4 ms·

Blackberry has rapidly declining sales (-50% in 2 years)... you'd have to hope to not just cut costs, but cut them faster (and repeatedly) to stay ahead of the

Blackberry has rapidly declining sales (-50% in 2 years)... you'd have to hope to not just cut costs, but cut them faster (and repeatedly) to stay ahead of the current decline in sales. And you'd have to expect that decline to accelerate if you're cutting back on R&D (and probably facing general brain drain - why would a good mobile engineer keep working for a company in obvious wind-down? Nobody likes to work on an EOL platform.)

mathattack 13y ago
In this environment you pay the folks keeping the lights on "just enough"
- tomkarlo 13y ago
  That works if it's a factory. It doesn't work that well in a mobile device manufacturer. Anyone selling wireless devices is subject to ongoing changes in the regulatory environment, plus security threats. If they don't have a team better than what you get by paying "just enough", bitrot will set in within a year.
  - mathattack 13y ago
    I'm sure it will. But the scenario in question is "How do you wind down the beast taking as much cash out as possible?" It's similar to, "What if AOL just tried to milk the subscriptions instead of blowing all that money?"
    - tomkarlo 13y ago
      It's really, really not similar to AOL. AOL has an ongoing cash flow from subscription payments. Those payments keep coming from customers until they either quit the service or die off. Blackberry sells devices. They don't have significant recurring revenue streams - customers have to come back and re-up to a new device every 2-3 years, or they don't get any money. That means as soon as you're no longer offering a competitive product, the revenue stream can dry up very quickly. Especially if carriers and retailers decide you're no longer worth carrying. Look at the 50% drop they've taken in the past two years. Even if that line just stays constant, you're talking about a decrease of 90% in 6 years total. It's rare than you can scale a tech business down 90% or more and still operate it in any reasonable fashion.

mathattack 13y ago

In this environment you pay the folks keeping the lights on "just enough"

tomkarlo 13y ago
That works if it's a factory. It doesn't work that well in a mobile device manufacturer. Anyone selling wireless devices is subject to ongoing changes in the regulatory environment, plus security threats. If they don't have a team better than what you get by paying "just enough", bitrot will set in within a year.
- mathattack 13y ago
  I'm sure it will. But the scenario in question is "How do you wind down the beast taking as much cash out as possible?" It's similar to, "What if AOL just tried to milk the subscriptions instead of blowing all that money?"
  - tomkarlo 13y ago
    It's really, really not similar to AOL. AOL has an ongoing cash flow from subscription payments. Those payments keep coming from customers until they either quit the service or die off. Blackberry sells devices. They don't have significant recurring revenue streams - customers have to come back and re-up to a new device every 2-3 years, or they don't get any money. That means as soon as you're no longer offering a competitive product, the revenue stream can dry up very quickly. Especially if carriers and retailers decide you're no longer worth carrying. Look at the 50% drop they've taken in the past two years. Even if that line just stays constant, you're talking about a decrease of 90% in 6 years total. It's rare than you can scale a tech business down 90% or more and still operate it in any reasonable fashion.