Once upon a time, many (blue) moons ago, there was this little tech company that the world was infatuated with. They had a product that many referred to as a “crackberry.” The company was leading in their industry for a few years. Investors and the masses believed they could do no wrong. Today that company teeters on the brink of extinction. I am not going to sit here and pose theoretical questions that cannot be answered. No one knows if RIM can be saved. No one knows if they can fix their faltering business model. No one knows if selling off assets will solve the problem. Those are topics for another post and answers that will surface in the months and years to come. What does have me worried was the tragic realization I came to yesterday. While I was reviewing the RIM story, listening to the blabberheads blab about it, the scary truth hit me; companies that many believe can do no wrong, can end up doing everything wrong.
I remember the days of blackberries, it was back in the days of windows 98? Whenever it was, it was “the technology” to have. That changed overnight. It may have been a time before you were as technologically savvy, before you were obsessed with the newest and next top gadget. If you havent noticed the world is consumed with the new and best piece of technology. Lucky or unluckily, depending on how you look at it, the technology sector has exponential growth. Currently we don’t see another company poised to revolutionize the smart phone arena, but no one can say it wont happen? One can argue that the barriers to entry will put a damper on any entry into the smart phone arena. I see the huge financial rewards outweighing any potential barriers.
Many bloggers and news sources have discussed the potential effects of RIM putting all or part of it for sale. I don’t need to sit here and bore you with the details. The unavoidable truth is that RIM can be put in the hands of another powerful tech company, resulting in a potentially superior product to that of the iPhone or Android protects. Investors often look at past performance of things, which is valid, but fail to look ahead at how industries can be revolutionized. Someone could even pull a Jobs and come in an revitalize the company. However the “playbook” is executed, the face of the smart phone industry will change. RIM may or may not be a part of it, they may be the leaders of the space or go extinct, however your model plays it out, the tech space will continue to be extremely competitive.
The point I am attempting to drive home here is that the smart phone game is far from over. In comparison, look at the PC tale, it has been multiple decades and the rivals are still rivaling on. The leader can become the loser overnight, just as the loser can take the lead spot over lunch. Microsoft was thought of as the leader in the desktop space, now every small company in america operates on Macs. Dynamics change often and that is something smart investors need to be aware of. Yes, again and again Apple shines. This trend will continue until it doesn’t, but you already knew that. What you have failed to realize is that Apple can be a RIM, just as the same can be said about the Android products. With one major misstep, with one foolish gamble in the wrong place, the dynamics of the game can change, just like that.
When it comes to the technology space everything can change in a blink of an eye. Take RIM as an example. So no matter if you have all your eggs in one basket or distributed among many baskets, watch those damn baskets.
