Thursday, December 8, 2011

The perils of resting on your technological laurels

The good people at Casey Research, in their latest Daily Dispatch newsletter, have a very interesting article on how Research In Motion (RIM), makers of the BlackBerry smartphone/PDA, lost their market leadership in the field. Here's an excerpt.

Last week (on Friday after market close, no less – the time when companies send bad news they hope the market will forget about by Monday), Blackberry smartphone maker Research in Motion (RIMM) dropped a bombshell, announcing that not only was its Playbook line of tablet computers floundering – not news to anyone who watches these things – but that the company would incur a massive $485 million charge in Q3 from writing off excess Playbook inventory and expenses.

The amount was so staggering that many analysts and industry observers were left wondering exactly how the company could have screwed up so badly. However, given RIM's decline in its core smartphone market – it's been rapidly bleeding market share for a few years now – there was little chance the company could make a tablet play successful. While RIM's most ardent fans insisted that the company was simply down but not out, the writing has been on the wall for some time that this company has lost its mojo. This latest blunder teaches some important lessons that all technology investors should understand.

There's much more at the link. Highly recommended reading as a case study in how not to maintain your market dominance!


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