Blackberry 2008 Annual Report Download - page 33

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31
Device revenue increased by $2.55 billion, or 115.2%,
to $4.77 billion, or 79.4% of consolidated revenue, in fiscal
2008 compared to $2.22 billion, or 73.0%, of consolidated
revenue in fiscal 2007. This increase in device revenue over
the prior year is primarily attributable to a volume increase of
approximately 7.4 million units, or 114.8%, to approximately
13.8 million devices in fiscal 2008 compared to approximately
6.4 million devices in fiscal 2007. ASP in both fiscal 2008 and
fiscal 2007 was $346. As RIM expands its market focus into the
consumer market and as the technology continues to mature,
the Company expects the ASP to decline. ASP is dependant
on projected future sales volumes, device mix, new device
introductions for the Company’s enterprise, prosumer and
consumer offerings as well as pricing by competitors in the
industry.
The Company estimates that a $10, or 2.9%, change in
overall ASP would result in a quarterly revenue change of
approximately $138 million, based upon the Company’s
volume of devices shipped in fiscal 2008.
Service revenue increased $300.5 million, or 53.7%, to
$860.6 million and comprised 14.3% of consolidated revenue
in fiscal 2008 compared to $560.1 million, or 18.4% of
consolidated revenue in fiscal 2007, reflecting the Company’s
increase in BlackBerry subscriber accounts since fiscal 2007.
BlackBerry subscriber account additions were approximately
net 6.1 million for fiscal 2008 compared to approximately
net 3.1 million for the comparable period last year. The total
BlackBerry subscriber account base at the end of fiscal 2008
was over 14 million compared to approximately 8 million at
the end of fiscal 2007. On February 21, 2008, the Company
issued a press release updating its subscriber forecast for the
fourth quarter of fiscal 2008. A copy of the press release is
available at www.sedar.com.
Software revenue includes fees from licensed BES
software, CALs, technical support, maintenance and
upgrades. Software revenue increased $61.2 million, or
35.3%, to $234.4 million in fiscal 2008 from $173.2 million in
fiscal 2007.
Other revenue, which includes accessories, non-warranty
repairs and NRE, increased by $57.9 million to $145.8 million
in fiscal 2008 compared to $87.8 million in fiscal 2007. The
majority of the increase was attributable to increases in
accessories and non-warranty repair.
Gross Margin
Gross margin increased by $1.42 billion, or 85.8%, to
$3.08 billion, or 51.3% of revenue, in fiscal 2008, compared to
$1.66 billion, or 54.6% of revenue, in the same period of the
previous fiscal year. The decrease of 3.3% in consolidated
gross margin percentage was primarily due to a higher
percentage of device shipments which comprised 79.4%
of the total revenue mix in fiscal 2008 compared to 73.0%
in the same period of fiscal 2007, as well as changes in the
BlackBerry device mix. Gross margin percentage for devices
is generally lower than the Company’s consolidated gross
margin percentage. The decrease in gross margin percentage
relating to the increase in percentage of device shipments
was offset in part by improved service margins resulting from
cost efficiencies in RIM’s network operations infrastructure
as a result of the increase in BlackBerry subscriber accounts
and a decline in certain fixed costs as a percentage of
consolidated revenue as the Company continues to realize
economies of scale in its manufacturing operations.
Research and Development, Selling, Marketing and
Administration, and Amortization Expense
The table below presents a comparison of research and
development, selling, marketing and administration, and
amortization expenses for fiscal 2008 compared to fiscal 2007.
Fiscal Year Ended
March 1, 2008 March 3, 2007
$% of
Revenue $% of
Revenue
Revenue $ 6,009,395 $ 3,037,103
Research and development $ 359,828 6.0% $ 236,173 7.8%
Selling, marketing and administration 881,482 14.7% 537,922 17.7%
Amortization 108,112 1.8% 76,879 2.5%
$ 1,349,422 22.5% $ 850,974 28.0%