William Polushin is founding director of the Program for International Competitiveness at the Desautels Faculty of Management, McGill University, and President of AMAXIS, an international business and operational development services firm. The Competing to Win blog series can be found .
There are few games out there that test one’s strategic thinking better than chess. A well thought-out plan, coupled with the ability to anticipate and outmanoeuvre your opponent, invariably leads to the capture of your opponent’s king. Game over.
The world of business is essentially built on the same basic principles, but in this case, the prize is revenue, earnings, market share and share price growth. In an increasingly integrated, competitive and fast-paced global economy, the path to these riches is complex and by no means certain.
Imagine the late Steven Jobs and the recently replaced Mike Lazaridis/Jim Balsillie going head-to-head in a corporate version of the royal game. In this case, though, both sides have only one piece to play with - Apple Inc. and Research In Motion Ltd. (Lazaridis/Balsillie), two giants in the mobile technology industry and two storied companies representing the best in U.S. and Canadian innovation.
So, beyond all the fanfare associated with the release of the iPad 3 on March 16, and last week’s that there were 770,000 more iPhones than BlackBerrys shipped in Canada in 2011 (2.85 million iPhones versus 2.08 million BlackBerrys), how has this game played out over the past few years?
As the following charts show, both companies realized substantial revenue and earnings growth from 2008 to 2011*. At RIM, annual revenue and net income jumped 231.3 per cent and 163.6 per cent, respectively. At Apple, net sales and earnings realized gains of 188.7 per cent and 323.6 per cent. Impressive results for both companies, but since the beginning of 2009, the unforgiving and unapologetic market - as reflected in the stock prices of these worthy opponents - was squarely behind Jobs and Co.
The financial results for 2012 have not reversed the trend. This week, RIM will be coming out with its Q4 results and, based on their Q1 to Q3 numbers, and their previously announced outlook for the last quarter in their financial year, the company will actually see a decline in annual revenues (to an estimated $19-billion U.S., from $19.9-billion in 2011) and net income (to an estimated $1.75-billion, from $3.4- billion).
Apple - based on exceptional Q1 results and a bullish second quarter outlook - is on pace to realize annual net sales and income of more than $160-billion and $45-billion, respectively, in financial 2012 (from $108.2-billion and $25.9-billion in 2011).
By any measure, I think we can all safely say that Mr. Jobs took the match over Messrs. Lazaridis and Balsillie.
Apple is one of RIM's key competitors in the mobile technology field - whether we like it or not. This scenario is reflected across sectors in which Canadian enterprises compete. With few exceptions, home-grown Canadian enterprises are small compared to the companies they are competing with in the global economy. That is why we have to become much more savvy in the country about what it takes to compete and win today.
The game between RIM and Apple is hardly over. Yes, Apple definitely enjoys an advantaged position over RIM at present, but with a change in leadership at the helms of Apple (Tim Cook) and RIM (Thorsten Heins), the long term script of these two companies remains to be written.
I am rooting for the home team. I just hope, though, that Mr. Heins is a particularly adroit chess player.
* Revenue and net income figures pertain to each company’s financial years versus results specific to the calendar year.Report Typo/Error