As bad as we think? #BlackBerry

It was announced recently that Windows phones overtook BlackBerry for the number 3 position in the world. This news came at a very bad time for BlackBerry as its own sales numbers weren’t nearly as high as expected. The fact many people seem to be overlooking is that BlackBerry 10 has only been available for 7 months while Windows phones have been available for just about 2 years. To compare a phone that has over a year in maturity to a new operating system seems ludicrous. The fact that there are 3 vendors pumping out Windows phones against a single vendor is another issue that needs to be taken into account. The news has been so willing and eager to jump on the father of smartphones that its like their waiting for any screw up. A new phone, new OS, lack of apps, poor marketing and terrible media have all contributed to a slower then expect start of sales. So it is truly as bad as people think? Lets take a quick peek at some numbers and see if its truly as bad as the news makes it out too seem.

The first full quarter of Lumia sales seen 2 million unit shipped. Blackberry 10 sales were roughly 1 million in the first quarter with the Z10 only being available in markets like Canada for 1 month. The Lumia sells more phones in the first quarter then BlackBerry 10.

The second quarter of Lumia sales seen 4 million units shipped to market compared to the 2.7 million units of BB10 that were shipped. The Q10 was only available in a couple markets again for a short period of time before the quarter ended. This is expected to be the biggest seller as many BlackBerry faithful have the qwerty keyboard phone.

BlackBerry 10 sales have only lasted through 2 quarters and it is extremely tough to predict the sales for the upcoming quarter. But if we were to continue to see the same growth as occurred from Q1 to Q2 then we could expect that 4.4 million units would be shipped in Q3. So lets see how that number compares to the Q3 sales of the Lumia lineup.

The third quarter of Lumia sales sent another 2.9 million units to the market. This is a 30% drop in sales from the previous quarter as the company transitioned from Windows 7 to Windows 8 phones. If we were to see the growth continue at 1.7 million units per quarter for BlackBerry then the Q3 numbers would see 4.4 million BlackBerry 10 devices sold. This means that in their respective quarters BlackBerry would sell almost 2 times what Nokia did if they had started sales together.

Obviously this number is based on the previously quarterly growth and would be subject to chances in the market, sales, etc etc. This simply proves that it isn’t all that bad when it comes to the sales of BlackBerry 10 devices. There is always room for improvement and many people were hoping to see much higher numbers then we have seen but it takes time. I believe that continuing with BlackBerry 10 till their first year portfolio runs out is the way to go. Thorsten Heinz said he wanted to take the company through the process and quitting while their are still plans on the table isn’t the right option.

There is also the issue of the company behind the product. The decline of BlackBerry has been well noted in tradition media and every step taken has been marred with bad press. In North America there isn’t the same press about the issues that Nokia is facing which may be much worse then BlackBerry. Nokia lost 98.8 million dollars in the last quarter even though they sold 7.4 million Lumia devices. The 9 months prior to the Q2 2013 results they had lost 4.1 billion dollars which included many restructuring charges as they cut massively into their employment pool. 24,500 workers will have lost their job come the end of 2013 as the company works to keep its head above water. While they have a large pool of cash they are consistently burning through it with their restructuring and quarterly losses. The position at BlackBerry while slightly better could be headed the Nokia way if things don’t start to turn around. Blackberry lost 84 million dollars in Q1 2014 as issues in Venezuela negatively affected the regions sales. Blackberry too has cut around 6,000 jobs in the previous months as they restructure the company in order to become more cost effective.

I try to write my blog posts as unbiased as possible but I will admit I have time/money invested in BlackBerry so I am biased. I don’t believe that comparing sales of Lumia devices which are in their second generation to first generation BlackBerry 10 devices is fair or accurate. Truly when we break it down the numbers are similar and with growth in the market of BB10 devices the company will continue to grow and proper. Truthfully I don’t believe that BlackBerry can take on Apple or Google but they can take on Windows and win the battle. We simply need more time to develop and push BB10 devices to market.

References:

http://en.wikipedia.org/wiki/Nokia_Lumia
http://en.wikipedia.org/wiki/Nokia#Financial_difficulties_and_restructuring

Click to access Q1FY14_final_filing.pdf

Sometimes perfect is dangerous

It was announced today that RIM’s new phones could be launched and released in March. This news was shocking to many who had been believing that RIM would release BB10 to the world in January or early February. Everything seemed to be pointing this way with RIM’s CEO saying at BB Jam America’s in late September

“in a few short months we will be releasing bb10”

To me 6 months isn’t a few short months away its a long way away and is severely damaging to the RIM customers who are ready and looking to update their phones. It begs the question; Is RIM waiting till its perfect to release it?

If I have learned one thing in my life is that nothing will ever be perfect, even if we tell our counter parts that they are. There will always be fixes and there will always be things that we could add to make it just that much more perfect. While I agree that RIM needs to make sure that they don’t release anything before it is ready for public consumption there needs to be a balance. Do you wait and push it off a little more to add things and fix things or do you release it at 95-99% or fix those last couple bugs while its being used by the consumer. It seems that RIM is waiting to make sure it is finally ready before the product releases after the disaster of the Playbook launch. Every day that the phones aren’t on the market means that the competition is stealing away more and more market share and the products released continue to age. RIM is a company that needs to make money in order to survive and as it stands right now they are doing very little of that with the BB7 phones. If it’s true that the phones launch in March that means for investors a minimum of 2 terrible quarters with the possibility of 3 or 4. Not great news for a company who’s stock has dropped from a high of $126 per share to around $7.50. Based on what I have seen of BB10 it is amazing and completely unlike anything else that is on the market or is coming to market. It’s a phone that I could see myself using for years to come but if we continue to wait then it might be a fish that got away. I would hope that RIM works to a early Q1 2013 launch in late January or early February. I can deal with a couple bugs because that is to be expected with a phone (look at Apple Maps) but the company needs to start selling again and making money because the 3 year contracts that many Canadians are on with older Blackberry devices are ending and soon.

 

In the end it will be interesting to see the difference between Microsoft and RIM. Microsoft is taking the get it to market now approach and RIM is taking the wait and finish before it releases it phones.

Media running with a story.

When you look into tech news recently one story or in the case company will stand out beyond the rest. RIM or Research In Motion the creators of the Blackberry smartphone seem to be in the news daily. While the reasons they are in the media merit the coverage the amount and how much media companies have run with it is extremely questionable. It seems that almost everyday or anything said will be front page in the tech section and sometimes make the front page. Blog after blog and even professional journalists digging deeper into a story and coming out with a completely wrong outcome. Now there are stories that need to be run with and being Canada’s biggest tech company it draws extra attention.

– RIM’s stock was and is an important story but now it has passed the residual book value and the shareholders meeting, if your not a share holder it means little. The numerous blogs and stories about the loss of share value are completely useless and focuses on a past company that has gone through significant changes. These types of stories shouldn’t come back into the press until the shareholder meeting, a company plans a takeover or RIM plans to go private.

– RIM’s financial numbers while important in the short term and for those paying attention to the company long term aren’t headline tech news or front page news. Unless RIM is announcing a bankruptcy then I’m not sure why this is really necessary for the news. The company has shown time and time again that its moving to a new platform and that its taking a lot of money and time to do so. In the mean time there sales are dropping due to a lack of new/interesting phones on the market. Yet, the titles “RIM is dead” or “RIM’s death spiral” continue to light the blog boards.

It really amazes me that the North American media pays such attention to RIM besides the fact its in transition and has made some serious misjudgements is in good position globally. It has 2.2 billion in cash, 0 debt and in number 1 in many of the developing countries. These facts continue to allude people when they write articles about RIM but what else is going on in the tech world also seems to disappear after the news hits.

Nokia was once the biggest phone manufacturer in all of the world and was one of the bigger employers in Finland. With the transition to smart phones from feature phones, Nokia failed to pay attention. They have lost billions of dollars and even last quarter (3 months) they lost 1 billion. But yet the media and the company found silver linings in the news and it was out of the media within hours. In that quarter Nokia moved the last plant out of Finland and into the developing nations, a story which likely received attention in Finland but did nothing for North American media. To Finland the company has the same recognition as GM, now imagine if GM moved all its plants to Mexico the media attention that would get!

HTC is another company running Google’s Android operating system. They make good phone and were extremely successful for a number of years. It really didn’t start having problems till Samsung released the extremely popular Galaxy S2 and Galaxy Note. Since then the company has been pushed out of markets by Samsung and there phones are having a huge issue of recognition after the media campaign by Samsung. Why isn’t HTC in the news more then the few hours after there market share numbers are released or the new quarterly report? If they continue, the company could be relegated to a much smaller market share or be squeezed out of the market by Samsung and other cheap phone manufacturers. HTC is a fairly big company and to be squeezed out of that market would be a huge story for the media but it seems like no one cares.

Sony doesn’t have the market share of RIM or any of the major companies but yet its smart phone division has been losing cash like they been wiping there ass with it. Apple has the Foxxconn issues and the legal battles with Samsung that never make more then a bloggers front page.

So why RIM, is it just an easy company to hate on as people moved from Blackberries to iphones, galaxy etc? Is it the way it fell or how it fell? Is it because it was Canada’s shining star in the tech world?

Leave your comments in the section below, what you think.

Land restoration tax

The topic of this blog is to purpose a new idea for a tax on industry. For years, Canadian industry has  powered the nation through the industrial revolution, wars, low and high times. We have produced everything from airplanes supplying the war effort to the automobiles that we drive everyday. With the introduction of developing countries as a cheaper alternative to industrial nations and the mass move these countries was on.

Thousands of jobs slowly eroded as these companies moved there factories to other countries for higher profits and business reasons. The things that stayed after the companies left were the buildings and the damage that they had done to the land. Thousands of empty factories dot the Canadian landscape rotting and slowly falling apart. The companies that originally owned them usually have long gone and the problem falls onto the tax payer. Not all of these sites that are contaminated were owned by industry, some site such as military installations were owned by the Canadian and American governments. Recently, it was announced that the government would have to pay close to 7 billion to clean up the heaviest polluted sites in Canada with the costs expected to rise significantly. Close to 2000 sites ranging from polluted lakes to military silo installations all leaking chemicals, pollutants into the ground. The idea for this tax would be to create a pool of money that could be used to clean up and restore sites if a company were to leave or go into bankruptcy.

How it would work:

A 1% tax would be added to all sites that fall under industrial. This tax would be collected through the same means as normal taxes but the 1% would go into a collection pool for environment projects. This bank account would grow until projects such as one previously listed at ‘high or extreme damage’ can be properly fixed and returned to normal. For every 10 dollars provided by industry the government would throw in a dollar of its own to help clean these project earlier. This tax would also have reductions where a company could reduce the amount it pays by doing there own environmental projects such as the Red Leaf project (Molson’s). A reduction of 0.10% for every $500,000 spent on environment projects in and around the area that the companies facilities sit on. A max of 30% reduction to the annual tax would be allowable for companies to claim. Sites would be determined by the toxicity of the contents, size, location and possible future damage to the environment. Once cleaned a site would need to sit idle for 10-20 years to allow the land and area surrounding it to recover and provide some relief to the area. Items that could be sold for scrap would go to the highest bidder to help cover restoration costs  and other items would be cleaned up accordingly. This fund would help to return to the past mistakes and correct them to the best of the ability of today’s technology and time.

Everday there is the chance of companies going under. The past mistakes we have made were to allow companies to come in to our land unchecked and make there billions in profits only to leave us the damage. We need to protect our land from this happening in the future and make sure the land returns the way we found it. Making sure we leave a better country and land for the next generations will allow us to take what we need and allow the space for more to grow elsewhere. Removing these structures from the land would allow the land to reclaim what is her’s and slow down the damage we have done to it. Hopefully its not too late.

F-35 Fiasco

In 2009, when the Canadian government said that they would be purchasing the F-35 stealth fighter I was extremely happy. From what I knew at that point the plane was extremely capable, fast, stealth and was a huge upgrade over our existing fighters. Now in 2012 its amazing how much things can change.

The Canadian government or ‘Harper’s Government’ are the laughing stock of the world and Canadians are ashamed. Since the election of 2011 and Steven Harper getting a majority conservative government there has been mistake after mistake. First it started off with Bill C-11, then Bill C-30 and now the F-35 fiasco has gotten even bigger. Its one of those mistakes that someones head (high up) should be put on a platter for the public to throw rocks at but its not likely to happen.

In 2006, the DND or the Department of Nation Defense informally signed an agreement with the American arms producer Lockheed to buy the F-35. It wasn’t know how many we would buy or how much they would cost but we signed on. Hoping that our American brothers would hold true to there word and get us a good deal. We actually also paid a couple hundred million to get Canadian companies the privilege to bid on work for it. The leadership of the DND and the ministry of defense figured that it was a waste of time to tender out the contract (30 billion) and make sure that it was in deed the best plane for the Canadians needs. Basically we signed on to buy a plane that hadn’t flown, been built or really knew the capabilities of other then on paper. We passed over the FA-18 Super-hornet, the European Tornado, Flanker SU and others because we simply trusted the Americans so much. When this fact came to light a couple years later, the government dismissed the claims as ‘false’ or ‘lies’. It was only in 2012 when the auditor generals report came out saying that the process was wrong and went against procedure that the government said “whoops we made a mistake”.

In 2009, when the government decided that they would purchase the planes it came with a hefty price tag. The government stated that they would buy 65 plans for 12 BILLION with a maintenance contract of 8 billion for 20 years. That works out to around 75 million per plane, but new technology is expensive and if they last as long as the F-18’s (30ish years) then we can hold our heads high and say well done, right? Around the same time that the ‘Harper Government’ was touting the 20 billion dollar cost the parliamentary budget officer came out with shocking new. He crunched the numbers and the cost was to be more then the government was showing off and it was 1-2 million they missed. It was 10 Billion dollars they simply ‘didn’t account for’. I’m not sure about you but I would love them to ‘not account for’ a 10 billion dollar transfer to my personal account. For his part in bringing out these numbers the government reduced his funding, made it harder for him to work and publicly criticized these numbers. While there were some conflicting reports made around this time from inside Lockheed and others, it seems that the budget officers numbers were closer then what the government was telling us. Fast forward to 2012 and the real numbers are out. 30 billion and rising because of partner pull outs and delays. Originally, it had been though that leadership inside the DND didn’t inform there ministers on the true costs. The defense minister himself said that he knew there was a ‘missing 10 billion dollars’ even as the government (including himself) pushed the 20 billion dollar cost. So while the government continued to push the lie, they started getting caught up in the web.

One of the most disturbing parts of this whole F-35 thing is that the planes apparently cannot do the job we need them to do. Yes, the wonder planes or the 160 million dollar shiny car cannot do the job we are buying it for. Canada has 4 extremely large borders, 3 which have water and 1 which has our neighbor to the south. For Canada, keeping the other 3 safe is extremely important but the most important may be the arctic. The arctic is the newest passage around the world and has been found to hold billions of litres of untapped oil. There are also huge amounts of minerals and other important resources which would help to keep the Canadian economy churning for a long time. The biggest issue right now is who has sovereignty over this area. The Canadians, Russians, Danish and Americans all are calling claim to large portions of this area as they have territory which is close to it. The problem for Canada is showing that they can protect this area and protect its own territory. Unfortunately  for the F-35, the curvature of the earth means that there communications and radar systems don’t work in the arctic. This is a huge problem and was known from the beginning. One of the keys for a planes purchase was to be able to work in the northern arctic. The F-35 didn’t meet this quality and as of right now will not be able too. Its expected that the Canadian government will buy pods for the F-35 to allow them to work in the north but the pods defeat the purpose of a stealth plane. The pod would create a bigger reflection area on radar making the planes more vulnerable to anti air fire and make buying stealth worthless, the current pods on the F-18 don’t fit so we would also need to purchase new ones. At this time there is no idea if there will even be a place for pods meaning the government may be SOL.

There is one other tiny problem for the Canadian government. The government paid around 300 million for Canadian companies to be able to bid on the plane, with the informal approval that they would also buy the plane. The contracts given to Canadian companies are also worth around 600-700 million and are providing work to Canadian aviation and technology companies. If the government was to pull back from the purchase it would basically be forking over the contracts back to Lockheed, have wasted around 1 Billion dollars and be on the line for major law suits. If it decided after the tendering process that the F-35 met its needs then it would have to spend more to get back in.

So basically the Canadian government bought a plane that (as of right now) cannot do the job its purchased for, is delayed and growing in cost and was contracted out to a company with no thought about the other options. Seems like something is wrong here to me. In my mind, someone needs to lose there job over this betrayal of Canadian trust and money. It’s amazing that the Conservative government which is based around fiscal responsibility is wasting so much of Canadian taxpayers cash.

I would support the government continuing to say they would informally purchase the F-35 to keep the contracts alive. I would like a new tendered process to see if it truly is the plane for the Canadian Air force. Its likely that any purchase will cost a large amount of money but that money should be going to the best plane available for the money and the pilots. We do not want another repeat of the sub purchase but don’t want to be hosed by lies from the government. We as Canadians simply want the truth, we want the government to act properly on our behalf and we want the best for our men and women serving in the forces. We may be in so deep now that we simply have to keep digging and hope for the best.