANALYSIS OF THE EFFECTIVENESS OF THE STRATEGY .................................................................... 28
    4.1      HEADING 2 .......................................................................................................................................... 28
             4.1.1         HEADING 3 ............................................................................................................................ 28
5   RECOMMENDATIONS .................................................................................................................................. 29
    5.1      HEADING 2 .......................................................................................................................................... 29
             5.1.1         HEADING 3 ............................................................................................................................ 29
6   CONCLUSIONS .............................................................................................................................................. 30
    6.1      HEADING 2 .......................................................................................................................................... 30
             6.1.1         HEADING 3 ............................................................................................................................ 30
7   APPENDIX....................................................................................................................................................... 31
    7.1      RIM’S ORGANIZATION CHART ....................................................................................................... 31
    7.2      STRATEGIC SOURCING FRAMEWORK .......................................................................................... 32
    7.3      BCG MATRIX ....................................................................................................................................... 33
    7.4      % SALE OF BUSINESS UNITS FROM 2002 - 2008 .......................................................................... 34


                                                                                                                                                     Page 2 of 49
    7.5      RIM BUSINESS VC ANALYSIS ......................................................................................................... 34
    7.6      VRIO ANALYSIS ................................................................................................................................. 36
    7.7      RIM’S HISTORICAL FINANCIAL STATEMENT ............................................................................. 44
8   ENDNOTES ..................................................................................................................................................... 48




                                                                                                                                                    Page 3 of 49
1 Executive Summary
1.1   Heading 2

1.1.1 Heading 3
1.1.1.1 Heading 4




                      Page 4 of 49
2 External Analysis
2.1   Heading 2

2.1.1 Heading 3
2.1.1.1 Heading 4




                      Page 5 of 49
3 Internal Analysis
3.1     Business Definition/Mission/Vision
      Research In Motion, Ltd., (RIM), headquartered in Waterloo, Ontario (Canada) is a leading
designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile
communications market. RIM targets both enterprise and consumer market. RIM’s product
portfolio includes BlackBerry wireless solution, the RIM Wireless Handheld product line,
software development tools, Radio-modem, and other hardware and software. (RIM Website).
      RIM is the number one smartphone vendor in North America. The success of BlackBerry
products and services is driven by passionate employees, outstanding partnerships, distinctive
technological expertise, a commitment to quality and a culture that embraces innovation,
customer service and operational excellence (RIM annual report, 2009). The company strongly
believes in innovation and creative thinking, and recognizes the importance of providing an
environment that inspires people to realize their full potential. 'Always On, Always Connected'
computing and communications solutions is RIM's longstanding vision. (RIM Website)

3.2     Management Style
      From Business Week’s interview with RIM’s founder Mike Lazaridis, RIM’s success forces
are successful R&D culture and a decade of sustainable innovation. Mr. Lazarids said in the
interview, “If you build the right culture and invest in the right facilities and you encourage and
motivate and inspire both young and seasoned people and put them all in the right
environment—then it really performs for you. It's what I call sustainable innovation.”1

      Newly hired employees attend weekly vision meetings; the company also has brainstorming
leadership committees on everything from technology to research and development,
manufacturing to the user interface of the product. The committee opens to all employees as long
as they have the capability.

      The whole company uses the product! So they actually test new ideas within the company.
This is a clever way to make RIM very competitive. Because of the way the devices are built
they can update the software and test a new feature right away, the test within the whole
company becomes very efficient. As Canada's largest employer of cooperative education
students, RIM has a wide cross-section of people, from the very young to the very experienced,



                                                                                          Page 6 of 49
who are testing these ideas. Decisions get made very quickly in the company and they get made
in very collaborative ways, and they get made with accurate information.

3.3     Organization Structure, Controls and Values

3.3.1 Organizational Structure
      Appendix 7.1 is a high level overview of Research in Motion’s organization structure. Mr.
Jim Balsillie and Mr. Mike Lazaridis share the CEO responsibilities.

      Mr. Balsillie is a chartered accountant and an MBA from Harvard University. Prior joining
RIM, Mr Basillie held several corporate executive positions (sales, finance, and business
development) in North America. Mr. Jim Balsillie has been Chairman and co-CEO at Research
In Motion since 1992. Mr. Basillie is responsible for driving RIM’s corporate strategy, business
development, marketing, sales, and finance. Mr. Basillie has been instrumental in leading and
transforming RIM into an international technology provider.

      Mr. Mike Lazaridis found Research In Motion while he was a student at University of
Waterloo. Mr. Lazaridis is known in the global wireless community as a visionary, innovator,
and engineer of extraordinary talent. As President and Co-CEO, he is responsible for product
strategy, research and development, product development, and manufacturing. Mr. Lazaridis has
led RIM earn numerous prestigious product and technology awards, which have increased the
company’s recognition by the international wireless community.

      RIM’s corporate structure allows RIM to focus equally on product development and global
market development. We believe this unique corporate structure has played a major role in
RIM’s success.

      RIM has offices in North Americas, Europe and Asia Pacific. RIM has over 12,000
employees around the world, with over 5,000 employees engaged in R&D, which includes
advanced research, product development, standards and licensing.

      The company’s two major business units are Enterprise business unit and Blackberry
Wireless Solutions business unit. Enterprise BU creates software ranging from the BlackBerry
Enterprise Server to the applications, operating systems and radio firmware on BlackBerry
Smartphones. Blackberry Wireless Solution BU focuses on the development, execution and
support BlackBerry wireless solution. The BlackBerry wireless solution is comprised of


                                                                                         Page 7 of 49
BlackBerry smartphones, software and services. RIM’s primary revenue stream is generated by
the BlackBerry wireless solution.

3.3.2 Organizational Controls
    RIM welcomes and encourages innovation and creative thinking in the company. RIM
recognizes the importance of providing an environment that inspires people to realize their full
potential. Working in RIM can be inspiring, challenging and deeply rewarding. The incentive
program is available to all permanent employees and is based on parameters relating to
performance, which includes innovation and creativity brought forth. RIM provides FREE
BlackBerry® device to all employees while they are employed with the company. (RIM
Website)

    RIM heavily relies on its intellectual property, the company records all employee actions in
the interest of maintaining control over intellectual property2. All employees are aware of this
control and understand that their information is transparent and in visibility, if they want to make
private conversations, they will bring in personal devices.

    Special cautions are for pre-release beta devices, since employees test and use pre-release
beta devices, the company asks employees to keep the devices out of sight when they go off
campus to avoid people taking photos of the new technology. If the device is lost, the company
will wipe off the device immediately. RIM’s employees are very cooperative and understand
their obligations as beta tester.

    To support corporate governess, RIM’s “Code of Ethics” sets forth specific policies to guide
Board of directors, officers, and employee in the performance of their duties. The company
maintains a culture of ethical standards and commitment to compliance, and provides a work
environment that encourages employees to raise compliance concerns to the attention of
management, address them promptly.

3.3.3 Organizational Values
    At Research in Motion, the main cultural values are seriousness, technical competence, and
intensity.3 Other corporate cultures are young, fast-paced development environment, casual,
informal. The values support the kind of commitment and technical innovation that have allowed
RIM to revolutionize e-mail communications. To support this kind of culture, the company is


                                                                                          Page 8 of 49
situated across Davis Computer Research Centre at the University of Waterloo, one of the most
respected computer-science schools in North America4. With a continual flow of interns and new
employees from the university, the company constantly refreshes its social network with
knowledgeable and energetic people. The company’s name derives from Mr. Mike Lazaridis’s
belief that research and engineering excellence would drive the company's growth, and Motion.
(Rapid Motion)

      RIM provides an environment that support healthy lifestyle through Healthy@RIM program.
RIM has been named as Canada’s most Admired Corporate Culture in 20065. From RIM’s
website, “Our people work hard, inspire each other and celebrate success. We meet the
challenges of a competitive, evolving marketplace by remaining true to the values that underline
our corporate culture. If you have a passion for excellence, a drive to achieve, and the desire to
work with others who share it, you belong at RIM.”



3.4     Strategic Position Definition

3.4.1 Corporate Level
Business Portfolio
      According to RIM’s Form 10K, the company’s primary revenue stream is generated by
BlackBerry wireless solution, which includes sales of BlackBerry smartphones, software and
service. See Figure 3.1.




                                      2%   3%
                             13%

                                                                                 Smartphones
                                                                                 Service
                                                                                 Software
                                                                                 Other

                                                         82%




                            Figure 3.1 RIM’s Business Portfolio in fiscal 2009



                                                                                               Page 9 of 49
                                  Source: RIM Annual Report (2009)
   RIM generates smartphone revenues primarily from device sales to carriers. In fiscal 2009,
smartphone sales represented 82.1% of total company revenues. BlackBerry smartphones are
available from hundreds of carries and indirect channels, through a range of distribution partners
and operated in a variety of carrier network types. RIM has traditionally been focusing toward
the enterprise market. More recently the company has introduced consumer oriented
smartphones and it has made significant inroads into the consumer market, and RIM is
positioning itself to take a larger share of the consumer market. In fiscal 2009, RIM launched
global BlackBerry brand campaign, and BlackBerry ranked at number 51 on the Millward Brown
Top 100 Most Powerful Brands list.(RIM Annual Report, 2009). RIM introduced three new
platforms in fiscal 2009, the Bold (3GQWERTY), the Storm (3G touch screen), and the Pearl
Flip. The Bold is targeting enterprise customers and the high end of the consumer market, the
Storm will attract both enterprise and consumer markets and the Pearl Flip will be largely sold to
the consumer market. The Curve (introduced in fiscal 2008) which has seen strong adoption in
the enterprise market, also widely penetrated into the consumer market as its price declines. RIM
has launched As of FQ309, 55% of RIM’s customer base was enterprise and the remainder
consumer6.

   BlackBerry service is provided through a combination of RIM’s NOC (Network Operating
Center) and the wireless networks of RIM’s carrier partners. Unlike other handset vendors, RIM
operates its own network operations center, or NOC, which allows it to collect a monthly fee
averaging ~$5-6 per subscriber7. In fiscal 2009, RIM’s BlackBerry subscriber account base is
approximately 25 million; the company generates service revenues by charging a monthly
infrastructure access fee to a carrier or reseller, the carrier bills the end customer. The service
revenue accounts for 12.7% of the total company revenue in fiscal 2009.

   RIM’s software business accounted for 2.3% of revenues in fiscal 2009. BlackBerry wireless
solution comes with software that can be installed at the corporate server level and on personal
computers. The company charge software license fee and upgrade fees from enterprise software.
Consumer software is included in hardware purchase, or at purchase from a carrier or RIM
website. Software business also includes BlackBerry technical support and software maintenance
program.



                                                                                        Page 10 of 49
   Other business includes accessories, non-warranty repairs, non-recurring engineering
development contracts, and BlackBerry licensing program.

Partnerships and Acquisition
   RIM’s strategy has been to include its handsets in the portfolio of as many mobile operators
as possible. In fiscal 2009, RIM added over 125 new carrier and distribution channel
relationships for a total of over 475 carriers and distribution channels in over 160 countries. RIM
is able to make substantial savings on marketing and promotion cost since the handsets are
promoted to the market through operators. According to ZDNET, RIM is the most profitable
device for carries because it eats up less bandwidth.8 RIM has a shadow telecom network which
pushes, compresses data, so carrier do not have to carry the entire load which will yield more
profits to carriers. So we believe RIM’s partnership with carriers is a win-win strategy for both,
and is a great asset for RIM.

   RIM also looks for partnership, collaboration opportunity to add value to its technology,
products and services. The company tied up with AOL, MySpace, and Facebook, to enhance the
BlackBerry smartphone user experience through partner’s compelling mobile applications. Such
strategic alliances and sustained relationships with these companies could provide an opportunity
to enter new markets and gain better market share and thereby enhance its business.

   RIM expands the functionality of its services with acquisitions. It bought voice mail and
mobile telephony software maker Ascendent Systems in 2006, and data compression company
SlipStream Data in 2007. The company purchased wireless security software maker Certicom for
in 2008. Early in 2009 RIM acquired, Chalk Media, a content distribution system developer for
BlackBerry devices.

   RIM’s strategic sourcing frame work is in Appendix 7.2, partnership with network carrier
and third party application provider provides high strategic value to RIM, while RIM has low
competence than the suppliers.

BCG Matrix
   In fiscal 2009, RIM is the number two smartphone vendor in the world, it has 16% market
share in the worldwide smartphones market. The smartphone industry is project to grow at about
30% worldwide. With the increased smartphone adoption in the world, RIM is introducing more



                                                                                        Page 11 of 49
smartphone devices with advanced features to appeal broader consumer base in the world. Thus
RIM’s BlackBerry wireless solution business is a Star. (Appendix 7.3)




3.4.2 Business Level
     RIM is focused on its core product, mobile handset devices for its market growth and
revenue. Total revenue from Mobile handset is growing since 2002 while other business sectors
are decreasing and became complements for the handset devices. (Refer to Exhibit x). In
addition, RIM currently received $5-6 monthly service fee from its current subscriber is expected
to grow to 44% of total company gross profit in 2012 because of the expanded customer base.
Therefore, the business strategy to grow its revenue is focused on positioning its handset devices
to targets at different segments customer where the Smartphone is entering the mature product
stage with strong potential growth.

   RIM’s business level strategy focused on different handset devices targeted at different
customer segments, Enterprise, Prosumer, and consumers to meet corporate strategy to enter the
consumer market. RIM’s handset sales also brings in revenue for other business units such as
service and software. Therefore, the business strategy is focused on selling the devices itself. The
handset devices can divide into three types based on their position, features, and targeted
customers. The following were selected to representative the three major types: (Exhibit x)

-Pearl Flip (Prosumer)

First clamshell blackberry phone aimed at prosumer who is looking for their first smartphone. It
is also the most consumer-oriented phone RIM has introduced to the market. Unlike previous
BlackBerry devices, the Pearl includes a music player, camera, as well as other multimedia
functions. It aims at the younger generation and people who just switch to smartphone.

-BlackBerry Storm (Consumer)

It is RIM's first touchscreen device and the first device without a physical keyboard. It is
intended to be a direct competitor to Apple iPhone 3G, the T-Mobile G1 by HTC and the HTC
Touch family.



                                                                                         Page 12 of 49
-BlackBerry Bold (Enterprise)

All the familiar BlackBerry applications are available on the Bold: WordToGo,
PowerPointToGo, BrickBreaker and WordMole. The Bold also offers new or updated
applications for BlackBerry Messenger, WHERE GPS, and Mobi4Biz.

To be competitive in the mobile phone market, RIM is using its value drivers with its resources
and capabilities to modify its business strategy to meet the goal of its corporate strategy in
following areas:

-Expand product portfolio with new smartphones models and include support for emerging
network technologies

-Develop further enhancements to our software and services platform to grow our customer base
in existing and new markets

-Grow and strengthen relationships with our carrier and distribution partner across the globe

-Enhance the BlackBerry user experience further by working closely with our partner to develop
compelling mobile applications

-Leverage and expand outsourcing partnerships and increase outsourcing volumes for
manufacturing

-Attract, hire and retain the best available talent to maintain RIM’s market leading position



3.4.3 Resources & Capabilities


Value Drivers


- Innovative Products
There’s an increasing trend in prosumers segment – business users buying through consumer
channel not only for business needs but also for personal needs. Smartphone users are
demanding more versatile features that encompass both technological and entertainment aspects
such as internet browsing, mobile blogging, social networks, audio and video player, Wi-Fi and
GPS. In FY 2009, RIM launched a number of new devices, Blackberry Storm, Blackberry Pearl
Flip and Blackberry Curve that incorporate all these features and also announced Blackberry

                                                                                         Page 13 of 49
App World to increase its value proposition among smartphone users. Blackberry Storm is
RIM’s first product with touch screen feature.


- Usability, Manageability and Security
RIM’s unique feature that makes it so desirable among enterprise users and prosumers is push
email functionality, which allows users to automatically see new emails on their device. Also,
RIM’s proprietary OS and secure enterprise server enable end to end platform design that
provides enterprise users with comprehensive security. The unique end-to-end design allow users
to converge and connect to Microsoft Outlook®, IBM® Lotus Notes®, Novell® GroupWise®
and many ISP email services securely lead RIM to be a leading choice of both IT departments
and individual users. Furthermore, RIM through partnership with ISVs (Independent Software
Vendors) develops applications that can be used with its OS and makes a number of key APIs
(Application Programming Interface).


- Brand Equity
BlackBerry brand is listed at number 51 on the Millward Brown Top 100 Most Powerful Brands
in the world, and rated as the fastest growing brand on the list with a 390% increase in brand
value. It is also the number 1 selling smartphone in North America.


Cost Drivers
- Sales, Marketing and Distribution
   By fostering strategic partnership with over 475 network carriers and distributors worldwide,
RIM is able to save on marketing on promotion costs, and avoiding direct sales. This strategy
also allows RIM to focus most of its time and resources towards R&D and services to ensure that
it continues to come up with attractive devices and solutions for its customers. RIM has
approximately 1,600 personnel or 12.5% of the workforce in sales, marketing and business
development. In fiscal 2009, RIM’s spending in sales, marketing and administration was about
$1.5 Billion or 13.5% of revenue.


- R&D




                                                                                        Page 14 of 49
    With 5,100 people or 40% of total workforce in R&D, RIM has a ver y high ratio of employees
dedicated in advance research and product development areas. RIM’s spending in R&D in fiscal 2009
was $684.7 Million, 90% increased from fiscal 2008.


- Manufacturing
    RIM has a total of 242,000 sqft of manufacturing facility in Waterloo, Ontario with
approximately 1,900 personnel or 16% of the workforce involved in manufacturing and production. To
support increasing demands, RIM continues to scale its manufacturing capacity by expanding its own
manufacturing facility, upgrading production and test equipment, as well as adding new sourcing partners
globally.



- Customer Service
    RIM has approximately 1,500 dedicated technical and support staff at five customer support
facilities around the world, providing 24-hours, 7-days a week per week. As part of the effort to
improve customer service and meet the needs of increasing customer base, RIM opened the fifth
customer care facility in Irving, Texas. RIM also continued to grow other customer care centers
to include multilingual training programs such as, French, Italian, German, Spanish, Simplified
Chinese, Japanese and Brazilian Portuguese.


Resources and Capabilities
- Top Management Team
    RIM believes key factors that contribute to its success are the strong quality and skills of the senior
management team and other personnel. By bringing together highly qualified management team with
extensive experience that encompass both management and engineering skills, RIM is able to meet
challenges and excel in highly competitive smartphone industry. compe Four out of six top management
personnel has Master Degree in Business Administration with operation or engineering background.


- R&D
    RIM has strong R&D team with expertise in RF Engineering, Analog RF, Digital ASIC,
Audio, Display, Intelligent Antennas, Power Management, Firmware, Software Tools, Testing
Software and Product Design. With such strong talents in R&D team, RIM is able to integrate all
the complex components into an efficient board layout design and customize its core proprietary

                                                                                               Page 15 of 49
hardware designs to address new applications, network protocol and transmission frequencies to
support multi wireless protocols.


- Network Effect
Blackberry is recognized as one of the premier smartphone brands. Historically RIM has strong
presence in North America and Europe, and continues to broaden strategic alliances with
enterprise, SW application companies, telecommunication carriers and distributors to expand
globally, particularly in Latin America and Asia. Up to day, RIM has partnership with 475
carriers and distribution channels in over 160 countries and deployed over 150,000 Blackberry
Enterprise Servers.


- Supply Chain Management
RIM continues to improve its manufacturing practice, particularly for new product introduction, by
integrating supply chain activities with its internal R&D activities. RIM also incorporated flexible
production capacity into its own manufacturing practice and through partnership with EMS with allows
RIM to quickly adjust inventory level in response to demands. RIM’s procurement team is responsible for
negotiating pricing directly with component suppliers, and controlling all sourcing decisions, and
whenever possible source components from at least two suppliers to avoid supply disruption, which is
critical to ensure only quality components are used to reduce waste and field failures.



- Customer Service
    RIM’s organizational practice is dedicated to product innovation, operation excellence and
customer satisfaction. In fiscal 2009, RIM launched four new initiatives including the
BlackBerry® Certification Program for its partners to enhance their knowledge of BlackBerry
hardware and software; BlackBerry® Support Community Forums, a self-service discussion
forum to bring together device users and IT administrators; BlackBerry Expert Support Center
(BESC) to provide on-line technical support for accounts that have technical support contracts
with RIM; and BlackBerry Answers which acts as both a mobile and desktop self-serve Q&A
center. RIM has five customer service centers worldwide with multilingual support.




                                                                                            Page 16 of 49
Value Chain



VRIO Analysis

   RIM has a number of resources it can exploit, to gain a competitive advantage. These
resources are described and analyzed in Exhibit xx. Basically, RIM’s resources in this VRIO
analysis can be classified into busines, marketing, operational and technical resources.

   Some of the resources stem from the fact that RIM was the first mover in the smartphone
market, and therefore has significant resources and capabilities due to its experience in this field,
its established relationships with carriers and distributers, and corporate customers, as well as its
large customer base. RIM’s brand is also a valuable and leveragable resource which helps RIM
sell to both business and prosumer users. RIM’s Blackberry system is recognized as one of the
most secure smartphone systems in the industry. RIM’s The Blackberry Enterprise Server
software which RIM developed not only provides RIM with a competitive advantage because it
is tailored specifically for Blackberries, but is a source of revenue for RIM too, with the per-
subscriber licensing fees RIM charges to corporate customers.

   Finally, other resources that RIM has include proximity of its headquarters to the Davis
Computer Research Center, providing RIM with a steady stream of interns as well as access to
renowned academic faculty and research, and RIM’s company culture which encourages hard
work, innovation and creativeness.

An analysis of RIM’s 4P’s: Product, Pricing, Placement and Promotion
This section analyzes the 4P’s of RIM: Product, Pricing, Placement and Promotion
Product
   As the original Smartphone manufacturer, RIM’s Blackberry products have a long history.
The Blackberry has evolved from being a simple, monochrome push e-mail                 client,    to a
sophisticated device with touchscreen and Wi-Fi (please refer exhibit xx). Among the major
product improvements at each major model release are:
 Model                          Major hardware technology improvements
                                Basic e-mail and phone integrated into one single device.
 5000/6000 series               Monochrome screen.
 7000 series                    Color screen, Bluetooth support


                                                                                           Page 17 of 49
                           Full semi keyboard instead of QWERTY keyboard. Allowed for
7000 series with semi-full smaller form factor. Disadvantage of not having a full keyboard
keyboard                   partially mitigated by using predictive wording technology
                           Predictive wording technology, Wi-Fi, built-in camera, MP3
Pearl series               playing capability, support for external SDRAM card
                           3.2MP Camera with flash and autofocus, Trackball interface,
Curve Series and Bold      GPS
Storm                      full-size screen touchscreen

   As shown from the table, RIM’s product portfolio has mainly targeted two markets: The
business user market (7000 series as well as Curve and Bold), as well as the mainstream
consumer market (Pearl series and Storm).         Products for the business user focused on
effectiveness of major business functions such as e-mail (by using a full QWERTY keyboard),
while products for the mainstream user focused on more personal applications such as having a
full touchscreen, and having a better camera and MP3 playback capabilities. From a competitive
timeline perspective, the Blackberry series’ major technological advancements shown in the
table above, have generally been in-line with competitive smartphones.
       On the software aspect, all Blackberry smartphones operate using the Blackberry
operating system. This is a double-edged sword: on one hand, developing their own operating
system allowed RIM to customize it only for the Blackberry, increasing the efficiency in terms of
operating system and hardware interfacing. On the downside, it also caused Blackberry to lag
behind others in terms of 3rd-party applications, since Microsoft Windows Mobile and Symbian
were more popular with 3rd party developers.
       Another important aspect of RIM’s products is the Blackberry Enterprise Server
software. This is the server-side software that enabled Blackberry’s push email technology by
“pushing” e-mail to Blackberry smartphones. The customers for this server software are mainly
corporate entities. RIM charges customers for the software and it is part of RIM’s methods of
revenue generation.


Pricing
       Blackberry’s pricing strategy generally reflects a company that knows it can charge a
little more for its products because of its brand name, yet not too much more, since Smartphone
customers have almost no loyalty to brands.



                                                                                      Page 18 of 49
       The following table shows Blackberry’s undiscounted retail price, as well as discounted
prices provided by wireless service providers, which locks the purchaser into a 2-year service
contract with the wireless service providers. In the United States, the a big portion of cellphones
are bought through wireless service providers, and even if they are bought at retail stores, a
wireless service provider is usually involved – this will be explained more in the placement
section.


           Blackberry Model              Bold         Storm         Curve       Pearl
                                                                               Price not
     Undiscounted retail price           $499          $499         $499
                                                                               available
                                         Not
                         Verizon       available       $199         $169          $119
 Service Provider
                                                        Not
 Price with 2-year
                         AT&T            $399        available      $249          $149
     contract
                                          Not           Not
                        T-Mobile       available     available      $249          $179

   The table shows that undiscounted price of a Blackberry is around $500. Wireless service
providers offer the phone at a much lower price, with a service contract. As shown in the
external analysis section, this price is many of the other smartphones available, such as the
iPhone and Motorola. It is, however, more expensive than the smartphones offered by Nokia
who specializes in price leadership.
   Like the other players in the Smartphone industry, RIM’s pricing strategy reflects a
‘waterfall’ strategy, where a certain product becomes cheaper over time, whereas newer products
fill the position of the high-priced product. For example, the 7000 series model Blackberry was
sold around $500 (undiscounted) when it first came out, but over the years the price has dropped
significantly. Now, it sells for a very cheap price, while the newer Bold and Storm models have
taken flagship status and the $500 price tag. This means that RIM, just like other smartphone
manufacturers, have to constantly update their product portfolio with newer breakthrough
products, in order to give customers a reason to pay the top price of around $500 for a
smartphone, since customers expect the price for any one smartphon to drop over time.


Placement (Channel)



                                                                                         Page 19 of 49
       The Blackberry is currently not sold directly by RIM. In other words, RIM’s corporate
website does not allow customers to purchase directly from RIM. In addition, RIM generally
does not have brick-and-mortar shops that sell their Blackberry smartphones. Instead, RIM sells
Blackberries through online and traditional retailers, as well as wireless service providers.
       In some cases, online and traditional retailers, such as Amazon.com or Best Buys, will
partner with wireless service providers, to sell Blackberry smartphones. For example, when a
user shops for a BlackBerry Bold on Amazon.com, the user is given the choice to buy it at a
discounted price of $149, with a 2-year service contract provided by AT&T wireless (see exhibit
xx). Wireless service providers also sell Blackberry smartphones, so at first glance this looks like
a case of channel conflict.
       However, if we analyze deeper, we find that channel conflict is minimized, because:: The
retailer’s goal is to sell Blackberry Smartphones, since that is how the retailers get their revenue.
The wireless service provider’s goal is mainly to sell their services, and they are able to do so
because they partner with the retailers to provide wireless service to the customers who bought
the blackberry smartphone. Wireless service providers get much more revenue per customer,
from service fees, rather than the Blackberry smartphone hardware itself. In fact, many times,
wireless service providers will subsidize the customer on the smartphone, in order to get their
business as a service customer. This is evident by the many smartphones that are offered free by
wireless service providers.


Promotion
   The majority of the Blackberry’s promotion actually comes from not from RIM itself, but
also from its service provider partners and ‘fans’, who had spread the word on upcoming and
current Blackberry products virally. In fact it was noted by a 3rd party (rimarkable.com) blog that
it was difficult to obtain the contact information for RIM’s own advertising department for
Blackberry.
   First, let’s discuss Blackberry’s promotions coming from RIM itself. There is not much
public advertising directly from RIM. On the Blackberry.com website, as of May 2009, the two
main Blackberry smartphones shown prominently are the Blackberry Bold and Blackberry
Storm. These two are RIM’s flagship products today and are being heavily promoted by RIM.
(see exhibit xx)


                                                                                          Page 20 of 49
       Going on to Blackberry promotions by its wireless service provider partners: these
promotions happen more frequently and visibly. For example, before the Blackberry storm was
launched, Verizon Wireless did a promotion campaign for the Blackberry Storm, saying it was
the “First Touchscreen Blackberry”. This message was featured prominently in billboards and
television and online advertisements. In addition to that, Verizon wireless is also currently
offering a “buy one Blackberry, get one free” promotion (see exhibit xx). Both Verizon Wireless
and AT&T Wireless launched Blackberry Storm and Bold promotional campaigns respectively,
during the launch of the product.
       In addition to promotional campaigns by RIM’s channel partners, another significant
portion of Blackberry’s promotion comes from word-of-mouth or viral marketing. The vast
majority of Blackberry commercials are available on YouTube, posted by fans of the Blackberry
phone. In addition, there are also many blogs about the Blackberry, for example at
Crackberry.com and Rimarkable.com. These websites provide a “communal” bond for
Blackberry users to spread the word about upcoming products and current promotions to other
Blackberry users and non-users.
       In addition to that, the Blackberry Brand provides a significant source of self promotion
too. RIM has built up Blackberry’s brand to a point that it is self-promoting. Due to Blackberry’s
brand, there is significant pull from the masses to obtain new information about Blackberry,
rather than Blackberry having to push information to the public.


Product Life Cycle
       As of 2008, the year-to-year annual revenue growth for the smartphone market was still
in the high teens, indicating that the smartphone as a product is still in the late growth stage of
the product life cycle, nearing the maturity phase (see exhibit xx and exhibit xx). However,
further enhancements to smartphone technology might still extend the growth phase of the
smartphone’s product life cycle. During this stage, revenues increase dramatically but
competition also becomes tougher as more players get into the market and improvements happen
on the product. Blackberry is currently facing such newer competition from the Apple iPhone
and HTC’s phones.
Building and selling the Blackberry Bold and Storm represents a move by RIM to expand its
distribution and compete more effectively with its old and new competitors.



                                                                                        Page 21 of 49
References:
http://en.wikipedia.org/wiki/List_of_BlackBerry_Models#Monochrome_Java-
based_models_.285000_and_6000_series.29
http://crackberry.com/verizon-taking-blackberry-storm-advertising-seriously
http://crackberry.com/verizon-buy-one-get-one-starts-tomorrow
http://www.rimarkable.com/rim-is-advertising-the-blackberry-everywhere




                                                                              Page 22 of 49
3.5     Financial Analysis

3.5.1 Performance and Operating Ratios
      RIM’s operating ratios have been discussed in section 2.5.6. Here, we examined RIM’s
fundamental financial performance based on past five year financials data. RIM’s historical
income statement, balance sheet and cash flow statement are listed in Appendix 7.4.

Income Statement Trend


                             12,000

                             10,000

                              8,000
               ($millions)




                              6,000

                              4,000

                              2,000

                                 0
                                      Feb 05           Feb 06            Feb 07          Feb 08           Feb 09

                                      Revenue   Costs of Goods Sold   SG&A Expense   R&D Expense   Total Net Income


                                           Figure 3.2 RIM Income Statement Trends
      Figure 3.2 shows the incomes statement trends. RIM has achieved exceptional growth in
revenue from last five years, with five year average of 81%. Despite the highly competitive
smartphone market and the global economic recession, RIM still continues the robust sales
performance in fiscal 2009, with revenue up 84% year-over-year. Benefit from the industry shift
to smartphone, RIM’s sales momentum mainly attributed to the increased number BlackBerry
smartphone sold, the BlackBerry subscriber base increased to 26 million users in fiscal 2009, up
from 14 million from previous year, which is driven by strong demand from new customers and
upgrades from loyal customer base. RIM occupies 50% of the enterprise smartphone market in
the world and held 50% smartphone market in North America. RIM has grabbed significant
share from the consumer market after the company released Perl, Bold, and Storm in 2008. The
strong revenue growth of the company coupled with improving operational and net profit will
support its growth and expansion.

      The company is able to maintain very healthy GAAP gross profit margin at average of 52%,
this is because lower commodity and components cost and the company is able to maintain the


                                                                                                                      Page 23 of 49
relatively low cost. But, gross margin dropped to 46% in fiscal 2009. This is because the higher
cost associated with the newly introduced feature-rich smartphones.

   Net SG&A is growing because of RIM’s increased sales and marketing efforts in the
consumer segment. SG&A as a percent of sales has a downward trend, it is primarily because
RIM sells smartphones through network operators instead of direct sales, and this strategy drives
down the relative SG&A costs. R&D expenses have maintained a steady percentage of sales,
since the company believes in innovation and continually invest in R&D.

Balance Sheet Trend


                             3,000

                             2,500

                             2,000
              ($ millions)




                             1,500

                             1,000

                              500

                                0
                                     Feb 05            Feb 06                 Feb 07          Feb 08           Feb 09

                                          Net Receivables       Inventories       Accounts Payable     Long-Term Debt


                                              Figure 3.3 RIM Balance Sheet Trend
   Figure 3.3 shows the balance sheet trend. RIM maintains strong balance sheet with $2
billion in cash and no debt at the end of fiscal 2009. Receivables are increasing steadily in fiscal
2008 and 2009, this is because RIM let network operators to stock the devices without paying
upfront fees. RIM heavily depends on a number of major operators and channel to distribute
BlackBerry products (RIM annual report, fiscal 2009). Inventory level has been kept at pretty
low level; this is because the high demand for smartphone from carriers, and the carrier are
carrying the inventories. RIM has very low level of long time debt in the past five years, this is
because the company has generated enough operating cashes, so its capital structure is less
leveraged, this also indicates the company is financially conservative.

Cash Flow Statement Trend




                                                                                                                        Page 24 of 49
   Figure 3.4 is RIM’s cash flow trend. RIM continues to generate operating cashing flow in an
upper trend and maintains strong free cash flow. The majority of the capital expenditure is to
invest in new facilities, computers and equipment to support RIM’s growing employee base and
the expansion and enhancement of the BlackBerry® Infrastructure. In fiscal 2009, RIM also
acquired Chalk Media to enhance RIM’s business.


                           2,000.0

                           1,500.0

                           1,000.0
            ($ millions)




                             500.0

                               0.0
                                      Feb 05          Feb 06             Feb 07                 Feb 08              Feb 09
                            -500.0

                           -1,000.0

                                               Net Operating Cash Flow   Captital Expenditure      Free Cash Flow


                                               Figure 3.4 RIM Cash Flow Trend




3.5.2 Valuation of RIM
   Discounted Cash Flow (DCF) is used in RIM’s current valuation. Appendix 7.x is the
assumptions used in our DCF valuation. The forecast horizon is five years, with terminal growth
rate of 5%; cost of equity is at 14.1%. We assume the company will have no long term debt
based on its historical trend. The DCF result is that RIM is valued at $40 billion (U.S), with
forecasted price/share at $71.15. The forecasting growth rate is based management’s
expectations, and analyst’s forecasts. In 2009, smartphone market growth will be lower (14% vs.
45% in 2008) due to the economic slowdown as consumers and enterprise defer spending and
delay device upgrades, this will also impact RIM’s growth in 2009, which is forecasted as 30%
vs. 84% in 2008. Long term trends for smartphones remain very exciting and once the economy
gets back, it is expected the growth to return to 30% and plus, based on RIM historical sales
performance and its broader range of products, we expect RIM should get its fair market share in
the long run and out grow the industry average, so we forecast the growth rate is 40% in 2011,




                                                                                                                             Page 25 of 49
but the growth will gradually decline as the increasing competition in smartphone market and
the trend of smartphone is becoming commodity.

3.5.3 Scenario Analyses
   We conduct following four scenario analysis to estimate the impact of different strategic
decisions and economic conditions impact on RIM’s financial positions.


Scenario 1- Without strategic move
   iPhone is the pioneer in introducing touch screen phone and launching application stores to
enhance user experience, and the impact is tangible with iPhone’s sales growth of 104% year
over year. RIM released its first touch phone, “Storm”, in 2008 to directly compete with iPhone.
But, without opening application store and services, RIM will definitely fail to market Storm to
the high end smartphone market, which will result in lower ASP prices and much slower growth
in the consumer base. But, we think the growth rate in 2009 will be slightly higher than industry
average, due to RIM’s stronger position in enterprise market, and the large subscriber bases
introduced in 2008. So we estimated the growth rate is 20% in 2009, with estimated price/share
of $48 and valuation of $27 billion. The SG&A will slightly decline because of the less
marketing and administration efforts in the consumer segment. The valuation detail is listed in
Appendix 7.x.


Scenario 2 – Best case with strategic move
   RIM is a new player in smartphone consumer segment, but the company has demonstrated
incredible sales momentum after releasing several high-end consumer devices. The company’s
“Life in Blackberry” campaign has successfully helped Blackberry become the number 51 brand
in the world ( RIM’s annual report, 2009), which greatly enhanced Blackberry’s brand equity in
consumer segment. We believe RIM will continue defend is enterprise dominant market position
because of RIM’s its proprietary technology and high switching cost. BlackBerry application
storefront and BlackBerry application centers will support the growing BlackBerry ecosystem,
help bridge end users with developers and carriers, and continue increase the customer base with
higher average ASP. So under this scenario we forecast the growth rate is 62% with price/share
of $109, and valuation of $62 billion. But with the continuing effort to market Blackberry in
consumer sector, expand the market in the global, and the focus of high end device


                                                                                       Page 26 of 49
manufacturing, we estimate SG&A and COGS will go up. The detail of the valuation is listed in
Appendix 7.x


Scenario 3 –Average case with strategic move
   Threatened by iPhone and newly introduced Google’s G-Phone, Blackberry Storm can only
command a small portion of the high-end smartphone market, but its mid-tier and low-end phone
become popular, this will result in lower ASP prices, and eventually drive down the revenue
growth rate to be 25%, with slightly higher SG&A costs, and valuation of $33 billion. Valuation
details are listed in Appendix 7.x


Scenario 4 –Worst case with strategic move
   Smartphone industry’s high end device providers are following the iPhone trend, by
integrating touch devices with applications and services around music, mobile e-mail. Google,
Nokia and Microsoft already opened their own application stores to attract high end consumers.
RIM’s application store can only play a catch up role. With the continue impact of declining
economy, consumer replacement cycle are lengthening across the entire handset market, and
increased competition in smartphone market will drive down the ASP prices, while SG&A will
continue climb up. In such scenario, we estimated that RIM’s sales growth rate barely match the
industry growth rate of 15%, with price/share of $40 and valuation of $22 billion. Valuation
details are listed in Appendix 7.x.




                                                                                      Page 27 of 49
4 Analysis of the Effectiveness of the Strategy
4.1   Heading 2

4.1.1 Heading 3
4.1.1.1 Heading 4




                                                  Page 28 of 49
5 Recommendations
5.1   Heading 2

5.1.1 Heading 3
5.1.1.1 Heading 4




                    Page 29 of 49
6 Conclusions
6.1   Heading 2

6.1.1 Heading 3
6.1.1.1 Heading 4




                    Page 30 of 49
7 Appendix
7.1   RIM’s Organization Chart


                                       Board of
                                       Directors




           Jim Balsillie                                        Mike Lazaridis
           Chairman and                                         President and
             Co-CEO                                               Co-CEO




 David Werezak       Mark Guibert     Don Morrison    Larry Conlee        Robin Bienfait   Brian Bidulka
VP                         VP            COO              COO                    CIO          Chief
Enterprise             Corporate       Blackberry    Engineering and        Blackberry      Accounting
Business Unit         Marketing,        Wireless      Manufacturing       Operations and    Officer and
                     Sales, Finance    Solutions                           Corporate IT        Corp
                                                                                            Controller


Source: RIM website http://www.rim.com and Cogmap at http://www.cogmap.com/chart/research-in-
motion,-ltd-rim?coglink=7915




                                                                                             Page 31 of 49
7.2   Strategic Sourcing Framework




                                     Page 32 of 49
7.3   BCG Matrix




                   Page 33 of 49
7.4   % Sale of Business Units from 2002 - 2008




7.5   RIM Business VC Analysis




                                                  Page 34 of 49
                                                     RIM Blackberry                                                    BlackBerry                                              BlackBerry
Phone                                                              Storm                                               Pearl Flip                                                Bold




                            (1-10)
                                     Feature

                                                   Feature Specs



                                                                       Score (0-10)

                                                                                      Weighted score


                                                                                                       Feature Specs



                                                                                                                              Score (1-10)

                                                                                                                                              Weighted score

                                                                                                                                                               Feature Specs



                                                                                                                                                                                    Score (1-10)

                                                                                                                                                                                                   Weighted score
                                     weighting
Brand                                      8                            10                80                                   10              80                                    10                             80

Screen Size                           10 3.25 in                               7          70 2.4 in                                   5        50 3.5 in                                    9                       90

                                                 480               x
Screen resolution                          9 360                               9          81 240 x 320                                6        54 480 x 320                                 8                       72

Battery Life - in use                      9 6 hours                           9          81 4 hours                                  5        45 4.5 hours                                 6                       54

Battery Life - standby                     8 15 days                           9          72 14 days                                  8        64 13.5 dasy                                 6                       48

Internal memory                            7 1 GB                              9          63 128 MB                                   1                 7 1 GB                              9                       63

3G                                         6 Yes                               9          54 N/A                                      0                 0 Yes                               9                       54

Bluetooth                                  4 Yes                               9          36 Yes                                      9        36 Yes                                       9                       36

Internet Browser                           4 Yes                               9          36 Yes                                      9        36 Yes                                       9                       36

E-mail                                     4 Yes                               9          36 Yes                                      9        36 Yes                                       9                       36

Wi-Fi                                      4 No                                0                   0 Yes                              9        36 Yes                                       9                       36

GPS                                        3 Yes                               9          27 Maps                                     7        21 Yes                                       9                       27

Touchscreen                                9 Yes                               9          81 N/A                                      0                 0 N/A                               0                       0

Digital Camera Resolution                  7 3.2 MP                            9          63 2.0 MP                                   7        49 2.0 MP                                    7                       49

Weight                                     8 5.5 oz                            5          40 3.6 oz                                   9        72 4.8 oz                                    7                       56

Total                            100                                                  820                                                    586                                                          737
                                                                                      1




                                                                                                                                              0.715




                                                                                                                                                                                                   0.899




Normalized score




                                                                                                                                                                                                                Page 35 of 49
7.6   VRIO Analysis




                      Page 36 of 49
Table 1: Blackbery 5000 & 6000 Monochrome series
    Family         Model                Screen                         Network                                Notes
Specialty          5790    large 160x160 pixel monochrome    900 MHz Mobitex               e-mail services only
                   5810    large monochrome screen           1900 MHz GSM/GPRS             phone but headset required
Early Java-based
                   5820    large monochrome screen           900/1800 MHz GSM/GPRS         phone but headset required
                   6210    medium 160x100 pixel monochrome 900/1900 MHz GSM/GPRS           integrated phone
                   6220    medium 160x100 pixel monochrome 900/1800 MHz GSM/GPRS           integrated phone
"Quark"
                   6230    medium 160x100 pixel monochrome 900/1800/1900 MHz GSM/GPRS      integrated phone (blue case)
                   6280    medium 160x100 pixel monochrome 850/1800/1900 MHz GSM/GPRS      integrated phone
65XX               6510    medium monochrome                 iDEN                          integrated phone, integrated two-way radio
                   6710    large monochrome                  900/1900 MHz GSM/GPRS         integrated phone
67XX               6720    large monochrome                  900/1800 MHz GSM/GPRS         integrated phone
                   6750    large monochrome                  800/1900 MHz CDMA2000 1xRTT integrated phone



Table 2: Blackberry 7000 color screen series
Family         Model             Screen                        Network                                     Notes
            7210                                  900/1900 MHz GSM/GPRS                 integrated phone
            7220                                  900/1800 MHz GSM/GPRS                 integrated phone



                                                  900/1800/1900 MHz GSM/GPRS            integrated phone

            7230
                            medium
72XX                        240x160       pixel
                            colour                800/1900 MHz CDMA2000 1x (EVDO-
                                                                                  integrated phone, Bluetooth
                                                  capable w/firmware update)
            7250
                                                  corporate WLAN 802.11b networks for
            7270
                                                  data and VOIP
            7280                                  850/1800/1900 MHz GSM/GPRS            integrated phone
            7290                                  850/900/1800/1900 MHz GSM/GPRS        integrated phone with Bluetooth
                                                                                        integrated phone with speakerphone,
            7510
                            medium                                                      integrated two-way radio
75XX                        240x160       pixel iDEN                                    integrated phone with speakerphone,
            7520            colour                                                      integrated two-way radio, GPS and
                                                                                        Bluetooth
            7730                                  900/1800/1900 MHz GSM/GPRS

                            large 240x240
77XX        7750                          800/1900 MHz CDMA2000 1x                      integrated phone
                            pixel colour

            7780                                  850/1800/1900 MHz GSM/GPRS




                                                                                                                        Page 37 of 49
Table 3: Blackberry 7000 Series with Semi-Full keyboard using predictive wording technology
Family       Model      Screen           Network                    Notes                 Carriers




          7100t

                                                                                   Airtel, Vodafone, T-
          7105t
                                                           with integrated phone Mobile
                                 850/900/1800/1900 MHz
                                                           with      speakerphone,
          7100r                  GSM/GPRS
                                                           Bluetooth
                      large
"Charm"               240x260
          7100v
                      colour

          7100g[2]

                                                                                    O2      (UK),      O2
          7100x
                                                                                    (Ireland)

                                                           with integrated phone
                                                           with      speakerphone, Nextel and Telus and
          7100i                  iDEN
                                                           Bluetooth, Push-to-talk, SouthernLINC
                                                           GPS, 64MB

                                                                                    Verizon     Wireless,
                                 800/1900 MHz CDMA2000
          7130e                                                                     Sprint, Telus, Alltel,
                                 1x and EV-DO
                                                                                    and Bell Mobility

          7130c       large                                with integrated phone AT&T
7130                  240x260                              with      speakerphone,
                      colour                               Bluetooth
                                 850/900/1800/1900 MHz                             O2      (UK),       O2
          7130g
                                 GSM/GPRS/EDGE                                     (Ireland), Airtel

          7130v                                                                     Vodafone




                                                                                             Page 38 of 49
Table 4: Blackberry Pearl Series
                                                                                                    Rogers Wireless, Cincinnati Bell,
                                                                                                    AT&T, Vodafone, Orange (UK), T-
                                                                     new trackball interface, 1.3
                                                                                                    Mobile (UK/US), O2 (UK), O2
                                                                     MP camera, speakerphone,
                                                                                                    (Ireland) and Vodafone (Ireland),Telcel
                                           850/900/1800/1900 MHz     Bluetooth, microSDHC (to
                                                                                                    (Mexico), Vodafone and TIM (Italy),
                                           GSM/GPRS/EDGE             8GB with handheld code
                                                                                                    Vodafone and Essar (India), Airtel
                                                                     4.5), polyphonic ringtones,
                                                                                                    (India), Mobily (Saudi Arabia),
                                                                     media player
                                                                                                    Mobilink (Pakistan), MTN (Nigeria)
         8100
                                                                                                    and Ufone (Pakistan).


                                                                     trackball interface, 2 MP
                                                                     camera,        speakerphone,
                                                                     Bluetooth,           external
                                           850/900/1800/1900 MHz                                   Vodafone, O2 (UK), O2 (Ireland) & T-
         8110                                                        microSDHC (to 8GB with
                                           GSM/GPRS/EDGE                                           Mobile.
                                                                     handheld      code      4.5),
                                                                     polyphonic ringtones, media
                           240x260 with
                                                                     player, GPS
                           65K colours

                                                                     trackball interface, 2 MP
                                                                     camera,        speakerphone,
                                                                     Bluetooth,           external
                                           850/900/1800/1900 MHz                                   O2 (UK) and AT&T Mobility & T-
         8120                                                        microSDHC (to 8GB with
                                           GSM/GPRS/EDGE                                           Mobile (USA).
                                                                     handheld      code      4.5),
                                                                     polyphonic ringtones, media
                                                                     player, Wi-Fi
Pearl"

                                                                     Trackball Interface, 2MP
                                                                     Camera,       Speakerphone,
                                                                     Bluetooth, microSDHC (to Bell Mobility, Telus Mobility, Sprint,
         8130                              800/1900 CDMA/EVDO
                                                                     8GB with handheld code Verizon Wireless,Alltel, US Cellular
                                                                     4.5),   Polyphonic/MP      3
                                                                     ringtones, Media Player, GPS


                           Internal Display:                         trackball interface, 2 MP
                           240 x 320 pixels                          camera,        speakerphone,
                           (1/4 VGA) 65K                             Bluetooth,           external
                                                                                                   O2 (UK) & T-Mobile (USA), Tim
                           colours.          850/900/1800/1900 MHz   microSDHC (up to 16GB),
         8220 Pearl Flip                                                                           Italy, Telus Mobility & Rogers
                           External          GSM/GPRS/EDGE           polyphonic ringtones, media
                                                                                                   Wireless (Canada).
                           Display: 128 x                            player, "Clamshell" form
                           160 pixel 65K                             factor, 128MB flash memory
                           colours                                   Wi-Fi


                           Internal Display:
                                                                     trackball interface, 2 MP
                           240 x 320 pixels
                                                                     camera,        speakerphone,
                           (1/4 VGA) 65K
                                             800/1900 MHz CDMA2000   Bluetooth,           external
                           colours.
         8230 Pearl Flip                     [1xRTT] networks MHz    microSDHC (up to 16GB), Verizon (USA).
                           External
                                             1xRTT/EVDO              polyphonic ringtones, media
                           Display: 128 x
                                                                     player, "Clamshell" form
                           160 pixel 65K
                                                                     factor, 128MB flash memory
                           colours




                                                                                                                           Page 39 of 49
Table 5: Latest Blackberry Models: Curve, Bold and Storm
                                                                                           Airtel (India), Vodafone
                                                                                           (India), Etisalat (UAE),
           8310                                                                            AT&T, Mobilink (Pakistan),
                                                                                           Rogers Wireless, O2 (UK),
                                                                                           O2 (Ireland) .


                                                                                           Vodafone (Germany, The
"Curve"
                                                           Trackball    interface,   2.0   Netherlands), AT&T, SFR
                                                           Megapixel             camera,   (France), Rogers Wireless,
"Bold"                    850/900/1800/1900 MHz                                            M1/Vodafone (Singapore),
           8320                                            Speakerphone,      Bluetooth,
                          GSM/GPRS/EDGE/Wi-Fi              internal microSDHC (to 8GB      Bouygues Telecom France,
"Storm"                                                    with handheld code 4.5),        Vodafone (UK), O2 (UK),
(a.k.a.                                                    Polyphonic         Ringtones,   O2 (Ireland) , T-Mobile
Thunder)                                                   Media Player, GPS.              (Slovakia).


                          Dual-band     800/1900 MHz
                          CDMA2000 1X EV-DO networks                                       T-Mobile (USA), Orange
           8330
                                                                                           (Slovakia)
                          iDEN, Wi-Fi


                                                     Trackball    interface,   2.0
                                                     Megapixel             camera,
                                                     Speakerphone,      Bluetooth,         Telus    Mobility,  Bell
                                                     internal microSDHC (to 8GB            Mobility, Alltel, Sprint,
           8350i
                                                     with handheld code 4.5),              Verizon   Wireless.  US
                          Dual-band     800/1900 MHz Polyphonic         Ringtones,         Cellular
                          CDMA2000 1X EV-DO networks Media Player, GPS, WiFi,
                                                     next generation OS (4.6)
                          iDEN, Wi-Fi

           8900           850/900/1800/1900 MHz            Trackball interface, 3.2 MP
                          GSM/GPRS/EDGE                    camera + flash + autofocus,
                                                           speakerphone, Bluetooth 2.0,
                                                           WiFi 802.11 a/b/g, UMA, Sprint Nextel
"Curve"                                                    GPS, external microSD (to
                                                           16GB), 3.5 mm stereo audio
"Bold"     (Javelin)                                       jack

"Storm"
(a.k.a.                                                    Trackball interface, 2.0 MP
                          850/900/1800/1900 MHz
Thunder)                                                   camera,        speakerphone,    T-Mobile      (USA      &
                          GSM/GPRS/EDGE              +
                                                           Bluetooth, Wi-Fi 802.11         Germany), AT&T, Rogers
                          UMTS/HSDPA (DoCoMo model
                                                           a/b/g,    GPS,       external   (Canada), Orange (UK), O2
                          features   additional 800mhz
                                                           microSDHC (to 16GB),            (UK) .
                          WCDMA frequency[1]) + WiFi
           9000                                            3.5 mm stereo audio jack


                                                       Clickable      Touchscreen
                          CDMA       EV-DO     800/1900,
                                                       interface, 3.2 MP camera, AT&T, Rogers, Turkcell,
                          GSM/GPRS/EDGE
                                                       Bluetooth, 1GB Internal Telenor (Pakistan), Airtel
                          850/900/1800/1900,      UMTS
                                                       Flash, 3.5 mm stereo audio DoCoMo, O2 (UK)
                          HSDPA 2100
                                                       jack, microSD
           9530


                                                                                           Verizon, Vodafone, Telus
                                                                                           (Canada), Bell (Canada).




                                                                                                        Page 40 of 49
Picture 1: Amazon.com partnering with AT&T to sell Blackberry Bold




Picture 2: Blackberry Google Adwords promotion by Verizon.




                                                                     Page 41 of 49
Picture    3:    The     Blackberry.com      website,   showing   the   Blackberry   Bold     and
Curve.




Exhibit 4: Phase of smartphone’s product life cycle




                                                                                      Page 42 of 49
Page 43 of 49
7.7   RIM’s Historical Financial Statement



Annual Income Statement (All dollar amounts in millions except per share amounts.)
                     Feb 05             Feb 06            Feb 07           Feb 08       Feb 09

Revenue                 1,350.4          2,065.8         3,037.1          6,009.4     11,065.2
Costs of
Goods Sold                (636)            (925)          (1,379)          (2,929)      (5,968)

Gross Profit              714.5          1,140.6         1,657.8          3,080.6       5,097.3
Gross Profit
Margin                  52.90%          55.20%           54.60%           51.30%       46.10%
SG&A
Expense                (512.70)         (476.90)         (488.60)         (813.10)   (1,362.30)

R&D Expense            (101.00)         (158.00)         (236.00)         (359.00)     (685.00)
Depreciation &
Amortization               66.8             85.9           126.4            177.4         327.9
Operating
Income                     34.0           419.8            806.8          1,731.2       2,722.1
Operating
Margin                   2.50%          20.30%           26.60%           28.80%       24.60%
Nonoperating
Income                     37.1             66.2            52.1             79.4          78.3
Nonoperating
Expenses                     --               --               --               --             --
Income Before
Taxes                      71.2           486.1            858.9          1,810.5       2,800.4

Income Taxes             -142.2           104.0            227.4            516.7         907.8
Net Income
After Taxes               213.4           382.1            631.6          1,293.9       1,892.6
Discontinued
Operations                   --               --               --               --             --
Total Net
Income                    213.4           382.1            631.6          1,293.9       1,892.6
Net Profit
Margin                  15.80%          18.50%           20.80%           21.50%       17.10%
Diluted EPS
from Total Net
Income ($)                  0.4              0.7              1.1              2.3           3.3




                                                                                     Page 44 of 49
Annual Balance Sheet (All dollar amounts in millions except per share amounts.)
                      Feb 05            Feb 06             Feb 07          Feb 08      Feb 09
Cash                  1,037.8             635.1              987.2         1,605.1     1,518.2
Net
Receivables             391.1             441.9              634.4         1,340.1     2,453.7
Inventories               92.5            134.5              255.9           396.3       682.4
Other Current
Assets                    22.9              45.0              41.7           135.9       187.3
Total Current
Assets                1,544.3           1,256.6           1,919.3          3,477.4     4,841.6
Net Fixed
Assets                  210.1             326.3              487.6           706.0     1,334.7
Other
Noncurrent
Assets                    866.6            729.3           682.1          1,327.9      1,925.1
Total Assets            2,621.0          2,312.2         3,088.9          5,511.2      8,101.4

Accounts
Payable                  614.4            257.5            517.9          1,436.8      2,061.5
Short-Term
Debt                        0.2              0.3              0.3              0.3            --
Other Current
Liabilities                16.2             21.0            28.5             37.2          53.8
Total Current
Liabilities              630.8            278.7            546.6          1,474.4      2,115.4
Long-Term
Debt                        6.5              6.8              6.3              7.3            --
Other
Noncurrent
Liabilities                  --            27.9             52.5             95.9        111.9
Total Liabilities        637.3            313.4            605.5          1,577.6      2,227.2

Preferred
Stock Equity                 --               --               --               --            --
Common
Stock Equity            1,983.7          1,998.8         2,483.5          3,933.6      5,874.1
Total Equity            1,983.7          1,998.8         2,483.5          3,933.6      5,874.1
Shares
Outstanding
(mil.)                   189.5            186.0            185.9            562.7        566.2




                                                                                     Page 45 of 49
Annual Cash Flow Statement (All dollar amounts in millions except per share amounts.)
                      Feb 05            Feb 06            Feb 07           Feb 08          Feb 09
Net Operating
Cash Flow               278.0             150.1             735.7          1,576.8        1,451.8
Net Investing
Cash Flow              -878.1              67.3            -364.6         -1,153.9       -1,823.5
Net Financing
Cash Flow                54.0            -368.2            -153.7             80.4            25.4
Net Change in
Cash                   -546.1            -150.8             217.6            507.3          -348.9

Depreciation &
Amortization               66.8            85.9            126.4            177.4           327.9
Capital
Expenditures             -109.4           -178.7          -254.0           -351.9           -833.5
Cash
Dividends Paid               --               --               --               --               --
Free Cash
Flow                     168.6             -28.6           481.7          1,224.9           618.3




                                                                                        Page 46 of 49
7.8   RIM DCF Valuation
Cost of Capital
 Equity Bata                                      2.34                 Yahoo Finance
                                                                       10 Year Treasure Bond
 Risk Free Rate (Rf)                           3.45%                   Yield(yahoo)
 Expected Market Rate RM                       8.00%                   S&P 500 Averate Return
 Equity Market Risk Premium(Rm-Rf)             4.55%
 Cost of Equity/WACC                           14.10%
 Terminal Growth Rate                          5.00%
 Shares Outstanding                      564.9 million shares


DCF Forecasting Assumption
                                         Actual        Forecast        Forecast       Forecast      Forecast        Forecast
 Fiscal Year End Date                  2/28/2009      2/28/2010        2/28/2011      2/28/2012     2/28/2013       2/28/2014
 Sales Growth                              84.1%          30.0%           40.0%          31.3%         22.5%            13.8%
 Cost of Goods Sold/Sales                  53.9%          53.9%           53.9%          53.9%         53.9%            53.9%
 R&D/Sales                                  6.2%           6.2%             6.2%          6.2%          6.2%             6.2%
 SG&A/Sales                                13.5%          13.5%           13.5%          13.5%         13.5%            13.5%
 Dep&Amort/Avge PP&E and Intang.           10.2%          10.2%           10.2%          10.2%         10.2%            10.2%
 Interest Expense/Avge Debt                 0.0%           0.0%             0.0%          0.0%          0.0%             0.0%
 Non-Operating Income/Sales                 0.7%           0.7%             0.7%          0.7%          0.7%             0.7%
 Effective Tax Rate                        32.4%          32.4%           32.4%          32.4%         32.4%            32.4%


                                      Actual             Forecast          Forecast           Forecast                Forecast
 Fiscal Year End Date                2/28/2009           2/28/2010         2/28/2011          2/28/2012              2/28/2013
 Income Statement (in thousands
 dollars)
 Sales (Net)                             11,065,186      14,384,742          20,138,639             26,431,963           32,379,155
 Cost of Goods Sold                     (5,967,888)      (7,758,254)       (10,861,556)           (14,255,792)         (17,463,346)
 Gross Profit                             5,097,298        6,626,487          9,277,082             12,176,171           14,915,809
 R&D Expense                           (684,702.00)        (890,113)        (1,246,158)            (1,635,582)          (2,003,588)
 SG&A Expense                        (1,495,697.00)      (1,944,406)        (2,722,169)            (3,572,846)          (4,376,737)
 EBITDA                                   2,916,899        3,791,969          5,308,756              6,967,742            8,535,485
 Depreciation & Amortization              (194,803)        (297,058)          (402,965)              (543,584)            (686,458)
 EBIT                                     2,722,096        3,494,911          4,905,791              6,424,159            7,849,027
 Interest Expense                                                  0                  0                      0                    0
 Non-Operating Income (Loss)                 78,267          101,747            142,446                186,960              229,026
 EBT                                      2,800,363        3,596,658          5,048,237              6,611,119            8,078,053
 Income Taxes                           (907,747.0)      (1,165,869)        (1,636,403)            (2,143,016)          (2,618,528)
 Net Income Before Ext. Items             1,892,616        2,430,789          3,411,834              4,468,103            5,459,525
 Net Income (available to
 common)                               1,892,616         2,430,789          3,411,834             4,468,103            5,459,525




                                                                                                    Page 47 of 49
                                 Actual      Forecast      Forecast      Forecast          Forecast
Fiscal Year End Date         2/28/2009      2/28/2010     2/28/2011     2/28/2012         2/28/2013
Cash Flow Statement (in
thousands dollars)
Cash From Operations          1,293,523      2,399,008     3,244,812     4,388,263         5,556,848
Cash From Investing         (1,420,756)    (1,274,994)   (2,098,054)   (2,397,587)       (2,438,491)
Cash From Financing               40,338     (668,551)     (357,287)   (1,127,193)       (2,302,365)
Net Change in Cash              (86,895)       455,464       789,470       863,483           815,992
 + Beginning Cash Balance     1,605,107      1,518,212     1,973,676     2,763,146         3,626,629
 = Ending Cash Balance        1,518,212      1,973,676     2,763,146     3,626,629         4,442,620




                                                                         Page 48 of 49
8 EndNotes

1
 Source: Business Week, April4, 2008, Interview with RIM founder, Mike Lazaridis,
http://www.businessweek.com/innovate/content/apr2008/id2008044_416784.htm?campaign_id=rss_daily
2
 RIM records all employee calls, March 04,2009, interview with RIM’s CIO Robin Bienfait interview with
ZDNet.com.au in Sydney, http://www.zdnet.com.au/news/communications/soa/RIM-records-all-employee-calls
3
 Managing Change through Networks and Values, M, Johnson-Cramer, S Parise, R. Cross, California Management
Review, Vol 49, NO. 3, Spring 2007, page 103
4
 Fast Company, Rapid Motion by Bill Breen posted on 12/29/2007 From Issue 49 |(July 2001),
http://www.fastcompany.com/magazine/49/motion.html?page=0%2C3
5
 Canada's 10 Most Admired Corporate Cultures™ of 2006 , Waterstone Human Capital,
http://www.canadasmostadmired.com/
6
    JP Morgan
7
    JP Morgan, page 4
8
  RIM’s secret weapon: Carriers’ profitability and lower bandwidth consumption. April 3rd, 2009,
tttp://blogs.zdnet.com/BTL/?p=15740




                                                                                                   Page 49 of 49

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:19
posted:12/12/2011
language:English
pages:49