TSLA - Tesla Motors

[thepupil]

But I just don't get how you (who has compounded capital at some ungodly rate) can just give Musk and TSLA the benefit of the doubt like you are doing. Will the market seriously allow Musk to not make money and suck up capital for 8 years while they get there? will  money always be free? 

 

Eric can correct me if I'm wrong, but I don't believe he has compounded capital by shorting wildly popular and successful companies with excellent and unique products, founded and run by some of the most successful CEOs on Earth.  I'm pretty sure he uses a different formula.

 

Take a look at Amazon.com.  These types of companies can be overvalued for decades.  And Amazon.com has never really been profitable.

 

How Eric has done that is not particularly relevant to the questions I've asked about TSLA's business model. I've thrown a bunch of shit against the wall that is ready to be assailed (I've proposed a long term ROA of 14%, I've given them free capital, I've used a discount rate of 7%). But no one has answered those questions or assailed my assumptions. They've pointed out the already well known flaws of shorting TSLA. I've shown the assumptions being used by the sell side and asked how reasonable they are.

 

I've asked for some company precedents of the revenue and volume growth that underlies those models. But no one has countered my assmptions. I've asked what Tesla's ROE is going to be and how it will overcome the constraints of its industry. I've asked a bunch of what i consider to be legitimate questions, but they aren't answered. Instead, I just get that I'm an idiot for shorting it. I already knew that.

 

Perhaps we can just agree to disagree. I just get frustrated because i want people to challenge the numerical assumptions and answer my questions and all i get is "musk is a visionary" "don't short on valuation" "you couldv'e said that 200% ago"

 

So please kill my assumptions. Show me why TSLA is not a car company.

 

If you shorted Amazon at 36 in november of 1998, you would've seen it go to 90, collapse and then had to wait till 2003 before it broke to 36 again. Ample opportunity would've been provided to cover at prices below 36. If you top ticked it at 105 in 1999 you coulve waited until 2009 (10 years) before it broke that again. So even the best of growth stories can be overpriced, collapse, and remain in the doldrums for many years. Is TSLA Amazon at 36 or is it at 105? That I don't know, but i'm inclined to say closer to 105.

 

Amazon funded its growth with options and payables float (they never made profits to fund their growth). Tesla appears to be funding its with equity and convertible debt, very cheap capital, but not free and it does dilute eventually.

 

[Palantir]

On an unrelated note to the above....Don't you guys think that things like the Gigafactory is going to hurt their margins? They're going from being a finished luxury goods supplier to manufacturing components and selling them to other people...it sounds noble, but I don't see it as helping margins.

[value-is-what-you-get]

Driving by my local "autoplex" which is 7 large car dealerships situated within a mile or so stretch, it occurs to me that almost the entire cost of those buildings, inventory, staff, repair bays, profits, property taxes, utilities, city taxes etc are added to the cost of ownership of a gas vehicle.  Then there is the cost of gas itself.  As the price of all these things increases over time, the Tesla business model becomes more profitable as the cost of ownership gap widens.  There is also a large Honda plant nearby which has a hundred trucks a day bringing in parts and assemblies from all over the place to assemble those traditional cars.  The outsourcing is an efficiency within an inefficient model.

 

I don't know what Tesla is worth.  It's a moving target depending on projections and assumptions.  I do know that what has been accomplished to date is remarkable and would not have been accomplished using a mental model of innovation by analogy (oh look the other guys are putting fins on their fenders so we better put out a model with fins on the fenders).

 

The first principles approach used by Musk is what has led to his success and will likely continue to do so.  It's the right way to think.  His accomplishments are considerable.

 

Big auto is advertising bluetooth and connectivity for the masses and small incremental improvements in fuel economy.

 

Tesla's don't require gas and can be driven across America on electricity provided for free ( I know it's paid for up front in the price of the car.  How much would a gasoline car cost if the useful lifetime fuel supply was built into the price?).

 

These are radically divergent trajectories.

 

At least Musk is part of the solution, not part of the problem, and if that is not worth some sort of premium, then I don't know what is.

[value-is-what-you-get]

 

So please kill my assumptions. Show me why TSLA is not a car company.

 

 

Define "car"

[shalab]

How is the Microsoft reference irrelevant? I tried to find the most successful growth story of all time and show its performance from its early stage? Should I use another example? Or am i just completely idiotic and focusing on precedent way too much? is 1/2 Microsoft 1990-2004 at all a reasonable expectation? Is Tesla's business model at all comparable?

 

Tesla is changing the world in a very significant way - you are seeing major disruption in the auto/utility industry which is better for the environment....

 

 

[Liberty]

At least Musk is part of the solution, not part of the problem, and if that is not worth some sort of premium, then I don't know what is.

 

I think you're spot-on with the premium thing.

 

It's been a pet-peeve of mine for years: Auto journalists in their reviews will talk about how cool fancy wheels, leather interiors, sunroofs, big engines, etc, are. They'll never try to economically justify these things. And that makes sense: They don't save you money, but you pay extra because you like these things and what they do.

 

But as soon as these same auto reviewers get inside a Prius or a Volt, they compare them to the closest gasoline car they can find and complain about how these cars will "never pay for themselves!" or will only produce small savings or whatever.

 

Well, there are a lot of people out there who want to drive electric cars or hybrids because they like the concept, it's a good thing to them, it provides value in itself over any monetary benefits.

 

So when comparing a Tesla to a similar gasoline car, not only should you shave off many thousands off the price because of the fuel savings, but it probably also makes sense to add more for what people are ready to pay extra to be in an electric car (many psychological reasons for that: to some it's not burning oil, to others it's the cutting edge tech, to others it's an added layer of exclusivity, or a mix of these, etc).

[enoch01]

At least Musk is part of the solution, not part of the problem, and if that is not worth some sort of premium, then I don't know what is.

 

I think you're spot-on with the premium thing.

 

It's been a pet-peeve of mine for years: Auto journalists in their reviews will talk about how cool fancy wheels, leather interiors, sunroofs, big engines, etc, are. They'll never try to economically justify these things. And that makes sense: They don't save you money, but you pay extra because you like these things and what they do.

 

But as soon as these same auto reviewers get inside a Prius or a Volt, they compare them to the closest gasoline car they can find and complain about how these cars will "never pay for themselves!" or will only produce small savings or whatever.

 

Well, there are a lot of people out there who want to drive electric cars or hybrids because they like the concept, it's a good thing to them, it provides value in itself over any monetary benefits.

 

So when comparing a Tesla to a similar gasoline car, not only should you shave off many thousands off the price because of the fuel savings, but it probably also makes sense to add more for what people are ready to pay extra to be in an electric car (many psychological reasons for that: to some it's not burning oil, to others it's the cutting edge tech, to others it's an added layer of exclusivity, or a mix of these, etc).

 

Great points, I hadn't thought of it in this way.

[blainehodder]

Eric was attempting to challenge your numerical assumptions and walk you through how TSLA could get there, but it seems you are getting offended.  Start with his first point of getting to 100,000-150,000 high end, high margin cars by 2020.

 

1) Do you believe they will hit 35,000 in sales numbers this year?

 

-Deliveries began in June 2012.

-They delivered about 22,5000 last year. Is 35,000 unlikely for 2014?

 

2) Do you believe they will begin to deliver the model X in 2015?

-Could the Model X sales ramp look largely like Model S Sales? If not, why not?  Will they get to 35,000 deliveries in 2 years for model X for 2017?

 

3) What could model S sales look like at that point by 2017? Presumably model S sales growth won't grind to a halt at 35,000 in 2014, then go flat. Will they?

What is your total number of deliveries around this time frame?

 

 

4) 3 years later, around 2020, do you or do you not agree that they could get to 100,000-150,000 vehicles in the high end market?

 

5) Do you think it is or isn't reasonable to achieve Porsche margins on those vehcles?  Remember TSLA has cut out a ton of waste in the distribution chain, is working on cutting out waste in the production chain, manufactures simpler vehicles in a brand new, state of the art factory.

 

Start with those questions.

[value-is-what-you-get]

My Honda CRV averages 13.5 l/100km.

 

Fuel costs $1.20 per litre, car has a useful life of 200,000 km, and say the increase in fuel costs over time offset the PV of prepayment, I could have prepayed all my fuel use for only an additional $32,400.00 up front (oil changes and complex mechanical systems related to fossil fuels repairs not included). 

 

How much are those Model X's going to cost?

 

Now do the same calculations on the luxury sedans that Model S competes with and it becomes even more compelling.

 

Wait until we get a track record published of reliability/repair cost numbers compared to gas burners.  Most conventional dealerships make the bulk of their money off this sort of thing!

 

 

 

 

 

 

 

[ERICOPOLY]

But I just don't get how you (who has compounded capital at some ungodly rate) can just give Musk and TSLA the benefit of the doubt like you are doing. Will the market seriously allow Musk to not make money and suck up capital for 8 years while they get there? will  money always be free? 

 

Eric can correct me if I'm wrong, but I don't believe he has compounded capital by shorting wildly popular and successful companies with excellent and unique products, founded and run by some of the most successful CEOs on Earth.  I'm pretty sure he uses a different formula.

 

Take a look at Amazon.com.  These types of companies can be overvalued for decades.  And Amazon.com has never really been profitable.

 

Exactly. 

 

Let's make a gentleman's bet though.  I speculate that two years from now, they are looking forward at 100,000 unit vehicle volume.  So, I expect them to sell 100,000+ vehicles in 2016.

 

Now, that's more than 50% of Porsche's current volume, and somebody carefully pointed out that Porsche is a 70 year old company. 

 

So let's see how it works out :-)  I will donate $100 to Sanjeev's honey pot (the board's "donations" link) if I'm wrong.

 

This will be Model S and Model X sales combined.

 

[ERICOPOLY]

How much are those Model X's going to cost?

 

Same as the Model S.  I should know, I reserved one (paid the $40,000 deposit for a "Signature" model).  I'm #1,239 in line -- I will get it sooner than that though, as some people will cancel.

 

 

[constructive]

Exactly. 

 

Let's make a gentleman's bet though.  I speculate that two years from now, they are looking forward at 100,000 unit vehicle volume.  So, I expect them to sell 100,000+ vehicles in 2016.

 

Now, that's more than 50% of Porsche's current volume, and somebody carefully pointed out that Porsche is a 70 year old company. 

 

So let's see how it works out :-)  I will donate $100 to Sanjeev's honey pot (the board's "donations" link) if I'm wrong.

 

This will be Model S and Model X sales combined.

 

I'll take that bet. Although I'd rather donate to Sanjeev's Crohn's and Colitis Fund. Good luck :)

[ERICOPOLY]

My high degree of confidence interval is more close to 80,000-90,000 cars sold.  However 100,000 is a stretch goal that I believe they will hit.

 

The Model X Performance is a dual-motor, AWD minivan/SUV that goes 0-60 in under 5.  They are expecting to sell more "X" than "S"s, and they should be in the 40,000-50,000 volume range on the "S"s in two years.

 

So, it will be a tight race. 

 

My chief risk is supplies -- I don't know if they will have the battery volume to do 100,000 vehicles that early.  I believe the demand is there though.

 

[thepupil]

I will take the 100K bet in 2016 for $100. Sanjeev's honey pot will win no matter what as i feel that i owe lots of money to this board for listening to my lonely ranting self.

 

Morgan Stanley (who i see as bull poster child) is at 86K for 2016, 150K for 2017.

 

We don't differ all that much on the possibility of the growth as much as the likelihood and the nature of TSLA's business and the constraints in which it operates. I understand they've taken out a lot of cost and this and that (dealers don't earn high margins on sale of cars though, so not really that much; they make it all on parts, servicing, and financing).

 

I just don't think they have overcome the fact that its a very competitive, capital intensive business. I am not so much short TSLA's innovation as I am long that of the well capitalized multinationals that actually make money. Perhaps they all just sit there and let TSLA make porsche esque ROE and perhaps TSLA gets loads of free capital to expand. Perhaps not.

 

I still don't understand why it's worth $40B. But I guess I have no vision.

 

Nothing more to say here.

[ERICOPOLY]

but it probably also makes sense to add more for what people are ready to pay extra to be in an electric car (many psychological reasons for that: to some it's not burning oil, to others it's the cutting edge tech, to others it's an added layer of exclusivity, or a mix of these, etc).

 

Yeah, the environmental thing is nice.  But that's not really the draw for me.

 

Aside from the instant 911-beating acceleration...  (and yes, even the "X" minivan will do 0-60 in under 5)

 

The challenge is how are they going to get me to switch from electric back to ICE -- I think they can't.  I don't like to pump gas, or change oil, or take it to a service station.  I don't have those hassles in my daily life anymore.

[ERICOPOLY]

Perhaps they all just sit there and let TSLA make porsche esque ROE

 

They have experience with that.

 

They already all sit there and let Porsche make Porsche-esque ROE.

 

Don't they?

 

Are they suddenly going to change their spots?

[rkbabang]

Perhaps they all just sit there and let TSLA make porsche esque ROE

 

They have experience with that.

 

They already all sit there and let Porsche make Porsche-esque ROE.

 

Don't they?

 

Are they suddenly going to change their spots?

 

Well, VW didn't just sit there and do nothing about Porsche.

 

I agree with you though that the large car companies are unlikely to be able to out maneuver Tesla.  This is like the smart phone market only with 15 Blackberries and one Apple.  By the time they believe that they are in trouble it will be difficult to do anything about it.  I wouldn't be surprised if Tesla is the largest automaker in the world in 30 years and if #2 and #3 don't yet exist.  There is no reason to believe that a company making ICE powered vehicles for many decades or even a century will also dominate with electric vehicles filled with technology.  I have a 2006 Toyota Sequoia Limited that was purchased for $58K (by the person before me, he left his loan documentation in the glove box) which is $67,297 today and it doesn't even have a way to connect a portable device (such as an mp3 player or phone) to the stereo.  Not even a simple AUX jack in a $67,000 vehicle.  It has a rear seat entertainment system with like a 4" screen with an awful washed out picture.  The navigation system is so god awful to use that I end up using my portable Garmin rather than the 7" screen built into the dash.  I could go on and on, and this is from the largest car company in the world.  The old companies take years to get even simple technology into their vehicles.  They will never move as fast as Tesla has.  They won't abandon ICE power nor even lead-acid batteries for a long time to come.

 

[jschembs]

I have no dog in this fight, but here's an interesting thought experiment: if TSLA dropped to $50 six months from now, would we look at the current price as where the stock should return to or a signal of a bubble?

[rkbabang]

I have no dog in this fight, but here's an interesting thought experiment: if TSLA dropped to $50 six months from now, would we look at the current price as where the stock should return to or a signal of a bubble?

 

I don't know how to value this company so I will likely never own it.  I don't know what to think about the current price, so if it drops $50 I still won't know what to think.  This is a company with enormous potential, but a lot of that is already baked into the price.  It was $50 cheaper recently and I still didn't buy it.  Hell, it was $200 cheaper recently and I didn't buy it.  I wouldn't be surprised to see this $100 cheaper at some point in the next year, but I also wouldn't be surprised to see it $100 higher.  This isn't trading on any type of valuation of the company's recent earnings nor expectations of the company's near term earnings, but on long term speculation.  I can speculate with the best of them, I just don't put any real money behind it.  As far as shorting goes... when I see a freight-train coming, even if I don't plan to jump on board, I know enough to get out of the way.

 

[hyten1]

a little puzzle, you can't really compare 2006 toyota sequioa to  2013 tsla s, totally different car from different decade serveing different market. you should be comparing to 2013 lexus LS or something.

 

not sure where you get current car company are so behind in technology? really?

 

ev vehicle is not exclusive to tsla. many auto company built or will be building them. from the small chevy spark to the more expensive bmw's.

 

tsla s is definitely a good car, but to dismiss the competition this early is a bit premature.

 

hy

 

 

 

Perhaps they all just sit there and let TSLA make porsche esque ROE

 

They have experience with that.

 

They already all sit there and let Porsche make Porsche-esque ROE.

 

Don't they?

 

Are they suddenly going to change their spots?

 

Well, VW didn't just sit there and do nothing about Porsche.

 

I agree with you though that the large car companies are unlikely to be able to out maneuver Tesla.  This is like the smart phone market only with 15 Blackberries and one Apple.  By the time they believe that they are in trouble it will be difficult to do anything about it.  I wouldn't be surprised if Tesla is the largest automaker in the world in 30 years and if #2 and #3 don't yet exist.  There is no reason to believe that a company making ICE powered vehicles for many decades or even a century will also dominate with electric vehicles filled with technology.  I have a 2006 Toyota Sequoia Limited that was purchased for $58K (by the person before me, he left his loan documentation in the glove box) which is $67,297 today and it doesn't even have a way to connect a portable device (such as an mp3 player or phone) to the stereo.  Not even a simple AUX jack in a $67,000 vehicle.  It has a rear seat entertainment system with like a 4" screen with an awful washed out picture.  The navigation system is so god awful to use that I end up using my portable Garmin rather than the 7" screen built into the dash.  I could go on and on, and this is from the largest car company in the world.  The old companies take years to get even simple technology into their vehicles.  They will never move as fast as Tesla has.  They won't abandon ICE power nor even lead-acid batteries for a long time to come.

[Avyalake]

After reading through this thread the long thesis looks less speculative (just kidding :)) than the short thesis. This is funny because even on an ordinarily valued company it is not hard to make a smart-sounding short thesis :D and I was on the skeptic short camp with no stakes in this fight. Now I am afraid for other car companies.

 

Also it is clear that a Tesla, even though its just a car, it's not just a car in the sense we are used to it. Let us list the advantages / potential paradigm changing elements to this starting with:

1) No need to fill up gas. 2) Less need for servicing. 3) Fewer parts and hence a possible reduction in need for recalls. 4) Simpler design due to electric motor and the possible advantages of endless configurability with future designs. 5) Ability to perform fast upgrades due to SW eating a lot of HW (the Andreesen model). Check out their front panel controls. I mean where are they and I wonder if the other car companies won't be forced to do this soon enough. 6) Possibility of riding down cost curves that could collapse exponentially with time and technology espec. battery prices and capacities. 7) Possible shortening of the typical car design cycle. 8 ) Business models enabled with no dealerships passing on that extra 6%. This should be welcome by many. 9) A life style stickiness.

 

Anything else?

[hyten1]

i guess tsla taking over the world is a forgone conclusion. even the most optimistic projection they will be selling 100k so car by 2016 or something

 

what will the 60mil+ cars sold worldwide be coming from?

 

hy

 

 

EDIT: next 30 years really? what was 1984 like (first mac just came out, internet most people have no idea what that is, web browser have not been invented yet).  wow i can't believe the optimism.

 

After reading through this thread the long thesis looks less speculative (just kidding :)) than the short thesis. This is funny because even on an ordinarily valued company it is not hard to make a smart-sounding short thesis :D and I was on the skeptic short camp with no stakes in this fight. Now I am afraid for other car companies.

 

Also it is clear that a Tesla, even though its just a car, it's not just a car in the sense we are used to it. Let us list the advantages / potential paradigm changing elements to this starting with:

1) No need to fill up gas. 2) Less need for servicing. 3) Fewer parts and hence a possible reduction in need for recalls. 4) Simpler design due to electric motor and the possible advantages of endless configurability with future designs. 5) Ability to perform fast upgrades due to SW eating a lot of HW (the Andreesen model). Check out their front panel controls. I mean where are they and I wonder if the other car companies won't be forced to do this soon enough. 6) Possibility of riding down cost curves that could collapse exponentially with time and technology espec. battery prices and capacities. 7) Possible shortening of the typical car design cycle. 8) Business models enabled with no dealerships passing on that extra 6%. This should be welcome by many. 9) A life style stickiness.

 

Anything else?

[Liberty]

There is no reason to believe that a company making ICE powered vehicles for many decades or even a century will also dominate with electric vehicles filled with technology.

 

There are certainly pros and cons to having a legacy ICE business.

 

It's a very overused word, but electric cars might turn out to be a disruptive technology because all the legacy players have such high investments in the old tech which is profitable, and at first EV certainly looked inferior in all ways so most didn't bother and missed the boat, and because to properly sell an EV, you need to showcase its advantages over ICEs.

 

Do GM and Ford dealers really want to talk down their other products when they try to sell an EV? Do they want to push vehicles that require almost none of the high-margin maintenance that they make their living on? (Tesla has said that they will provide all maintenance at cost, making no money on it). That's why Tesla feels it needs to have its own stores and not a traditional dealers network, and that's why dealers associations are lobbying to block Tesla in many states.

 

Traditional car makers have invested so much in steel-stamping equipment and ICE research and supply chain, transmission tech, etc... To truly make competitive EVs they need to go into aluminum and/or carbon fiber and relearn all that propulsion stuff (motors, power electronics, all the software that controls everything, 1-speed transmissions, etc). Tesla is years ahead on that stuff, and the ICE business is still very profitable so there's no real urgency to make a big change (kind of like how Kodak saw digital coming and even invented part of it, but it couldn't truly make the switch and dump its very profitable business for a less profitable one, even if they knew it was probably the future).

 

Even Carlos Goshn at Renault-Nissan, probably the person who made the biggest bet on EVs aside from Musk, didn't really go all the way. Why didn't he make an electric Altima or G37 rather than something more like a Versa? It's almost like he didn't want to compete against his other main products too much.

[Avyalake]

i guess tsla taking over the world is a forgone conclusion. even the most optimistic projection they will be selling 100k so car by 2016 or something

 

what will the 60mil+ cars sold worldwide be coming from?

 

hy

 

After reading through this thread the long thesis looks less speculative (just kidding :)) than the short thesis. This is funny because even on an ordinarily valued company it is not hard to make a smart-sounding short thesis :D and I was on the skeptic short camp with no stakes in this fight. Now I am afraid for other car companies.

 

Also it is clear that a Tesla, even though its just a car, it's not just a car in the sense we are used to it. Let us list the advantages / potential paradigm changing elements to this starting with:

1) No need to fill up gas. 2) Less need for servicing. 3) Fewer parts and hence a possible reduction in need for recalls. 4) Simpler design due to electric motor and the possible advantages of endless configurability with future designs. 5) Ability to perform fast upgrades due to SW eating a lot of HW (the Andreesen model). Check out their front panel controls. I mean where are they and I wonder if the other car companies won't be forced to do this soon enough. 6) Possibility of riding down cost curves that could collapse exponentially with time and technology espec. battery prices and capacities. 7) Possible shortening of the typical car design cycle. 8) Business models enabled with no dealerships passing on that extra 6%. This should be welcome by many. 9) A life style stickiness.

 

Anything else?

 

 

As I said I have no stakes and nothing is certain. But is it not possible that the game is changing and others are forced to play a game that Tesla is pioneering?

 

If that is possible, then why should we assume that the current competitors will be naturally good at playing this new game, even assuming they can even play (Check Liberty's comments above).

 

Also consider the smartphone market. How hard is it to make good smartphones? They have operating leverage issues / BBRY write-downs are all about "capital-intensiveness" and purchase commitments. There were many competitors to Apple. Yet how hard or easy is it to compete against iPhone?

[hyten1]

- sure its possible, but anything is possible, so what is the point?

- sure EV might be the future, but i think all major automaker are aware of this and have been working on it for years.

- i don't think the smartphone is the best analogy (but that is another discussion). iphone have the network effect amongst other etc., replace cycle its a lot faster, its a $500 item vs $50k.

 

 

i guess tsla taking over the world is a forgone conclusion. even the most optimistic projection they will be selling 100k so car by 2016 or something

 

what will the 60mil+ cars sold worldwide be coming from?

 

hy

 

After reading through this thread the long thesis looks less speculative (just kidding :)) than the short thesis. This is funny because even on an ordinarily valued company it is not hard to make a smart-sounding short thesis :D and I was on the skeptic short camp with no stakes in this fight. Now I am afraid for other car companies.

 

Also it is clear that a Tesla, even though its just a car, it's not just a car in the sense we are used to it. Let us list the advantages / potential paradigm changing elements to this starting with:

1) No need to fill up gas. 2) Less need for servicing. 3) Fewer parts and hence a possible reduction in need for recalls. 4) Simpler design due to electric motor and the possible advantages of endless configurability with future designs. 5) Ability to perform fast upgrades due to SW eating a lot of HW (the Andreesen model). Check out their front panel controls. I mean where are they and I wonder if the other car companies won't be forced to do this soon enough. 6) Possibility of riding down cost curves that could collapse exponentially with time and technology espec. battery prices and capacities. 7) Possible shortening of the typical car design cycle. 8) Business models enabled with no dealerships passing on that extra 6%. This should be welcome by many. 9) A life style stickiness.

 

Anything else?

 

 

As I said I have no stakes and nothing is certain. But is it not possible that the game is changing and others are forced to play a game that Tesla is pioneering?

 

If that is possible, then why should we assume that the current competitors will be naturally good at playing this new game, even assuming they can even play (Check Liberty's comments above).

 

Also consider the smartphone market. How hard is it to make good smartphones? They have operating leverage issues / BBRY write-downs are all about "capital-intensiveness" and purchase commitments. There were many competitors to Apple. Yet how hard or easy is it to compete against iPhone?