Nikon's 5 year plan...

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stevo23
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Nikon's 5 year plan...
11 months ago

OK guys, you read what the moderator said. Maybe we can re-boot this yet again and stay civil.

Thoughts of Nikon's demise could bring many emotions, but it's just a camera. If they were to go away in 5 years (not likely), there are other toys to play with.

Here's the article:

business.financialpost.com/2013/10/05/point-shoot-collapse-why-big-camera-companies-are-the-next-blackberry/?__lsa=de50-bc6b

Here's what I think is wrong with the article (not much right actually):

1) Most technology writers try to understand what they write about. This one doesn't quite get Nikon and Canon or any other camera maker or why any of the past ones went out of business. I don't know anything about him personally, but in this case, he seems to be missing something.

2) Quoting numbers can be scary, but I like Thom Hogan's more balanced approach. He actually knows what they mean and where they come from. He's being honest and straight with the facts and not skewing it for his purposes.

3) Tunnel vision is a sure sign that you're not getting an informative article. This writer focuses on Nikon and Canon, but the forces he describes and uses to predict doom are hitting all camera makers. One could actually say the Nikon and Canon, with cash in hand, are in a stronger position than the rest.

If you dig deeper, you'll realize this is not really an smart article at all. It's a simple regurgitation of facts that have been floating around for some time now. It's really just about the pain the smartphone market is causing the camera makers. It should say "all camera makers". But it doesn't. It chooses to focus on the big two.

JimPearce
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Typical Financial Post fare...
In reply to stevo23, 11 months ago

Many of the "facts" are indeed common knowledge here, but many would be new to a broader business readership. The numbers are daunting, no matter how you look at them and correct the details. Ironically, the writer doesn't seem to know anything about Nikon's quality control and customer service problems. And let's be clear: Thom thinks that Nikon has some work to do. Do I think Nikon will be around in five years? Short answer: yes, but it will be a much smaller company.

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rkodama1
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Re: Nikon's 5 year plan...
In reply to stevo23, 11 months ago

I don't know about the validity of that article's numbers but based on what I have seen, Nikon may have some challenges ahead of them.  While their sales have increased, their 2013 Op Income took a large drop.  This means that they are making less profit on greater sales.  This is one of the downsides of outsourcing key, expensive components such as sensors although there many other factors impacting profitability.  Also, their cash flow tightened up which is a bad indicator.  If this trend continues with lower Op Margins and tightening working capital then Nikon will have less money to invest in R&D and other future expansion activities.  It doesn't matter what technology Nikon has if they can't turn into profits and cash flow.

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stevo23
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Re: Typical Financial Post fare...
In reply to JimPearce, 11 months ago

JimPearce wrote:

Many of the "facts" are indeed common knowledge here, but many would be new to a broader business readership. The numbers are daunting, no matter how you look at them and correct the details. Ironically, the writer doesn't seem to know anything about Nikon's quality control and customer service problems. And let's be clear: Thom thinks that Nikon has some work to do. Do I think Nikon will be around in five years? Short answer: yes, but it will be a much smaller company.

But it's easy to focus all the complaints on Nikon because we are (obstensibly) Nikon owners and we're well aware of their faults. I check some of the other brand threads and there are always things to complain about.

There's nothing about Nikon that keeps them from being number one other than themselves.

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stevo23
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Re: Nikon's 5 year plan...
In reply to rkodama1, 11 months ago

rkodama1 wrote:

I don't know about the validity of that article's numbers but based on what I have seen, Nikon may have some challenges ahead of them. While their sales have increased, their 2013 Op Income took a large drop. This means that they are making less profit on greater sales. This is one of the downsides of outsourcing key, expensive components such as sensors although there many other factors impacting profitability. Also, their cash flow tightened up which is a bad indicator. If this trend continues with lower Op Margins and tightening working capital then Nikon will have less money to invest in R&D and other future expansion activities. It doesn't matter what technology Nikon has if they can't turn into profits and cash flow.

But read every other annual report from a camera maker. I've read through them all and it's gloomy everywhere. The biggest weakness here isn't the loss of sales to smartphones or lack of mirrorless etc. It's that they are more dependent on cameras than any of the other camera makers. They're so heavily leveraged in cameras that they will be hurting if they don't climb up on that wagon and start driving it like a winner.

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JimPearce
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In reply to stevo23, 11 months ago

http://www.dslrbodies.com/newsviews/july-2013-nikon-news/if-the-ship-were-sinking.html Maybe you missed this commentary Thom did on a WSJ article. Nikon may indeed be #1 in overall camera sales in 2013, but Canon will continue to dominate in DSLR sales. So what was different in 2007, the last time they challenged Canon for that crown?

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Moondancer
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Re: Nikon's 5 year plan...
In reply to stevo23, 11 months ago

I too don't think Nikon will go away in 5 years time. I would go as far as saying they may transform into an optics company with possible niche camera bodies due to not being able to keep up with software and electronics innovations. Of course new technology (such as computational photography) could arise and reduce the importance of glass quality thus pose real threat to the well being of high end lens makers.

But these are all speculations, and more often than not, companies that do fall out of relevance were rarely predicted to be years before their demise.

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dave gaines
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In reply to stevo23, 11 months ago

I didn't see what the moderator said, so her goes.

The article's most significant numbers are:

"... the rate of market decline is accelerating each quarter — with global shipments of all digital cameras falling 36.2% to 19.2 million units in the second quarter alone, and interchangeable lens cameras, which include DSLRs, falling 10.9% to just 4 million units shipped. Canon has sold 23% less cameras than a year earlier, Nikon is down 18.2%, and Sony and Fujifilm are each off about 35%."

This begs the question of which maker was selling more of the P&S that are slowly being replaced by "Smart" phones. Does that account for the differences in sales decline? It's clear that DSLRs are about 20% of the total market in this particular quarter. I thought it was less. The difference between Canon and Nikon may be due to the latest, greatest new release from one or the other brand for that particular quarter, or the time period surrounding that quarter. Maybe one brand had a hot new release during that period.

The article stated this is a general trend. Maybe the market for DSLRs is saturated now. Maybe the advances in cameras have slowed to the point where buyers feel it's too much money to spend for too little increase in value. Maybe buying the latest model as soon as it's released has lost it's appeal. Maybe "it's the economy stupid".

According to the article, IQ is not the most important factor. Being connected instantly online is. Maybe what the new wave of DSLRs need is wifi connection through the smart phone, which is available today. But posting a 600x400 pixel, 150 KB image to be viewed on a 5" screen is not what you need a DSLR for.

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ultimitsu
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Re: Nikon's 5 year plan...
In reply to stevo23, 11 months ago

I will make a few quick comments:

1, Cameras saw unprecedented, in fact, arguably unnatural, growth for about 10 or 15 years. It was the advent of digital camera and the sudden lowered cost of photography enticing a lot of otherwise uninterested people into photography. You can say it was merely a fashion trend and like all fashion trends, it was always going to die down. But that doesnt mean the core hobbyists will disappear or change what they do. So yes, we will see a decline in sales, but the decline will merely go backto,  at the most, where things were before the age of digital camera.

2, notwithstanding what I said above. The general interest in photography has not died down. What has happened, is that the majority, who care more about instant sharing over ultimate quality, merely found smart phones to be more convenient. They choose to use smartphone only because they can share images instantly. It truly is surprising how camera makers are so slow at realising this. As of 2013 no major camera makers make a mid-high end camera with 3G connection or NFC. only a handful have wifi. People used to carry a cellphone and a small camera with them. there is no reason why that is suddenly unthinkable. except right now it is very inconvenient because you have to move SD card around to copy images. If cameras like A7, or V1, or G16 or RX100 or S110 had NFC, you just touch it with your smartphone and instantly you can upload pictures to facebook, many people will come back to stand alone cameras.

Recently a friend of mine went to Thailand with his girlfriend for a holiday, He took his D300 + 17-50 yet he took 99% of his pictures with iPhone 5. Why? because he wanted to upload images to instagram, facebook, wechat, ALL THE TIME, to show off where he has been what he has just eaten or how hot his girlfriend is bikini. Now I wouldn't do that myself because I want my images to be as good as possible so when I come back look at them again in 15 years I wont have regrets. But I can certainly understand his thinking. So why is it camera makers are so slow to catch up with this trend?

Like the article said, Nikon's 5 year plan should have been in place 5 years ago. indeed. If 5 years ago (when iphone 1 was out for one full year which already started changed the way people use their phones) Nikon had the vision to see how things would turn out, they should have included an accessory bay in all their DSLRS which allows you to plug in an add-on that does not protrude like the wifi chip for D600/D3200. Then my friend may well have been shooting d300 during his thai trip, and his next planned camera would be a D7100 rather than iPhone 5S.

Sadly, 5 years down the line, they still havent thought of that. 6D is about as advanced as they come and it doesnt have programmable OS or NFC. D600 is even worse with that stupid 70 dollar add-on.

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kelvin2345
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Re: Nikon's 5 year plan...
In reply to stevo23, 11 months ago

I agree with the financial post article.

Would you have predicted RIM to get in such sticky situation 5 years ago, when nearly every single ibankers were using the Blackberries?

Would you have predicted Nokia being acquired before the debut of the iPhone? When every other smartphones are either manufactured by Nokia or Sony.

Would you have predicted Samsung to dominate the smartphone market 5 years ago? When Android was not released yet?

And do you remember Kodak? The company that INVENTED the digital camera and dominated the whole film industry?

So why is it not possible for Nikon to go out of business in 5 years?

What are the recent breakthroughs of Nikon? I mean breakthroughs, not incremental upgrades of sensors megapixels. I dont think they will be around in the next 5 years if they keep on doing what they have been doing.

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Leonard Shepherd
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Re: Nikon's 5 year plan...
In reply to stevo23, 11 months ago

ANY reasonable company has a 5 year plan, updated every year to take account of what has happened and what is currently predicted to happen in the market.

There is some similar talk about Apple. Despite this Apple report 6,000,000 sales in the first week after launch of there new i-phone - which many suggest is not a technology leader.

Last years Nikon 5 year plan included reports they had started developing mobile phone products,. The just announced D5300 confirm Nikon are not standing still implementing new technology.

Nikon and Apple are facing increased levels of competition. Some financial analysis (like Ken Rockwell) make money out of controversial and sometimes unrealistic claims.

6 years ago Nikon did not have an FX body - in 2012 they were market leaders. Did this market analyst predict this? If not maybe you should consign his comments to the garbage can.

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caspianm
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Re: Nikon's 5 year plan...
In reply to Leonard Shepherd, 11 months ago

I agree. Phones are not DSLR replacement. DSLR sales are down due to market saturation and market decline due to shrinking economy growth specially in Europe. Phones have eaten the point&shoot market. DSLR market is not a growing market. Last year was a year of decline for many expensive gadgets.

DSLR will continue to sell below or near last year level as new entries such as cheaper & smaller FF become the norm. Nikon has sold 5% more than Canon (18% vs 23% decline) last year. Next year Canon goes under water further than Nikon in DSLR sale as they have ceased to introduce more advanced sensors for years.

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rhlpetrus
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Re: Typical Financial Post fare...
In reply to JimPearce, 11 months ago

JimPearce wrote:

Many of the "facts" are indeed common knowledge here, but many would be new to a broader business readership. The numbers are daunting, no matter how you look at them and correct the details. Ironically, the writer doesn't seem to know anything about Nikon's quality control and customer service problems. And let's be clear: Thom thinks that Nikon has some work to do. Do I think Nikon will be around in five years? Short answer: yes, but it will be a much smaller company.

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Jim

Maybe yes maybe not (much smaller company). Nikon still has a strong precision tool division, even though imaging has seen the most growth in the last 10 years and the 2008-2009 crash is still affecting its steppers and other industrial sectors.

I have had a private exchange with Thom regarding emerging markets. He thinks they are not going to cover for the change in the more developed economies re photography. I can't say, but Canon is going to produce Rebels here in Brazil for internal sales and exports. Nikon will likely follow suit, they have recently revamped Nikon Brazil, which never existed before (there was a comercial representative that didn't do much for them).

Think about the BRICs, about 3 billion people slowly ascending the income ladder. Africa has another 1 billion people, and other Asian emerging economies (led by Inodnesia in population) account for another 700 million or more. If the big two keep their heads cool and make longterm plans, certainly there is a world market for 20 or 30 million ILCs a year, possibly more. I don't see markets in NOrth America and Europe growing, and I think that's what these "analysts" only look at in their "expert" papers.

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Bailey151
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Re: Nikon's 5 year plan...
In reply to kelvin2345, 11 months ago

kelvin2345 wrote:

I agree with the financial post article.

Would you have predicted RIM to get in such sticky situation 5 years ago, when nearly every single ibankers were using the Blackberries?

Would you have predicted Nokia being acquired before the debut of the iPhone? When every other smartphones are either manufactured by Nokia or Sony.

Would you have predicted Samsung to dominate the smartphone market 5 years ago? When Android was not released yet?

And do you remember Kodak? The company that INVENTED the digital camera and dominated the whole film industry?

So why is it not possible for Nikon to go out of business in 5 years?

What are the recent breakthroughs of Nikon? I mean breakthroughs, not incremental upgrades of sensors megapixels. I dont think they will be around in the next 5 years if they keep on doing what they have been doing.

Absolutely - and all of the failures listed here have one thing in common & that is the company in question failed to understand or adapt to how people used the device. Blackberry couldn't grasp the concept of apps, Nokia couldn't grasp the concept of a "smartphone", and Kodak relied on reputation.

At this juncture Nikon's single biggest issue is they have no idea how devices get used. It's quite apparent they lack even the most basic understanding of electronic media & content consumption. No Wifi, no NFC, & new to GPS tells me they just "don't get it".

Sony introduces a new camera that has both NFC & WiFi, Nikon is rumored to introduce a camera that can't even do video. WTF? This is a huge hint Nikon simply doesn't understand how media is used or how content is consumed. It would seem Nikon has no idea things like Facebook or Youtube exist.

Nikon is in the most vulnerable position. If Canon got out of the camera business entirely they might survive, same can be said for the like of Fuji. Sony is so diverse they can quit much larger markets like TV and survive. Nikon? Nope, that would be the end of them.

Nikon can continue to follow the dinosaurs who ramble on about "this is the way we did 'er back in 19-ought-and 5" and they'll follow them to extinction.

Don't get me wrong - I like Nikon, been using their products for a long time (quit Canon during the lens mount dustup - ) but I'll go with the devices that meet my needs & if that's not Nikon so be it.

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bobn2
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Re: Nikon's 5 year plan...
In reply to stevo23, 11 months ago

stevo23 wrote:

OK guys, you read what the moderator said. Maybe we can re-boot this yet again and stay civil.

Thoughts of Nikon's demise could bring many emotions, but it's just a camera. If they were to go away in 5 years (not likely), there are other toys to play with.

Here's the article:

business.financialpost.com/2013/10/05/point-shoot-collapse-why-big-camera-companies-are-the-next-blackberry/?__lsa=de50-bc6b

Here's what I think is wrong with the article (not much right actually):

1) Most technology writers try to understand what they write about. This one doesn't quite get Nikon and Canon or any other camera maker or why any of the past ones went out of business. I don't know anything about him personally, but in this case, he seems to be missing something.

2) Quoting numbers can be scary, but I like Thom Hogan's more balanced approach. He actually knows what they mean and where they come from. He's being honest and straight with the facts and not skewing it for his purposes.

3) Tunnel vision is a sure sign that you're not getting an informative article. This writer focuses on Nikon and Canon, but the forces he describes and uses to predict doom are hitting all camera makers. One could actually say the Nikon and Canon, with cash in hand, are in a stronger position than the rest.

If you dig deeper, you'll realize this is not really an smart article at all. It's a simple regurgitation of facts that have been floating around for some time now. It's really just about the pain the smartphone market is causing the camera makers. It should say "all camera makers". But it doesn't. It chooses to focus on the big two.

With respect to Nikon, I don't expect Nikon to disappear. For a number of reasons:

i) Nikon is an important part of the Mitsubishi group. I use the word 'group' rather then 'kieretsu' advisedly. Mitsubishi seems to see it as a part, see here:

http://www.mitsubishi.com/php/users/category_result_industry.php?gyousyu_id=0015&lang=1

This puts it is a significantly different position with respect to companies such a Nokia or Kodak. Simply, Nikon won't go bust, and isn't likely to get taken over by an outside concern (they would have to negotiate with Mitsubishi first). Note also what Mitsubishi says Nikon's business is:

http://www.mitsubishi.com/php/users/category_result_info.php?lang=1&click_id=07&company_id=00000004

It's quite likely that if Nikon was losing money badly, it might get restructured significantly (which would have to be by agreement with Nikon's shareholders, but since one way or another Mitsubishi controls a majority stake that would be forthcoming)

ii) Nikon's semiconductor equipment is of strategic importance to Japan - that is, the Japanese government would not be prepared to let ASML gain control of the market, thus whatever the global market does, that business will survive.

So, the chances survival of Nikon surviving as a company are pretty high. I can imagine that the photographic range might retreat to just the top end/pro models over time, and without the margin contribution from the amateur models, those will be relatively much more expensive than now (think low volume cinema cameras from the likes of Red)

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stevo23
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Re: O captain! My captain!
In reply to JimPearce, 11 months ago

JimPearce wrote:

http://www.dslrbodies.com/newsviews/july-2013-nikon-news/if-the-ship-were-sinking.html Maybe you missed this commentary Thom did on a WSJ article. Nikon may indeed be #1 in overall camera sales in 2013, but Canon will continue to dominate in DSLR sales. So what was different in 2007, the last time they challenged Canon for that crown?

If you read their Annual Report (2012?), they state very clearly that they want to be valedictorian of the summer school class when it comes to compacts. I can think of several reasons why one might want that spot, not sure if any of them make good sense.

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stevo23
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Re: Nikon's 5 year plan...
In reply to ultimitsu, 11 months ago

ultimitsu wrote:

I will make a few quick comments:

...

Sadly, 5 years down the line, they still havent thought of that. 6D is about as advanced as they come and it doesnt have programmable OS or NFC. D600 is even worse with that stupid 70 dollar add-on.

Well - wait a second. I don't think we expect a 6D or D600 to be the "wifi" camera. I pick it up when I want resolution and quality. I don't plan to wifi that image to aunt Jeannie in Minnesota.

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stevo23
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Re: Nikon's 5 year plan...
In reply to kelvin2345, 11 months ago

kelvin2345 wrote:

I agree with the financial post article.

Would you have predicted RIM to get in such sticky situation 5 years ago, when nearly every single ibankers were using the Blackberries?

Yes, we saw that in my company. It was obvious the minute active sync came into being.

Would you have predicted Nokia being acquired before the debut of the iPhone? When every other smartphones are either manufactured by Nokia or Sony.

Absolutely.

Would you have predicted Samsung to dominate the smartphone market 5 years ago? When Android was not released yet?

No surprise.

And do you remember Kodak? The company that INVENTED the digital camera and dominated the whole film industry?

Their death was inevitable - we saw the death of film. Kodak couldn't survive in digital because they had no infrastructure to build cameras and because they were poorly managed and in financial trouble before digital hit.

So why is it not possible for Nikon to go out of business in 5 years?

It is possible

What are the recent breakthroughs of Nikon? I mean breakthroughs, not incremental upgrades of sensors megapixels. I dont think they will be around in the next 5 years if they keep on doing what they have been doing.

"If they keep doing what they've been doing" - clearly that is true. But remember that both Canon and Nikon, with their large embedded base, is trying to make smart moves that keeps the customer base intact while also attracting new buyers.

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sandy b
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Nikons STRONGER than they were five years ago
In reply to kelvin2345, 11 months ago

And if they are out of the camera business in five years, no one will be in it. Sony, Pentax, Oly, Fuji, all of them could be out of it THIS year. Sony has Never made a profit selling cameras. Ever. It's been years since any of the others saw a dime. Anyone remember Nikon finishing a year in the red? Even the year with the flood? And theothers all have worse shrinking markets than Nikon. So sure, Nikon could go under. Any company could go under.

I would put the odds at 100000-1.

I think Nikon is just as likely to solidify their position in the face of competition weakness.

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stevo23
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Re: Nikon's 5 year plan...
In reply to Bailey151, 11 months ago

Bailey151 wrote:

kelvin2345 wrote:

I agree with the financial post article.

Would you have predicted RIM to get in such sticky situation 5 years ago, when nearly every single ibankers were using the Blackberries?

Would you have predicted Nokia being acquired before the debut of the iPhone? When every other smartphones are either manufactured by Nokia or Sony.

Would you have predicted Samsung to dominate the smartphone market 5 years ago? When Android was not released yet?

And do you remember Kodak? The company that INVENTED the digital camera and dominated the whole film industry?

So why is it not possible for Nikon to go out of business in 5 years?

What are the recent breakthroughs of Nikon? I mean breakthroughs, not incremental upgrades of sensors megapixels. I dont think they will be around in the next 5 years if they keep on doing what they have been doing.

Absolutely - and all of the failures listed here have one thing in common & that is the company in question failed to understand or adapt to how people used the device. Blackberry couldn't grasp the concept of apps, Nokia couldn't grasp the concept of a "smartphone", and Kodak relied on reputation.

Not quite the case with Blackberry. The downfall of Blackberry is mostly the result of their reliance on the Waterloo path and especially the higher cost of having to maintain the Blackberry Enterprise Server. Blackberry simply cost more for fewer features. They were also very vulnerable to a couple of patent trolls a few years ago and I believe that hurt them the most and kept them from putting their energy into innovation that could have saved them.

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