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BlackBerry 10: Research In Motion’s Last Throw Of The Dice?

RIMM-Insider HedgeResearch In Motion (NASDAQ: RIMM) is counting down the days to the launch of its new generation of BlackBerry smartphones, which go by the name BlackBerry 10. The Canadian-based smartphone maker’s stock rose by 50 percent during the month of November, following its announcement of successful developments with regards to BB10 launch.

The company seems to be getting all sorts of bonuses from analysts. A majority of the analysts are expressing significant level of confidence in the company’s stock, which relies upon the success of BB10. Goldman Sachs analysts estimate a 30 percent chance of success, which is significantly material given the company’s 2012 woes. Research In Motion does not rely on revenue from its BlackBerry smartphones alone.

In general, the company provides “platforms and solutions for access to information, including email, voice, instant messaging, short message service, Internet and Intranet-based browsing, and multimedia content through developing integrated hardware, software, and services”. However, according to statistics, the BlackBerry unit is a major player in the company’s overall performance. This is because of the way the unit’s dismal performance impacted on the overall performance of the company’s stock in 2012.

Research In Motion faces stiff competition from smartphone industry giants like Samsung Electronics Company, Apple (NASDAQ: AAPL), and Nokia (NYSE: NOK), among others. The company also faces an uphill task in the smartphone O.S business, as it lags well behind Google (NASDAQ: GOOG)’s Android as well as Apple’s iOS. However, the BlackBerry smartphone still maintains its lead in the workplace, but continues to lose the grasp of the market share in the area as businesses embrace iPhones and other smartphones.

For instance, the department of Defense said in October that it would embrace the use of iPhones and Android smartphones. The department has been using BlackBerry smartphones since the introduction of the devices. This indicates that there is an encroachment of sorts in its stronghold business segment. Therefore, RIM will now battle it out with the likes of HTC Corporation, Google’s Motorola Mobility, iPhones, and Samsung Smartphones among others.

Research In Motion is also involved in the business of tablets, where it faces additional competition from the likes of Amazon.com (NASDAQ: AMZN) and Taiwanese company, ASUSTeK Computer. Amazon’s Kindle Fire and Kindle Fire HD tablets pose a competitive threat in terms of pricing, to RIM’s BlackBerry PlayBook tabs.

The Big Question: Is BB10 RIM’s Last Throw of the Dice?

Research In Motion’s BlackBerry platform is not only facing a challenge from the smartphone industry competitors, but also from App developers. In a recent survey, only 9 percent of developers were willing to develop BlackBerry apps. This is a worrying statistic as the company approaches its long awaited launch of BB10. Smartphones run on applications, and hence, RIM will need ultimate support from developers for it to stand a chance in competing with the two main ecosystems, the iOS and Android. The tech giant will need to invest well in order to boost its newly rebranded App store, the Blackberry World.

According to analysts, a decent performance by BB10 will likely return RIM to profitability. However, this is only a big “IF”. In fact, RIM’s task is larger than what is being perceived. The company postponed the launch of the device to 2013, skipping out the busy festive season which would have otherwise, given the company a good basis for judgement. Cyber Monday just reported more than $1.4 billion worth of online transactions, while Black Friday logged a historical $1 billion. So, did RIM miss an opportunity? Only time will tell.

The BB10 has been touted as the saviour of the Canadian tech giant. According to the way the company is handling the launch, there is every reason that this could be true. Over the last two quarters, there have been reports linking the company with a possible sale of its smartphone BlackBerry unit, which is probably the only alternative if BB10 fails to pull the strings together.

The company engaged JPMorgan Chase and RBC Capital Markets in the early periods of the year to assess possible buyout options. The company has also involved Goldman Sachs in strategizing for its future. Windows Phone 8 maker Microsoft (NASDAQ: MSFT) was one of the rumored potential buyers of the BlackBerry Unit, with Nokia and Samsung being linked, as well. However, these options faded off, and now the company’s stock is trading on double digits after it had dropped from mid teens to $6.22 per share in late September.

Bottom Line

Research In Motion is facing a make it or break it situation with its latest generation of BlackBerry phones. The company’s future does indeed, rely on how well its newest device will do come 2013. The company’s previous devices performed underwhelmingly, especially BB7 as competition intensified. It is believed that BB10 O.S will be a class act in the smartphones industry. My recommendation is that, that is the only option; otherwise, this might as well be its last involvement in the smartphones business.

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About Nicholas Maithya

I am a writer focussing on disruptive technology, Fintech, Big Data and Internet of Things, Online Marketing trends, and investments. When I am not writing about these, I am probably in the gym working out, out and about with family, watching the news (basically business/technology) or soccer. That's why I do sometimes cover soccer-related stories.

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  1. Pingback: BlackBerry 10: Research In Motion’s Last Throw Of The Dice? « Insider Hedge - 13/12/2012

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