Math in the News: Issue 52

Blackberry vs. iPhone

• For years, Research in Motion’s (RIM’s) Blackberry has been dominant in the mobile device market. Its flexible design allowed users to check e-mail, make phone calls, and browse the Internet.

You can see a sign of RIM’s success by looking at its revenue, which is the amount of money coming into the company from sales of

Blackberry products. This is before expenses are taken into

account.(Source: www.rim.com.)

http://www.rim.com/


This table shows RIM’s revenue from 2000 to 2011. Throughout this period, the revenue shows an increase. (Revenue is in thousands of dollars.)

Year Revenue: RIM2000 $84,967

2001 $221,327

2002 $294,053

2003 $306,732

2004 $594,616

2005 $1,350,447

2006 $2,065,845

2007 $3,037,103

2008 $6,009,395

2009 $11,065,186

2010 $14,953,224

2011 $19,907,000


Here is the graph of the revenue data, which shows dramatic increases from year to year.


This graph shows the percent increase in revenue from year to year. Note that although revenue increases every year, the percent increase from year to year goes down after 2008.

Net Income takes into account the expenses incurred and gives a

better indication of the success of a company. Let’s look at RIM’s Net Income from 2000 to 2011.


This table shows the Net Income from 2000 to 2011. Note that some years show negative values, representing a profit loss for that year.

Year Net Income2000 $10,498

2001 -$6,211

2002 -$28,479

2003 -$148,664

2004 $51,829

2005 $213,387

2006 $382,078

2007 $631,572

2008 $1,293,867

2009 $1,892,616

2010 $2,457,144

2011 $3,411,000


This is a graph of the Net Income data.


Now look at the percent increase in Net Income from year to year. Not only are there negative values, but since 2006 the Net Income has been flat to declining.

While RIM continues to generate more revenue each year, it’s

becoming more expensive for them to do so. As a result, their

Net Income declines.


You can see that the start of RIM’s Net Income troubles coincide with the release of the first iPhone.


RIM’s Net Income problems got worse in 2008 with the release of the first Android phones.


The result of two huge competitive forces (Apple and the Android phones) has taken a toll on RIM’s stock price, which has been in continual decline.


Although RIM has a new CEO, it’s unclear what can be done to stem the tide of profit loss.

Education

Math in the News: Issue 52