BlackBerry maker Research In Motion has long differentiated itself from the rest of the smartphone industry because it isn’t just a phone seller, but also gets recurring revenue from carriers for BlackBerry service subscriptions. Its subscriber growth has therefore been one of the most looked-at metrics in the company’s quarterly reports.
That’s why it’s somewhat surprising that RIM will stop releasing quarterly subscriber growth stats after this quarter’s earnings release in December. (It still plans to announce major milestones, such as the 100 million subscriber mark, and quarterly device shipment totals.)
RIM made the announcement on its Q2 call yesterday afternoon, after missing its subscriber growth numbers for the second quarter in a row.
RIM co-CEO Jim Balsillie explained, “Net subscriber account additions are increasingly difficult to forecast as the smartphone market becomes mainstream with more channel complexity, growth in the number of competitive products and increased market segmentation.”
Perhaps the bigger problem is that investors have put a lot of weight in RIM’s subscriber growth metrics, and RIM has disappointed them several times now. Meanwhile, RIM’s competitors don’t report subscriber stats, only device shipments, because they don’t have subscribers. So it seems like RIM thinks it’s being unfairly scrutinized here.
We buy that, and RIM doesn’t really have to disclose anything about its subscriber base that it doesn’t want. And to that point, RBC analyst Mike Abramsky writes today that the change in reporting “may reduce share volatility around quarterly results” — meaning shares may not spike up or down so much based on whether RIM beats or misses its subscriber growth forecasts.
But it also reflects the reality that RIM’s subscriber base just isn’t growing as fast as the company had hoped, as a greater mix of sales are to existing BlackBerry subscribers who are upgrading to new phones. And as competition intensifies — especially in the enterprise — that’s not a good trend.
Earlier: RIM Guidance Strong, Stock Jumps