The BlackBerry CEO thinks tablets would be dead in 5 years.
Three days ago, some statements credited to the BlackBerry CEO made some interesting headlines, while I haven’t read the actual interview so there’s a chance it’s quoted out of context (people do anything for clicks these days) the quote goes thus:
“In five years, I see BlackBerry to be the absolute leader in mobile computing — that’s what we’re aiming for,” “I want to gain as much market share as I can, but not by being a copycat.” “In five years I don’t think there’ll be a reason to have a tablet anymore,” “Maybe a big screen in your workspace, but not a tablet as such. Tablets themselves are not a good business model.”After I read it and shared the link to the Engadget article where I first saw it via my twitter, I got a couple of replies asking me to do a post with my thoughts and before I could get around to writing it, Bankole’s post on the issue went up…more ginger to write…more on his post later.
Back to Thorsten’s views, there are two points you can readily deduce from his statement. Firstly, he doesn’t think tablets are a good business model. To that, I’ll agree wholly and the market to an extent agrees. Only Apple really makes serious money in the tablet space. To a much lesser Samsung also does but their margins are no where near Apple’s. Apple is able to make so much money in the tablet market because they aren’t actually selling you a tablet, they sell you a lifestyle and an ecosystem. The most common question I hear from 1st time iPad users on this part of the world is “so what does it do?” And “How can I do this (or that) with it? Meaning, they just knew they had to get an iPad, not necessarily what they were going to do with it. That’s the lifestyle bit. It’s the genius of Apple’s marketing. Then there’s the apps, and itunes, that’s the ecosystem.
Samsung on the other hand are profitable in the tablet market for two, often overlooked reasons. First of all, their sheer marketing and distribution power means where other OEMs spend, they save. I’ll give an example. Assume Samsung wants to ship a batch of new tablets and phones to Nigeria, they don’t have to make separate transport budgets, they can simply distribute the shipment into other already paid for channels of distribution for their other already established products (Tvs, fridges etc)…so no money spent there. Distribution and marketing? They can give out little quantities of the said products (tabs and phones) to existing dealers for other products and bundle them together (eg buy a TV, get a free smartphone)….(Again, no money spent there), they can afford to keep doing this, till the product can stand on it’s own. No unnecessary risk taken, no marketing budget used, nothing. No other OEM can afford to do this.
Secondly, and most importantly, Samsung controls every single point of their product chain. They make the “raw materials”. From chips, RAM, to display, to battery….they make everything and in most cases, each production is a business of its own. Again another example: Company A orders processors from Samsung, but somewhere along the line, company A’s products don’t do too well, and are forced to shelve the product and cancel orders. They obviously would pay Samsung termination fees and all that. Samsung still has a couple of warehouses full of processors. So what do they do? They can get left over display orders, left over RAM, etc put them together…and voila! New product. For all we know, many Samsung products could be left overs from other products. Again no other OEM can do this. (Note that I’m not stating that this is what they do, just used that as an example). A lot of savings would also be made by offering in house products, parts at smaller profit margins than when they are selling to competitors.
These two reasons enable Samsung to profit in almost any market they are in. It also affords them the luxury of making long term profit projections and taking small margins knowing that over time, the volume would balance up the margins per product. (Some Samsung products sold here, especially in the low end have profit margins of less than N20). I’ll probably dedicate a whole post some other time to Samsung as a whole…it’s always a great subject to discuss.
No other OEM makes decent money off tablets. Nexus 7 is pretty much sold at the cost price, Kindle fire was sold at a loss, even BlackBerry’s ill-fated Playbook is being sold at a loss right now.
So if the CEO of blackberry thinks Tablets would be all gone in 5 years time,hey guyz do you think thesame?
HOLLA!!!
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Meet Shellie Bo Talley. She is already 55 years old but she looks and dresses as if she is a 29-year-old woman. She is a mother, a grandmother, a host, and CEO of Blaq Pearl Entertainment She already has grey hair, but she still looks so young. She said that she never had surgery.
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