I think the time has come to call the end of RIM, although it might take a while to come to pass.

It’s not just the continuing losses in their core business; plenty of companies have had periods of decline, only to reinvigorate themselves and roar again.

It’s the delay to BlackBerry 10.

RIM is subject to an existential threat, and they know it. At current run-rates, they’ve got about a few years of runway left before these losses overcome them (although with only $1.5B in cash and $500M a quarter in losses, one wonders). Given their belief that BB10 represents their survival, the repeated delays speak to a deep inability to execute – even the threat of extinction can’t help them deliver to announced dates. The bar, too, is incredibly high – Apple and Google’s platforms are large, profitable and growing, and that growth is funding investment. To take back a spot on the podium, RIM needs to not only match those platforms but dramatically surpass them, all the while funding that investment from retained earnings, rather than profit.

According to Reuters data, the analysts don’t think (in aggregate) there’s growth in RIM’s top line even once BB10 lands. The mean estimate has their sales gently falling away over the next two years; the low estimate has it collapsing by two-thirds. There’s a lot of momentum in their business – RIM’s “fortress enterprise” customer-base is very resistant to change – but that’s not going to last forever, nor restore profitability.

RIM’s responding to this by slashing costs. Heins announced a program to reduce $1B p.a. of cost by cutting 5000 staff, about a third of RIM’s current workforce. Given the enormity of the task ahead of them, one struggles to imagine how they’re going to cut that many people without compromising the key development resources they’re going to need to deliver BB10, or the marketing and sales forces to sell them. This is already starting to appear; the Q1 release this week showed declines in research and development expense of about 13% in the last nine months.

Delving further into the numbers we got this week, gross margin was down about 35% in nine months (from 43% to 28%); revenue down about 43%, against a nearly constant cost of sales. More tellingly, EBIT went from a $900M profit in May 2011 to a $640M loss last quarter, an astonishing $1.5B collapse in profitability. Even after recent write-downs, RIM is still carrying $1B in inventory, which will only decline in value (particularly after BB10 is released, if it is), putting further pressure on profit. RIM’s also carrying accounts receivable worth all of last quarter’s revenue, which seems concerning to me. They’ve still got about $9B of equity (of which $7B is retained earnings), but there’s a full $6B of PPE and intangibles on their books, and that $1B of inventory.

Given all this, it’s plausible that RIM won’t be with us, in its current form at least, five years from now. If this were Nokia or Sony, that wouldn’t be a huge cause for enterprise concern. RIM, though, put their servers on the network path for every interaction between a BlackBerry device and its mailbox. We’ve already seen what happens when these servers fail – last year’s extraordinary outage seems to have been part of the catalyst for the co-CEOs’ resignations – imagine now that they become uneconomic to a new owner of the assets, or that RIM’s eventual administrators can’t afford to run them.

What’s your plan to reduce your dependence on RIM? Given how slow large organisations can be to change, to say nothing of governments, we should probably start disinvesting now. If we do, RIM’s eventual failure might become a self-fulfilling prophecy.

Update: Matt Sinclair points out that John Gruber called this four years ago, quite presciently.

For me, Twitter seems to be down. That said, downforeveryoneorjustme.com says it’s just me, so I’m not sure what to believe. (Actually, it looks like I can’t resolve anything, so it probably is just me.)

All that said, the most frustrating thing is that I just tried to take to Twitter, from this laptop, to complain about Twitter seeming down.

…

It took literally seconds for the realisation to click. I think it’s time to crash out for the night.

(And, in writing that sentence, my brain anagrammed “night” as “thing”…)

In the #5by5 channel, on freenode earlier today:

05:59 < Holy_Cow> This is the problem with OS X. If this was a Windows machine, I would have a million suggestions of how to fix this. None of them would work, but at least you would look busy.

Farhad Manjoo, writing for PandoDaily:

[I]f you’re bullish about Facebook’s long-term future, you should be happy about [the lack of a first-day rise in their stock price]—Facebook now has more resources with which to fight Google and Apple, after all. But of course for most investors, the IPO wasn’t about the long term. If you bought shares on Day 1, you were almost certainly doing so because you expected a pop—and when you didn’t get your sugary popsicle, you whined.

Interesting piece, and Manjoo’s thinking makes a lot of sense.

I’m not sure that agree this means that there wasn’t a bubble, though. Zynga’s P/E ratio is currently 68 times 2013 estimates, which implied investors are pricing in astonishing growth. Facebook is similar, with a P/E of about 73, even after the post-IPO decline.

That said, I’m hopeful in a similar direction:

Not only are we likely to see fewer irrational IPO pops after Facebook, but—in a twist that has taken even Facebook’s critics by surprise—we might even see investors basing their decisions on a firm’s fundamentals.

Paul Krugman’s five step scenario for the failure of the Euro enjoys face validity:

4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or:

4b. End of the euro.

The Economist:

Like some dreadful joke, the euro needs French reform, German extravagance and Italian political maturity.

Nearly two weeks later, this still makes me laugh. Pity it’s so important…

This site has an excellent selection of data visualisation tools.

Dinei Florêncio and Cormac Herley:

We have examined cybercrime from an economics standpoint and found a story at odds with the conventional wisdom. A few criminals do well, but cybercrime is a relentless, low-profit struggle for the majority.

and

The harm experienced by users rather than the (much smaller) gain achieved by hackers is the true measure of the cybercrime problem. Surveys that perpetuate the myth that cybercrime makes for easy money are harmful because they encourage hopeful, if misinformed, new entrants, who generate more harm for users than profit for themselves.

Alan Kohler’s blog is a series of interesting economics and finance graphs, with an Australian slant.

See also his column on high-frequency trading yesterday.

Keith Winstein et al at MIT have released Mosh (for “Mobile Shell”). They describe it as a:

Remote terminal application that allows roaming, supports intermittent connectivity, and provides intelligent local echo and line editing of user keystrokes. Mosh is a replacement for SSH. It’s more robust and responsive, especially over Wi-Fi, cellular, and long-distance links.

After a few minutes of testing, it seems to do what it says on the label. Because our new house doesn’t have internet connectivity yet, I’m spending more and more time on cellular data networks; SSH feels very brittle on these connections, and I have to reconnect about once an hour. Mosh promises to supply a more robust connection that, as they say,

makes remote servers “feel” more like the local machine!

Certainly, it feels much lower latency in recognising keystrokes than the standard ssh connection next to it. It helpfully underlines keystrokes that have been recognised locally but haven’t yet been acknowledged by the remote host (or at least, that’s what I assume it means).

I like, too, that it piggybacks session negotiation and authentication off the ssh protocol. I had to add one firewall rule to my linode, to allow a single inbound udp port; that’s very reassuring. Even the two factor authentication provided by Duo worked perfectly without reconfiguration.

Update: My favourite feature is one I didn’t anticipate when first exploring mosh — if I close the lid on my laptop, my session’s alive when I open it, without forcing me to reauthenticate. This still feels like magic to me.